Ron Griffin, CIO, leaves Home Depot: Insiders cite frustration over ever-tightening IT budget - Home Depot: A Different Direction

Home Channel News, Dec 17, 2001 by Matt Nannery

ATLANTA -- Ron Griffin, the high-profile chief information officer who brought fiscal discipline and what is widely viewed as the retail industry's most flexible systems infrastructure to Home Depot's IT organization, will soon leave his post for a new challenge. On Dec. 10, Fleming, a nationwide distributor of a broad range of merchandise, announced hat Griffin would become its CIO and executive vp in early 2002.

Griffin and Home Depot decided to part ways in August with the understanding that he would potentially stay on until a successor was found -- but no later than spring 2002.

"We kept it relatively loose as to timing," Griffin said in late November. "If a world-class replacement can be identified sooner, I'll go ahead and leave. Or, if something comes along for which I can develop a real passion, contribute significantly and strike a better work/life balance while my teenage daughters are still home, I might elect to leave sooner. Otherwise, I'll likely remain on for several more weeks."

Home Depot has reportedly narrowed the field of CIO candidates to a handful of individuals -- all from outside its own IT ranks, but as of Dec. 10, had not announced Griffin's replacement.

Griffin's departure comes at a critical juncture for Home Depot, both in its IT migration schedule and its business strategy. The retailer will begin what could be a lengthy upgrade of globally capable core financial, payroll and HR systems in February. The backdrop for those changes: a deceleration of Home Depot's once-dizzying store-opening schedule, volatile comp-store sales and resurgent earnings achieved through cost-cutting measures.

The latter measures implemented over each of the last two years, industry observers say, have likely taken a toll on Griffin's ability to continue to put new applications in the hands of Home Depot associates and may have precipitated his decision to step down. Key technology partners of Home Depot have indicated Griffin's frustration at not getting the budget to accelerate value and further extend the company's lead in the industry. Like all departments within the company headed by fiscally conservative CEO, president and chairman Robert Nardelli, IT has had to do more with less in 2001. However, for 2002, Nardelli is expected to allocate the funds necessary to begin to position Home Depot as an efficient, cost-effective global enterprise.

Home Depot has experienced heady top-line growth since Griffin joined the company as director of applications development in early 1990. Its sales were about $2 billion in fiscal 1989 and will top $50 billion in fiscal 2001. Home Depot's sales continue to grow, but in a climate of stagnating comp-store sales, the company will continue to corral costs.

"We urgently need to bring more discipline to the business," Griffin said. "1999 was a great year from a sales and earnings point of view. Unfortunately, it allowed us [the business] to get sloppy with execution. Now we have to go on a diet, getting back to the basics and into fighting shape."

Griffin, only 48, was seen as one of the "old guard" at Home Depot -- that corps of orange-blooded associates who grew the company alongside founders Arthur Blank and Bernie Marcus. When Griffin joined Home Depot, his staff numbered 30, two-thirds of the company's total IT staff. He took over as CIO in 1994 and leaves a staff of 1,250 IT professionals.

Managing such a large organization, Griffin said, has been rewarding but tough.

"Now we do our department meetings in three sessions because our auditorium can accommodate only about 400 people," he says. "It feels like Bill Murray in [the movie] 'Groundhog Day'."

Now is the right time for a change, according to Griffin, because Home Depot's new fiscal year begins next month. A new CIO should be in place by that time to launch the new initiatives, which could span between two and three years until all phases are completed and fully implemented. Griffin said that it's very important to have continuity through these types of investments and that, by leaving now, the new CIO can have his or her fingerprints on the initiatives since they will be in their formative stages.

Home Depot's IT strategic direction is to tightly integrate its subsidiaries and future acquisitions underneath the same architecture and systems, allowing the retailer to reuse processes, systems, data and code.

The benefits of that strategy are dual: It allows programmers to respond to business needs with new applications quickly as they don't have to rewrite underlying functions such as error handling and date comparison, which should be common to all applications, and it keeps the library of code Home Depot must support to a functional minimum. At the time of the Y2K crossover, the retailer had only about 13 million lines of code in its IT shop, compared to 40 million to 60 million lines for retailers of comparable size.

An additional differentiating factor: Home Depot's ubiquitous TCP/IP, any-to-any ATM (asynchronous transfer mode) data communications infrastructure. That system of "fat pipes" connecting all of the retailer's stores to corporate offices allows the retailer to transfer information throughout its organization quickly and gives the retailer the option of allowing store personnel to access graphics-heavy applications that would sit on remote servers at Home Depot corporate headquarters.