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Cloud Player – Steve Jacobs, CIO Gilt Part 2

Gilt

Steve Jacobs CIO Gilt takes cloud with Gathering Clouds.

Continuing from Part 1, Steve Jacobs, CIO at Gilt delves into IT position in a business, balancing different business units’ technology requirements, going beyond ecommerce, and more.

Thoughts on this interview? Let us know on Twitter @CloudGathering.

GC: And where do you feel IT as a whole fits into the dialectic between the need state and technology’s range of solutions? Do you feel IT’s role is to implement rather than strategize?

SJ: I think it’s about my peers and me and the CEO coming to a common understanding of the business opportunities and challenges at the table. And that doesn’t just happen with one prioritization session, it has to be an ongoing discussion of where the opportunities exist, of growing a business and making the customers loves us. If we, as an executive team, are doing our jobs right, then we’re already aligned by the time we get to the meeting of how to prioritize. Then during execution, given that we want to solve a problem—which could be where we want to move or doubling the amount of revenue from SEO—it’s only a question of getting that to the team. So, we get the problem we want to solve to the team, and then they have complete degrees of freedom on how to solve it. They’re executing, but we’re not telling them how to execute, we’re just telling them what to execute on.  We’ll say something like, go after SEO, and you’re going to come up with 100 different ways to do it, just figure out which ones you want to try first and go at it. As opposed to other organizations that might say, go after SEO, and do it this particular way. So, there are more degrees of freedom, which I think allows for more creativity and more engagement in our engineering team.

GC: Does IT broadly control what technologies are brought into the organization, or do the teams decide what tech to use in the pursuit of solving different challenges? Does the range of different platforms present a problem to the way that you’re integrating different systems? What’s IT’s role in managing that?

SJ: That’s a good question. We’re on the path towards decentralization, which is what I was describing with the SEO example. But there are some problems if you get to the point of complete decentralization. Let’s say you let the team do whatever they want and they bring in a new system. It’s not integrated to anything, and it creates a whole bunch of business user problems, etc. With the path we’re headed down, we haven’t gotten to the point of needing to solve that particular problem yet. So, to directly answer the question, there is still a very centralized decision of bringing in new technology.

GC: How is the way different business units are using cloud-based technologies impacting data for the organization? You’re managing data from marketing, which is different than the data you’re managing for sales, etc. How do you make your data strategy a holistic approach? Who owns it? How do you turn it into an advantage, and, and is that sort of decentralization in terms of data inputs a big challenge for you guys?

SJ: Very good questions. These are definitely problems that we are grappling with. Data is centralized as well. There is a data warehouse team that is responsible for integrating all these different data sources. The prioritization process around data actually turned out to be much tougher than expected. People have a tough time explaining, in concrete financial terms, why the world would be a better place if they had better or easier access to data.

When we’re doing calculations on customer facing or business systems projects, we more often than not can get a clearer understand of associated ROI. With data, those calculations actually turn out to be really hard. There was an interesting article where a study was run on the performance of companies that have easy and robust access to data, and how that influenced their company’s performance metrics. One of the results was a six percent improvement in profitability, just by having quick and easy access to the data they needed to do their jobs. They measured improvement in many different vectors in subjective ways. I think that’s interesting in the context of how we’re prioritizing the business, and that approach does break down a little bit when it comes to data.

Although our data team is currently centralized, we’re looking at ways in which we can convert some of that to decentralized teams. Not only are the decentralized teams producing data, they’re also doing some of the effort to get it integrated into the data warehouse. Otherwise, it ultimately won’t scale. We’re not at that point yet, but as we’re thinking about the future and scaling the organization, we’re looking at ways of pushing out to decentralized teams, if possible, with oversight by the centralized team.

GC: How are you managing that data and then scaling proportionately to the value it brings to the organization? How do you see that happening in the future? What are some of the key challenges related to achieving that sort of future goal?

SJ: I think we’re making good decisions about how to prioritize and invest in data, but it is much more on the subjective side. Mobile analytics, for instance, has been behind the curve compared to where web analytics is today. Especially in being able to track and understand the performance of mobile as a marketing and e-commerce channel. And so, we’ve pushed pretty hard into mobile and getting the same level of visibility there as we do on the site. In an apples-to-apples way, especially as the shift of traffic to mobile grows, it becomes a much more significant part of our business. That’s an example of the subjective. I can’t quantify the benefit of having visibility into mobile data, but I know visibility at the user interaction level is good for us.

GC: Traditionally ecommerce runs in a seasonal demand curve: Christmases, Black Fridays, etc. But Gilt has daily deals. How do you handle keeping spiking aligned with cost and usage?

SJ: We are actually investing in a more elastic version of Gilt. And it’s for exactly that reason, to improve the KPI, which would be the percentage usage of CPU cycles, so we have the goal of minimizing those. In the past, I was running the grid computing infrastructure at Merrell Lynch and Bank of America, and that was about squeezing every last CPU cycle out of the 20,000 CPUs of processing, using disaster recovery hardware for extra processing, and desktop processing as well. At that scale the savings become really significant and improving things by one percent has a huge dollar value. While we write pretty efficient software, that spike of traffic comes and we’re pretty inefficient in our use of that hardware today. Being elastic is about optimizing from there. For instance, even during off hours we do a lot of processing of data to offsite warehouses at complimentary times of day.

GC: How are you looking to go beyond simple ecommerce? What is your approach to achieving differentiated brand recognition through technology?

SJ: The flash sales format is an interesting one. It creates a lot of excitement and motivation for our customers to come at noon, Eastern Time. As we expand internationally, it doesn’t feel as good to get the daily email at one o’clock in the morning. Although a lot of those folks do open the email at one o’clock in the morning, and come to the site and start shopping.

So what does it mean to be an international flash sales company? There is a lot of interesting technology challenges that are turning our model on its head. I can’t say much more than that at the moment, but that’s one example of how technology is going to have a significant impact on the business model.

GC: Looking at the way you guys are cloud right now, what are some of the key areas where it’s lacking?

SJ: Prices are coming down, but the one thing that I think everyone is worried about in recent years is availability. It’s not okay when the site is down, and it doesn’t help to say to the CEO, “It’s our provider’s fault.”  That’s the one thing that I think is problematic.

GC: Is there a point at which doing things on the cloud doesn’t make sense?

SJ: I think it can definitely get to that point. It all depends on how good you are at it yourself, and how good you want to be at it. The two-person startup is never going to want to be as good as Amazon. It’s a matter of doing the math to figure out when it’s going to work, and there are definitely times when it does and when it doesn’t, depending on the size or the scale of the company, and what you want to focus on. We didn’t focus on cloud for a while, and as we went through the list of things that could have an impact on incremental savings, being on the cloud and handling that spike just hasn’t bubbled to the top of that list, and it’s somewhat of a conscious decision. But that might change over time as other priorities come up, and you have to look at the opportunities objectively.

Let us know your thoughts on this interview on Twitter @CloudGathering.

By Jake Gardner

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