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A Scalable Architecture
Joe Martins arrived at Design Within Reach (DWR), the chic European home furnishings chain, in 2002 as a consultant to help restructure IT operations. Back then, the San Francisco-based DWR had 15 stores, or "studios," and big plans to open some 15 more a year over the next few years. The company, then just 4 years old, was "struggling a bit with the servers and systems they had," says Martins, 42, a former retailer who switched to IT in the early 1990s. "High network availability takes a certain expertise that you need to have some experience with."
Each studio had its own servers that tapped into a central ordering system. "I looked at the systems in place at each of the studios and realized they were very overbuilt and barely manageable at just 15 studios," Martins says.
"The reasoning of my predecessor -- and it's going to sound funny -- was that we needed to have servers in the studios so that if the [central] LAN connection went down, the salespeople could still be able to log on and print locally," Martin says. "My rather simple question was, 'Well, our order system is central, so what are they going to log on to, and what are they going to print?'"
Martins needed to redo the entire IT infrastructure into a more scalable one. The store servers were shipped to San Francisco headquarters where they became part of a central server farm. Martins outfitted the studios with thin clients embedded with Microsoft Windows XP. Now DWR can focus on keeping the central systems, including the LAN, in prime condition rather than worrying about the health of servers in 63 remote locations. Today the server farm at headquarters handles the work for all DWR studios.
"When the business is moving fast, nobody wants to wait for IT to catch up," Martins says. "We have to figure out how to get a strategic set of systems in place that we won't have to replace the following year because we grew 40%. The [business] might not know when they're growing by 40% a year."
Fast Growth |
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For three years, steel pipe maker Maverick Tube Corp. grew 52% a year.
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But CIOs who can't discern where the business is going may find themselves in trouble, as did Martins' predecessor. DWR went public in 2004 in an offering that raised $32 million, but as its financial filings show, has found it painfully difficult to satisfy the financial rules imposed by Section 404 of the Sarbanes-Oxley (SOX) Act.
At the heart of the problem was a $670,000 systems conversion project. DWR's third-quarter report filed Nov. 15, 2005, tells the story. "We converted our existing information technology systems to a new, custom-built system. We encountered problems with the conversion. In particular, the new systems do not contain mechanisms to automatically identify and correct or reject erroneous or incomplete data." Company shares plummeted 50% on the news.
In August, Nasdaq notified DWR that the company was subject to delisting for failing to file subsequent financial reports on time. The CIO who led the development and integration of the custom-built IT system resigned. Martins, who arrived at DWR after the firm decided to go with the custom-built system, was put in charge, albeit without a CIO title.
Although Martins declines to speak about the SOX problems -- at press time, Nasdaq had granted the company a reprieve provided it filed past reports by Nov. 24 -- he is doing a cleanup job there too. Rather than wrangle with the complexity of the custom-built system going forward, the company elected to scrap it. Martins chose enterprise resource planning software Microsoft Dynamics AX as a replacement. "Our focus is on design and modern furniture. We shouldn't be in the software development business."
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