Digital Transformation Of Compucom Led To Doing The Same For Customers
When ODP, the parent company of Office Depot, sold its Compucom managed services business to private equity in a $305 million deal, Compucom all of a sudden found itself with a lot of work to do to set itself up as an independent company.
This included realigning its organizations, finding new leaders, learning new processes, setting up independent back-office functions,and a host of other activities. And there was the question of security given that the company, which became independent of parent company ODP in January 2022, had less than a year earlier experienced a massive DarkSide ransomware attack.
That put a lot on the plate of Damon Venger, a 16-year employee of ODP who in 2020 became the CIO of Compucom and is now the global chief information technology officer.
[Related: Compucom CEO Kevin Shank: ‘I Have Unfinished Business Here’]ADVERTISEMENT
Venger told CRN that he knew when moving from ODP to Compucom that his new organization would likely be sold so he started looking at what it would take to run the IT of a separate company, as well as set up the processes and technology that would allow Compucom to operate as a managed services provider separate from ODP’s retail business focus.
“As you can imagine, at the time, a lot of IT was in Compucom and the parent company,” he said. “It was decentralized and all over the place. So I had to rebuild that to bring it together—that’s the organizational side of the transformation—and get us ready to be a stand-alone company. In parallel to that, we built an actual road map across all of the technology that we’re using internally and for our customers.”
The end result was a massive digital transformation project that was important not just for running Compucom efficiently, but also for working with customers going forward. And, Venger said, it was more than just new technology.
“The biggest thing I’d say for digital transformation aside from all the gory details is it’s not a technology modernization, which is driven by just IT,” he said. “It has to be business-focused. You have to have a business mindset. You have to have a business acumen to be able to do it because you’re engaging others and bringing them in to help change perspectives, change habits, change processes.”
It is not an easy process, Venger said.
“When people are involved, you can’t just go slam it in,” he said. “It’s really the business value of what you’re doing versus just the technology value. It’s beautiful when they align. But they don’t always, and that’s where the ‘secret sauce’ comes in where you’re figuring out the right business value against everything you’re trying to change.”
Venger and his team must have done something right. Compucom in August was named a bronze Stevie award winner in the Best Business Technology Pivot category in the 20th annual International Business Awards.
For a look at the digital transformation Compucom went through to get ready for the future, here is more from CRN’s conversation with Venger.
Congratulations on winning a bronze Stevie in the Best Business Technology Pivot category. What is business technology pivot? And what did Compucom do to get an award like that?
I came over from Office Depot about three years ago and took over as CIO knowing that the company was going to be sold, most likely to private equity. So I knew there was a whole lot of work to do, a lot of things to change. It’s one of those things you don’t really understand until you open up the hood. So when I came over, I saw an abundance of opportunity, which made it exciting, and that led to the whole digital transformation program. It was everything across people, process and technology. We started with culture within IT, which had been kind of a ‘no culture,’ which creates silos, and revamping that to a ‘yes culture,’ here’s how we can help. And then bleeding into, where do we have old technology? Where is the new technology? Where do we have shadow IT? As you can imagine, at the time a lot of IT was in Compucom and the parent company. It was decentralized and all over the place. So I had to rebuild that to bring it together—that’s the organizational side of the transformation—and get us ready to be a stand-alone company. In parallel to that, we built an actual road map across all of the technology that we’re using internally and for our customers. Again, there was an abundance of opportunity. It doesn’t mean it’s easy to do.
You used the phrase ‘abundance of opportunity’ twice. Does that mean it was a mess?
Yes, there was a lot of overlapping technology. Here’s a good analogy to weight loss and weight gain, which a lot of people can relate to. It’s a lot easier to gain weight because it’s easy to just go grab this, grab that, buy this software, pick this food. It’s easier to do the junk stuff. It’s harder to do the things that are right for you. And that’s what happens over the years. Whether it’s neglect from a parent or just sometimes in private equity flipping, the focus is on the wrong things, and you’re building a house of cards. A lot of that increased our SG&A [selling, general, and administrative] costs. Not labor, per se, but technology. We’re a technology company. We had hundreds of technologies, sometimes duplicative technologies that could be streamlined. So a big part of that transformation was reducing our tech span by over $10 million bottom line yearly and letting us reinvest in that. But it wasn’t ‘get rid of it and make things worse.’ The beauty of it was we were able to rationalize tech spend and technology while modernizing everywhere.
For example, moving to SD-WAN on the network from traditional MPLS saved over $1 million a year. Moving to common reporting technologies instead of having eight different ways to do it saved over $1 million a year. And this is pure run-rate maintenance stuff. Another big one was in the field area. We had over 2,000 techs, but there was old outdated technology, which leads to challenging processes. As part of this transformation, we’re now wrapping up the implementation of Salesforce Field Service along with newer modern commerce platforms for product ordering. Some things sound like table stakes, but when you’re built over time things like real-time product ordering and tracking, real-time visibility to when parts are going to show up, some of these things did not exist.
So it was not just cutting costs. It was reducing costs, modernizing all our tech, leveraging IT to either reinvest in other areas or to improve EBITDA. And we hit everywhere from finance to services to legal with Contract Lifecycle Management, and infrastructure as well.
Also, right when I started, we shut down one of our two remaining data centers and moved everything mainly to our last one over the last year or so via cloud SaaS migrations or IaaS and PaaS. We are positioned now to shut down our last data center in the second calendar quarter 2024. So we will be 100 percent in the cloud, multi-cloud with Oracle, AWS and [Micorosoft] Azure for the most part, with pure PaaS, or IaaS in some of the legacy pieces. That drives improved performance, scalability and stability for business areas across the board and gets us out of running something that isn’t core to our business.
