Amid speculation the company was up for sale, the Jones Apparel Group IT department continues forward progress toward integrating business processes following the acquisition of several apparel brands in the past few years, starting with Nine West in 1999 and ending, most recently, with the luxury brand Barneys New York in 2004.
The acquisition activity prompted the Jones IT department to formulate a go-forward consolidation strategy that allows for continued growth. That strategy s creating a company-wide data center at its corporate headquarters in Bristol, Pennsylvania, and implementing SAPs apparel and footwear solution as the core enterprise system for the company. Brands will remain autonomous to some degree, but overriding business processes will be consolidated.
We are getting away from the classic shared services model and moving into a single business process but at the same time maintaining brand autonomy, explains Paul Lanham, executive vice president and chief information officer. We will maintain IT resources for the different brands but we will be smarter about it. We will leverage the vast resources of third-party resources to help us improve the way we do business.
Jones Apparel, a $5 billion apparel, footwear and accessory retailer and brand manager, now operates 1,051 retail stores, including 384 Nine West retail and outlet locations, 235 Easy Spirit retail and outlet sites, 138 Jones New York outlets, and 25 Barneys New York stores, as of the end of 2005. Other Jones-owned brands Kaspar, Enzo Angiolini, Bandolini, Anne Klein, and Joan & David.
In the past, Lanham notes, Divisions of Jones developed custom applications to do core functions and they worked very well up to a point, but that system doesnt lend itself to the company competing as an enterprise. Reacting to trends or changes became problematic, which is why were moving to third-party applications.
Business process consolidation is helping Jones achieve its goal of a $100 million return on its recent IT investments within the next three years, notes Lanham. That ROI has been broken down into specific components, he notes. Once the implementations are complete, each of the companys 12 distribution centers will have a database package that s The Learning Management Corporation (TLM) for content development, SAP for enterprise resource planning (ERP) and PkMS from Manhattan Associates for warehouse management.
The enterprise software selection process began in September 2005. In addition to SAP, Jones researched four other software providers. We chose SAP because we had confidence that the application could zig where we wanted to zig and zag where we wanted to zag without a high degree of customization, explains Lanham. In large part the final choice came down to a lot of other factors including strength and reputation of company, references and financials.
The implementation is scheduled to be complete within 18 months, notes Lanham. It is a fairly aggressive schedule, but we have a tremendous advantage because we dont need to customize the system. The SAP functionality is broad enough and the overall business process is close enough to our current process that we have been able to eliminate customization and avoid a cultural shift that often slows down the process.
Once the DC system is in place, Lanham hopes to be able to focus on consolidating product offerings. To date, each DC is brand- or division-specific. We want to be able to ship from any of our DCs to anywhere at any time, explains Lanham. We want to be able to have dynamic routing and distribute different types of product from different distribution centers. Right now Nine West, for example, has its own distribution center. That introduces complications in terms of flexibility of the supply chain.
Although one aspect of the Jones strategy is focused on centralizing and consolidating business processes to create efficiency in the supply chain, other aspects of the strategy are dedicated to maintaining brand autonomy. There are some core applications that are specific to the individual wholesale brands so we have maintained a decentralized application suite, Lanham notes, but it makes sense to centralize processes like customer service, finance and human resources.
Data Center Delivers
From day one, consolidating the data center proved to be a productive and efficient step for Jones. Nine West, our biggest acquisition to date, maintained a very classic mainframe-oriented data center operation, says Lanham. So while we were eliminating the data center we were converting their applications off the mainframe. In doing so, Jones was able to reduce the Nine West IT staff from 140 down to six. Subsequent acquisitions followed a similar model.
Creating a business model with the acquisition of Nine West set up the company to proceed with future acquisitions. You cant move ahead with an ad hoc process, says Lanham. Setting up this model becomes increasingly important to us as we acquire more companies. We were able to establish from day one, for example, that we didnt want to have satellite data centers.
Success on the Nine West project confirmed the process moving forward. It was quite an ambitious agenda, notes Lanham. It was a major shift off one technology platform onto another. It was changing out major application suites and reducing IT staff. From a financial standpoint, The savings we wanted were accomplished.
While consolidating the data centers and business processes have been a challenge for Lanham and his team, other systems have presented relatively simple solutions. Point of sale (POS), for example, is a basic function that at its core needs to offer one basic attribute, according to Lanham: efficiency. Jones uses a basic POS setup from NSB in all stores. We are not leading edge in this area because we choose not to be, Lanham notes. Our philosophy is that POS shouldnt get in the way of a transaction. Our POS offers some very basic functions in a very cost-efficient manner. With more than 1,000 stores, and more than one register per store, the cost to change or upgrade a POS system can be unmanageable, says Lanham. To that end, Jones has chosen not to invest in items like electronic shelf labels, kiosks and digital media. We believe we have the appropriate level of technology in our stores from a POS perspective.
While Jones maintains the basics in terms of in-store hardware, it has recently invested in several new software applications. The company has implemented a product lifecycle management (PLM) application from UGS, assortment planning from 7th Online and is looking into pricing optimization software.
Above all, according to Lanham, the technology is only as effective as the people who use it. Five years ago and five years from now the best technology will only be as good as the relationships of the people who are using it. We didnt become a five-billion-dollar company without having successful relationships.