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JCPenney IT “Is A Mess,” Says COO
Kramer also has cover from a truly awful (but not completely unexpected) financial quarter. If you’re going to announce that your IT is completely worthless, that’s tactically the right time to do it.
Still, Kramer’s thorough shredding of his company’s IT reputation is stunning—stunning enough, in fact, that it’s easy to miss something important.
Replacing nearly 500 customized applications with 100 easy-to-maintain applications is going to be very, very expensive. And none of the assembled retail analysts seems to have noticed that JCPenney was essentially announcing a huge IT capital expenditure program.
There’s no way to pare down that IT portfolio. Cleaning up the mess will require wholesale replacement. That will also require a radical simplification of JCPenney’s business processes (which is also on Kramer’s agenda) and all the training that goes along with it.
JCPenney last week halted its sales commission program, which will also require a huge investment to make it work, at the cost of a much less effective sales team until then. And creating a huge opening for Amazon and other e-tailers, as though they needed another one.
And there’s a reason JCPenney was saddled with that portfolio of endlessly patched-up processes and applications: Ordinarily, CIOs simply don’t have the clout to rip everything out and start over. That’s a very pricey proposition, and getting the CEO and the CFO to sign off on it is very rare. And, naturally, if anything goes wrong, it’s the CIO’s head that will roll.
Everyone in retail IT has legacy systems. There’s a reason they hang around so long, and it’s not because they’re much loved or the best that technology can offer. Mostly, it’s because no one wants to spend all that money to get something that might go south and that, at best, will take a long time to pay for itself.
That means Kramer and Blum are in something of an enviable position: They have gotten a green light to completely strip out and replace their company’s IT structure. They’ve gotten the budget and, late in the earnings presentation, their boss even teased when the replacement will be unveiled: At the next quarter’s earnings call, “we will then talk about our new technology platform, how we’re going to win with technology and become—I think—the leading retailer from a technology perspective,” Johnson said.
That sounds great. Then again, everything about JCPenney’s resurrection has sounded great. It’ll be a little easier to believe once things actually start working according to the promises.
And when it comes to replacing a completely, thoroughly, utterly rotten IT core that happens to be what a big retail chain still depends on—heck, what could go wrong with that?
Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code.
-Marc