There’s always that question of whether the cloud actually leads to lower costs over time.
So cost is always a factor for a multitude of reasons: driving profitable growth, reducing costs to reinvest and providing better service to our customers. This was not a case of, ‘Let’s move to the cloud no matter what.’ It was, and I’ve done this over the years, it was finding the right timing and the impetus for the move. A great impetus might be the majority of your storage or server layer needs to be refreshed. You’re at that point when you say, ‘I’m going to go spend $3 million on hardware,’ and I’m making up a number, ‘refreshing all the storage or servers, or 80 percent, or I’m going to spin it to an Opex model in the cloud.’ And I found in every scenario that I’ve been able to actually save money with the cloud because you clean up a lot of stuff. You don’t really need 1,000 servers anymore. If you do it right, and don’t do a like-for-like replacement, you can clean out a lot of waste and move some scenarios to a consumption-based model. You can spin things up and down with automation, and you can control costs in a different way. If you just say, ‘I have 1,000 servers. Put them over here,’ it’s going to cost more for sure. You’re going to pay a premium.
Doing it differently gets out of that churn of resources, the churn of the dead time. It can work out financially. And then you’re out of the cycle of major capital purchases every five years. You’re out of the cycle of major issues from running your own data center and managing hardware.
Are there lessons from Compucom’s digital transformation that you can take to customers?
We have several examples of what we do for customers. We implemented a next-generation endpoint management process where instead of the old-school way of buying laptops, touching them all, reimaging them, taking forever, and any time there’s a problem you don’t really know what’s going on, now it’s all seamless. You can get the laptop from anywhere, log in from home, and you’re up and running on the corporate network with a managed device that we have control over so you can do your job. We do that for clients. I recently did my own. It took about 15 minutes by myself, no tech help. Anyone could do it.
Another example of endpoint management digital experience is how, especially in this hybrid world, to keep employees engaged and happy and either like the technology they have or feel like it works well for them. A lot of times, you’re dealing with people’s feelings, ‘Hey, this didn’t work.’ With new endpoint software, you can be ahead of it, see the failures, track the metrics, track the usage, understand the different ways that you may need to go to your customers now and say, ‘Well, this is what we’re seeing. We know this because here are the facts of what’s going on across your 10,000 devices. Maybe you should either get a better laptop or better software and more memory. It’ll make your people more productive.’ We do that internally and externally as well. There’s a lot of overlap because I’m a CIO running a business and we’re doing these services for hundreds of CIOs out there as well.
How much of Compucom’s digital transformation was completed by the time the company was sold to private equity?
It really started when we were sold. … The synergies really weren’t there. We were trying to understand what the future would hold. Knowing we were moving to private equity, and then me coming over, started the process. And the first piece was not just organizationally aligning, bringing all the teams back together. It was also having to spin off from any systems that were integrated with the parent company. And the biggest one was Oracle financials, procurement, the back-office area. That was a shared Oracle Cloud system with the parent. The big piece post-sale was getting off of that and spinning it up on our own. We actually won an Oracle award for that as well for digital disruption. So that was a big component of becoming stand-alone from a technology standpoint.
And then you had all of the people and process sides as well because over the years some of the process stuff had focused more on retail versus services, on one-time buys versus subscription annuities. Those things had to shift. That’s why I say this was full-scale people, process and technology. It was not an IT-only driven thing. In order to truly digitally transform, it has to include the people and process. So how do you change people’s habits? How do you change their perspectives? How do you change how they look at and use technology? How to enable them to do things on their own via self-service? It’s not just saying, ‘Here’s a new piece of tech because it’s cheaper.’
How about the cybersecurity side of Compucom’s digital transformation?
Security was also underneath the parent. I had to build out a security organization, hire our own CISO, and develop a robust program to revamp how we manage things here. I don’t really want to get into any of the stuff that happened two years ago, but you can read about it. So clearly there was an impetus to say things needed to change. And the timing was right because we were pulling security over from the parent. And those issues happened while we were still with the parent. So what I ended up doing there was looking at security as a whole and what we needed—people, process and technology—to build out the organization. Change processes around how to buy software, who’s allowed to buy it, where do you put it, who’s allowed to manage it. All the processes around technology had to be changed.
Our security scores were low. You can’t really hide security. You’re going to get hacked. It’s going to happen. It’s a matter of when, not if. You can get scorecards publicly on any company, so you can’t hide and pretend like you’re in a secure position anymore. All of our customers need to know we’re secure and that we manage their data securely. It really is at the forefront of what we do as a business. We put a new program in place aligning to the NIST and CSF frameworks and getting new tools and software while modernizing, which in some cases also helps save money, reduce insurance premiums and reduce deductibles. This while moving us up to an A-rated score compared to significantly lower before. Probably a ‘C,’ when you round it up. But that’s a great story now that resonates with customers who have been through a lot, whether it’s nation states hitting people or the recent MOVEit attacks that hit thousands of companies. These things happen every month, and having programs and protocols in place to manage it and threat hunting capabilities to try to stay ahead of it is paramount to any CIO organization that’s running the CISO security suite as well.LEARN MORE: Mergers and Acquisitions | Professional Services | Cybersecurity | Software as a Service | Infrastructure Management | Cloud Infrastructure
Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at [email protected].
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