Grainger’s IT Boss Talks Resource Planning

Timothy Ferrarell is as close to a chief information officer as W.W. Grainger has. As senior vice president of enterprise systems, Ferrarell oversees technology spending at the $5 billion industrial-supplies company, along with training (Grainger has more than 16,000 employees) and business process engineering. Those are “the three things you need to have your hands around in order to drive effective change,” he said recently. Here’s a bit more of what he told Baseline.

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A: In the next year, we’ll actually increase our investment in IT in general. But that largely relates to the completion of an ERP system from [business software producer] SAP. We’re slowing down a little bit with respect to our CRM plans.

Q: In terms of your ERP (enterprise resource planning) investment, what are you doing to mitigate the risks of having such an enormous investment going on all at once?

A: We’ve broken it into pieces. We did the order-processing system first, in 1999. And it was a tough road—we learned a lot in the process. It was not without some impact. Now that we have sort of internalized SAP, we’re going to complete the back-end part of the system. So our bias has really been toward removing the risk that is inherent in any one of these implementations. We are not a “turn the whole thing on at once” kind of organization. That’s proving to our benefit.

Q: Do you need to get a tangible financial return on technology investments?

A: There are business situations where insisting on that makes sense. But we’ll also look at and prioritize projects strictly around customer satisfaction. At the end of the day, that ends up being a good, long-term business decision for us.

Q: How do you measure how satisfied your customers are?

A: We have internal objectives around something we call “the perfect order,” which is about making sure the customer gets exactly what he expects and wants every time he does business with us.

Q: Why not just buy a CRM (customer relationship management) package that’ll make this happen?

A: I’m not convinced that a full-blown CRM package with all the bells and whistles is necessarily the right thing for us, and that all we need to do is take the shrink-wrap off the box and put it in and everything will be that much better. I don’t believe one CRM initiative can be exactly like another. We have to figure out how to make it work for us.