Home Depot's CEO switch could alter IT strategy

Home Depot CEO Robert Nardelli just resigned and most will focus on his $210 million severance package. But it's worth watching how the retailer's information technology strategy develops under new leadership. Often when a CEO leaves a new CIO isn't far behind.

When Nardelli joined Home Depot in late 2000 from General Electric one of his first big moves was to bring in Bob DeRodes as CIO. DeRodes was previously at Delta Airlines and Nardelli gave him a big mission: Revamp all of Home Depot's IT systems, install PeopleSoft HR, implement SAP and create a data warehouse so managers could track sales and inventory in real time. Previous management at Home Depot didn't invest a lot in IT and hampered DeRodes' predecessor Ron Griffin. Nardelli, however, was sold on information technology.
In fiscal 2005, Home Depot spent $1 billion on technology, largely on automatic inventory replenishment and self checkout systems by NCR. On Home Depot's third quarter earnings call, CFO Carol Tome said the company is "looking at continuing our investment in technology." Indeed, a nice chunk of $3.8 billion in capital spending is allocated to technology.

The big question: Will Home Depot's new CEO Frank Blake be as technology happy as Nardelli was? Judging from recent visits to Home Depot Nardelli seemed to believe that self-checkout systems can replace all cashiers. And those systems probably can for small stuff. Those self-checkout systems generate serious returns, but there's something refreshing about Lowe's approach to IT. Lowe's quietly maintains a technology lead on Home Depot, invests in data warehousing and has Linux point of sale systems yet realizes it's in a people business--it keeps folks on the floor and cashiers at the registers.

It wouldn't be surprising if Home Depot downshifts on the technology investing after 2007. Meanwhile, DeRodes has been a master at sweeping information system overhauls--he pulled one off at Delta too. But Nardelli's departure coupled with that fact there may not be a lot of technology to overhaul anymore at Home Depot could mean a strategy switch and a new CIO.