06 Aug CIO Leadership Series: School Specialty's Herman Nell aims to spur organic growth
Appleton, Wis. – Herman Nell likes to play the percentages, and most of the time that means devoting a good percentage of his time to being a transformational leader that can add business value.
Nell, executive vice president and chief information officer for the Appleton-based School Specialty, Inc., ideally would like to devote about 45 percent of his work time to business process transformation and IT-business alignment.
It’s a role that Nell, who specializes in enterprise resource planning systems, is quite familiar with. While he tries to reserve a little more than one-third (35 percent) of this time to operational excellence and 20 percent to being a business strategist – driving enterprise strategy and innovation – School Specialty recruited him in part to implement a new ERP system.
While 20 percent may not sound like much time for innovation, Nell says this one-fifth commitment pays dividends where transformation and alignment are concerned. “I have two amazing teams who are so good at operations and transformation that it affords me the opportunity to spend a significant amount of time on the strategy and innovation side of the business,” he explained, “and as a consequence improve the alignment of future IT strategies.”
Not every CIO has that luxury, and Nell is trying to take full advantage of it as he oversees an all-important ERP consolidation.
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School Specialty, an education products company serving the pre-kindergarten through K-12 market in the United States and Canada, reported $1 billion in revenue last year. Of its 2,800 employees, Nell supervises just over 100 in information technology, and his annual IT budget approaches $25 million.
Although the company’s 2007 net income of $18 million allowed it to return a tidy earnings per share of $1.74, Nell believes there are more technology-driven improvements to be made for the benefit of the company’s bottom line.
Since 2002, School Specialty has acquired nine companies, including ABC School Supply, Califone International, and some assets of McGraw-Hill. While the merger-and-acquisition strategy will continue, the company would like to improve its organic growth in conjunction with it.
As a CIO who would like to make that happen, Nell loses sleep over the same things that keep his School Specialty colleagues up at night – particularly, the main thing that will drive revenue growth: “How can we best help educators engage and inspire students?”
The company offers school products through its catalog and has a significant e-commerce environment – 20 percent of its sales are online – which brings IT closer to customers.
Online sales notwithstanding, the company website is not one of Nell’s major worries. While it’s an example of how IT interacts nearly directly with customers, it is the company’s ERP implementation that currently occupies most of his time.
The ERP project, which Nell described as a major strategic initiative, is designed to leverage the company’s scale and capabilities to create value and allow it to grow more organically.
As part of a three-year project that is half completed, School Specialty is beginning with the introduction of an ERP system from Oracle. Within that platform, the organization will rely heavily on common systems to share information on customers, vendors, and providers.
“We’ve been growing by acquisition, and we have tended to operate as a group of holding companies with multiple individual companies,” Nell said. “We’re moving to a category-managed organizational model that is developing shared services for supply chain, finance, and information technology.”
The company will consolidate all its business units onto the Oracle system. The project started in 2006, when about 20 percent of the business went online. This year, another 60 to 65 percent of the business will migrate, with the remainder going online by the end of 2008.
As with other implementations he’s managed, Nell’s focus is remaining on time and on budget, and knowing the priorities of the business even if they change over time. As he attempts to follow the roadmap of the project, which is matched with the roadmap of the business, he must be cognizant of the company’s continuing M&A execution.
That means assessing how newly acquired business units fit into the puzzle. “You have to keep track of changes in vision, strategy, acquisitions, or divestiture,” he stated. “All will have an impact on the outcome.”
The ERP project is not a massive overhaul – three or four main legacy systems will be replaced by the Oracle system – but Nell had only two or three months to map out a project plan with an acceptable level of detail. Even if he felt pressed for time, his philosophy about constantly revisiting the plan, even as the project proceeds, enables him to spackle any cracks.
“The need to identify what’s critical and what’s important does not change as the project moves along,” he said.
Among the anticipated benefits will be a deeper understanding of customers, who according to Nell are still teachers in school districts and related organizations. Whether they are selling pens and pencils or selling a science project, Nell said a lot of the benefits of the new ERP system will come from having a wholistic view of the customer.
Nell, who has a master’s degree in commerce from the University of Stellenbosch (South Africa), has worked for organizations like Motorolla, Deloitte & Touche and, more recently, the Madison-based Fiskars.
The most important lesson he’s learned from past IT implementations is to make sure it’s being carried out by quality workers, a principle that also extends to vendor relationships and others who impact the project.
It’s also critical for CIOs to communicate effectively with, and be part of, upper management. Nell said any distance between the IT director and top management significantly increases the risk level of failure.
“They should not be viewed as IT projects but as business-driven projects,” Nell said. “I don’t believe in IT projects. If the business doesn’t view it as critical, it shouldn’t be done.”