When Gordon Buswell arrived at ITM in 2001 as the building supply store co-operative’s new CEO he says his mission was to consolidate the business by taking “a non-corporate approach, but with disciplines”.

The non-corporate approach was required because, as a grouping of just under 100 stores, all owned by the co-operative’s shareholders, ITM isn’t run along typical topdown corporate lines.

Instead, Buswell oversees a national support office focused on balancing the various needs of the storeowners, the wider group, its customers and its suppliers, so that all are getting the most out of the relationship.

“It’s a well proven model in that we’ve identified what the storeowners need in terms of support and we’ve refined it over time. The strategies are national strategies, but they’re implemented locally so there is room for local variation depending on their needs,” he says.

“Our philosophy there is pretty straight forward. If we were a corporate we’d have a national strategy and impose it. Instead, what we have is an outline national strategy but we provide the tools for our guys to respond locally as their needs require. Although there is a strong shared vision there’s no operational overlay which forces people to do what’s wrong for their area or region.”

Buswell says the model has proven robust enough to allow ITM to prosper in a competitive environment where its main competition comes from Placemakers, which is operated under a joint-venture structure, and Carters, which is corporate owned. (Two other big-name brands in the sector, Mitre 10 and Bunnings, offer less direct competition because they predominantly target retail shoppers, rather than trade buyers, Buswell says.)

“Our strategy is about being close to the customer, understanding the customer’s needs and supporting the stores to deliver value to the customers. One way we do that is buying as a larger group. Our turnover is around $600 million at store level, so we’ve got buying power. We also do all the marketing on behalf of the group, in terms of brand positioning, catalogues and electronic access to customers. We also provide corporate services in terms of financial advice, financial support, HR, events, et cetera.” What about ITM’s IT strategy? Buswell’s answer would probably shock a number of IT managers entrenched in the corporate way of doing things.

“We don’t have an IT strategy. We have a business strategy and the IT is a component part of it. Across the 94 stores in the co-operative there are probably eight or nine point of sale systems, and two of those would dominate the group with a 70 percent share.”

This acceptance of a plethora of disparate systems running across the group may seem unworkable, but Buswell and ITM’s GM Finance and IT, Andrew Ryan-Kidd, have no trouble explaining the thinking behind the strategy. “Andrew and I arrived at ITM at pretty much the same time, and we had certain no-go areas,” explains Buswell.

“One was we were never going to try to convert this place to a corporate because by doing that you stifle the creativity and the drive at store level.”

One of those corporate no-nos was forcing a single platform on the group.

“We said we’d never go there because the drive for a single platform for a corporate is to get transparency of data from top to bottom whereas we believe we have other means of getting signals from our stores. That’s done through our communications processes, some of which are electronic, but most of which are face-to-face in terms of meetings which are far more effective.”

IT deployments
ITM’s no-IT-strategy approach does not mean the group shuns IT initiatives, and Buswell rattles off a number that have been deployed.

“We’ve got the highest EDI rate in the industry. We receive a significant proportion of invoices – about 70 percent – from suppliers electronically. It’s a cost-effectiveness measure.”

And because “communications is ITM’s lifeblood,” Buswell says the group relies very heavily on its intranet to keep store owners and staff informed.

“Also on the members’ side and suppliers’ side, one of the most time-consuming roles at store level is updating prices with various price files, so we’re working on a costprice update project that means we electronically receive files from our suppliers in this office and our members selectively download the files appropriate to their regions, which automatically update their store files.”

The support office also manages ITM’s nationwide loyalty card programme.

“We also rely heavily on our website to communicate with stores and for the stores to communicate with their customers. But those are informational at this stage. There’s a common template and that works very well. We maintain some from here on request and the stores maintain others.”

Website-based e-commerce has not been deployed yet, however.

“We’re very immature – and intentionally at this stage – when it comes to the customer’s electronic interface with stores. The reason is that customers haven’t demanded it. It’s been talked about for six or seven years in the industry as something that’s just around the corner, but it’s come to the fore and fallen away. But we do have the hooks in place so that we can do something there to transact if the market requires it.”

There is demand, however, for electronic price books, with about 80 per cent of ITM stores offering a service which allows customers to upload generic price books into their various job-costing solutions.

And despite the philosophy that a single platform should not be imposed upon the group unilaterally, Buswell says there is a move to consolidate the number of point-of-sale systems currently being used across the cooperative.

“We’re not doing it so that members’ stores information is transparent to us but we’d like to move to a single or a dual platform in terms of point of sale and accounting systems and software at store level. The reason is that whenever a store implements any software they ask for support and if we’ve got seven or eight software programmes we can’t deliver the expertise from here as easily as we could if it was a single or a dual system – so we’re working on that with them and making significant progress.”

This type of technology initiative always needs the approval of ITM’s IT committee, chaired by Ryan-Kidd but made up mostly of store owners. “So it really is done on a needs basis, and a user perceived value basis,” says Buswell.

Diverse background
Buswell joined ITM after 12 years with Carter Holt Harvey and prior to that worked in a variety of accounting, finance and marketing roles for a diverse range of businesses including Nissan, Corbans Wines, property development company Unity Developments and NZ Forest Products.

He describes his approach to management as: “passionate leadership and strategy, but with a very good understanding of the need for marketing and finance, which are critical to the business.”

When it comes to technology, he takes a pragmatic approach, laced with a degree of realism nurtured from past experiences.

“Andrew and I are both very similar. Andrew’s got a lot more technical knowledge than I have but we’re both more concerned about how we’re going to apply technology than having to have the latest and the best,” he says.

“We’ve both been involved in the past with implementations where they’ve been very low on the delivery so what we do here in the main works. We know it will work, and we’re very cautious about what projects we take on. We have to prove the business value before we proceed with anything. Having a membership base that will hold us accountable is a good control.”

That accountability, brought about by keeping the shareholder store owners involved in the consultation, evaluation and agreement process, is a great strength of the co-operative, he says.

“I’ll say it without holding back: if the corporates did more of what we do in this area they’d have better implementations as well. The temptation when you have the power is to push down.”

IT has proven a very effective means of boosting efficiencies at ITM’s support office, Buswell says. When he arrived to take up the CEO role 6 1⁄2 years ago the support office had a staff of 25. Since then the co-operative’s turnover has almost tripled, while the support office staff headcount is currently 22.

The organisation’s approach to IT is probably well summed up by its recent approach to a support office implementation of Microsoft Dynamics which won it an “Implementation of the Year” award from implementation partner Olympic Software.

“Obviously it’s important to make sure you’ve got the right partners and the thing about Olympic Software is that right from the word go they understood our business whereas some of the larger multi-nationals, and many of the local companies, knew nothing about us and didn’t do any homework to find out anything about us,” says Ryan- Kidd.

“We even had a situation where one of the multinationals wanted to re-engineer the whole business to suit their software. So it was very pleasing to see Olympic were astute enough to work out who we were before they’d even walked in the door.”

Buswell adds, tongue-in-cheek, that keeping a tight rein on budgets is another way to make good IT decisions. “We have finite resources so we’re forced to spend them very well. So if we had a lot more money we could make a lot more mistakes.”

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By Simon Hendery