Billion-dollar mistake: How inferior IT killed Target Canada
What really happened behind closed doors - A must read for the retail student
Unmanageable deadlines and disastrous IT wrecked this top US retailer's attempt at international expansion. The moral of the story: IT drives the enterprise.

Because the company wasn't extending its existing data entry system, the data being used either had to be exported or entered from scratch. Lengths were entered where widths needed to be. The wrong prices were entered. The wrong descriptions were entered. Low-level marketing assistants were pushed on impossible deadlines to enter thousands upon thousands of fields of information. Is it any wonder that they got 70 percent of it wrong?

Then there was the replenishment system. As you know, stores are designed to sell frequently bought items. When products run low on shelves, the replenishment system is supposed to know that, and instruct the distribution centers to send more stock. In Target's case, behind every product's replenishment process was a business analyst, whose job it is to predict just how much product of a given region will sell.

As you might imagine, each product requires some level of demographic and psychographic analytics in order to build a model for purchase and replenishment for each local store. But the analysts were compensated (or, more accurately) dinged if too low a percentage of their products was kept in stock at any given time. The replenishment system, by placing automatic orders, would expose when certain products had had an unexpected run, or there were too few in stock. When this happened, the junior analyst would get the equivalent of a demerit put on his or her record.

Not being stupid, the analysts turned off this metric -- because they could. Apparently, the Canadian system made automatic replenishment data an optional switch, so when the analysts started to notice that they were getting criticized for poor stocking levels, they turned off the notification system that would tell people that there were poor stocking levels. As a result, management reading replenishment reports thought there was plenty of stock, when that was far from the case. Call it productmageddon. It wasn't pretty

Put simply, Target should have never added an entirely new and unrelated IT system for Canada. Instead, Target should have carefully extended their existing IT system to support internationalization, and once that capability was available, only then consider expanding into another country. The moral of the story is that IT matters. If done correctly, IT should not be an afterthought. IT drives the entire enterprise. zdnet.com

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