Making it Work
Lanham was clear from the beginning that he should have control in the staffing, ensuring feedback is incorporated into the program and having flexibility with the service provider whenever an amendment was required. This is required during the learning curve when it is difficult to forecast outcomes.

Rajaier vouches that HCL’s learning curve was quite smooth because of the presence of the 32 re-badged employees who contributed greatly to the transfer of domain knowledge and helped the team navigate through the maze of client managers at Jones. “We were effective from day one, as we had this team of domain experts who played a pivotal role in the knowledge transfer,” says Rajaier. 

Lanham, on his part, says he had a free hand in selecting the provider and running operations. The program had complete sponsorship of the CEO with periodic reviews. Although Lanham had a hands-on approach in the initial days, he gradually delegated a lot of work and managed mostly through his lieutenants.

The first task of the partnership was to consolidate its data centers in New York. Nine West, the biggest acquisition of the group, had a mainframe environment, and while the joint venture consolidated the data centers, it also converted all applications from mainframe to AS400.

Consolidating the data centers proved to be productive and efficient from day one for Jones as it enabled it to bring down the staff from 140 to six. The consolidation sent out a powerful message, “It helped establish the fact that we did not want any satellite data centers in subsequent acquisitions,” says Lanham. The experience in consolidating data centers became a model to identify applications required for common business processes that would be replicated across the organization.

“The joint venture worked because HCL was willing to give up
control and Jones was willing to pay a price for it.” - Paul Lanham, ex-CTO, Jones Apparel

Lanham displayed a lot of original thinking in managing the partnership. For instance, he was of the opinion that he didn’t want to spend dollars on maintenance; he would rather spend on enhancements. The program leveraged offshoring to bring down costs in routine maintenance but kept most of the development and integration work onshore. He rarely declined requests for additional budget, if it required getting employees with specialized skills. He cleared the budget for getting highly paid employees with XI skills during the SAP implementation. Second, he was convinced that customization was an expensive proposition and that it should be avoided unless it could create a competitive advantage to the business. Rather he compelled the organization to amend internal processes to suit vanilla applications, thereby preventing the organization from getting trapped into a cycle of continuous customization whenever there was an upgrade.

He pushed the organization in adopting gold standards for all applications: The Apparel and Footwear System (AFS) from SAP, ProfitLogic from Oracle for profit, PkMS from Manhattan Associates for warehouse management, assortment planning from 7th OnlineS, and PLM from UGM. These products were chosen after extensive research, based on the reputation of the company, customer references and financials. Explaining the rationale for selecting SAP’s AFS product, “It could zig where we wanted and zag where we wanted without a great deal of customization,” says Lanham.

What then was the value that HCL brought to the table? HCL’s skill was its integration capabilities. As a service provider, HCL knew the intricacies of different application and could integrate them seamlessly in the shortest possible time. They set ambitious timelines and achieved the target of implementing AFS, and integrating it with other core systems within 18 months. This was remarkable since many ERP implementations have failed because extensive customizations had escalated costs and thrown schedules haywire. 

This emanates from Lanham’s belief that IT is purely a support function in retail, required for smooth functioning and  increased efficiency. Customization cannot  impact business bottomlines much because apparel and footwear retail is all about perception where “brand” plays a bigger role than IT deployment. IT is strictly to ensure a smooth supply chain, to forecast demand and source material to meet it too.   

BEST PRACTICES

On the customer side, it is important to have a considerable degree of control during the learning curve as you need to be in charge during that critical period

On the provider side, it calls for greater flexibility and sensitivity to the customer’s needs during the learning phase. If there are performance issues with particular employees, they must be replaced to build the trust and comfort level with the customer

It is a good idea to have somebody at the provider’s offshore location to monitor the work during transition and until the processes stabilize. In hindsight, Lanham feels they missed out on this opportunity

Companies should not be bound by SLAs. It is all right to have a set of SLAs as a guiding principle, but it has the potential to make an outsourcing relationship dysfunctional, if one spends too much time and energy on it

Technical people should spend time working with core business groups to learn about business requirements. Technical knowledge is bereft of business knowledge

Identify common business processes in the organization across all functions, and standardize and replicate them across all departments. This will do away with the practice of excessive customization that leads to a never-ending cycle of development requirement

Once the standards are defined, it is possible to deploy a single application for business processes that reduces the cost of maintenance and save the dollars for enhancements

It is important to develop standards for estimation and review meetings. This helps in having focused discussions.