Walmart CTO Chip Hernandez: 'Everyone's going digital'

How the mega-retailer is dealing with technological change, live from the Bloomberg Enterprise Technology Summit.
Written by Andrew Nusca, Contributor

NEW YORK — You can run from digitization, but you can't hide, according to Chip Hernandez, chief technology officer of gargantuan retailer Walmart.

Speaking this morning at the Bloomberg Enterprise Technology Summit, Hernandez explained how his company was, from a technology perspective, dealing with the reality that both its employees and its customers are walking into stores with digital devices in hand.

His conversation with Bloomberg News reporter Jason Kelly was extensive. Here are a few highlights, edited and condensed for clarity.

On attitude.

We have three concepts at Walmart: every day low cost, every day low price, and sales. We are constantly looking at how to take cost out of the business… to maintain that low price. The relevance to emerging technologies is to figure out how we enhance that cost reduction, versus being additive to that cost.

On the cloud.

When we talk about private and public cloud, you have to make an assessment: how does it fit your business model? What capabilities will it add? We are believers in the private cloud. We are making significant momentum against a cloud journey, a cloud roadmap. Anyone who has to go down this path needs to have a reference architecture. Ultimately, I believe corporate enterprises are largely going to go down the private cloud path. But that's not to say that we won't extend out to the public cloud where it makes sense.

On balancing the needs of tech-savvy consumers and the business.

The more digitized our associates and leadership become, the more conversant we are. We have a culture where we encourage and leverage grassroots feedback. The more that level becomes technically savvy and digitized in their personal lives, the more that adds to [the conversation] in terms of technological approaches.


[We adopted it] with a lot of fanfare. The technology wasn't a challenge. It was more of a policy challenge to make sure we didn't create any pitfalls from an operational standpoint.

On the technology challenges of a multinational company.

We have a framework called local-regional-global. It allows individual markets to be able to adjust their business model locally and have some discretion on how they satisfy their local constituencies, while at the same time allowing them to take advantage of the global [benefits]. It's something we call "freedom in a framework."

Technology plays a large part — how they leverage systems to [address] their changing environments.

On harnessing big data.

It's been said that "Walmart was big data before there was big data." Today, we are facing the proliferation of data that's coming from multiple sources. It starts with consumers, who have become more digital. It's reflected in the explosive adoption of smartphones and tablets. There's more data that has to be analyzed, assessed, shared and ultimately acted on. We're [trying] to figure out how to best apply [certain tools] to our business model.

It will be reflected in how you identify your own particular use cases.

On the supply chain.

Supply chain management is a particular process within Walmart. It's going to benefit from any technological innovation. We are no longer going to be focused on the physical locations but more along the lines of capability. For example, we might become more regionalized in terms of compute ability. That's going to determine a lot in terms of how it gets done and where it gets done.

On BYOD, from a customer perspective.

The customer is no different than the associate: everyone's going digital. This ties to big data. We need to understand in a big way, a real time way, what the customer is doing (and why they're doing it, and where they're doing it) to take advantage of sensing and…turn data into insights to serve them better. Whether it's in our stores or off-premise.

On the role of social media.

As a corporation, we do have a formal presence. We are interacting with the customers. I'll leave it to business leaders to determine that balance. But we are out there. The majority of our customers — the moms — they are out there in social media, and globally they control $20 trillion of spending. There is [an imperative] to understand what their needs are.

On the cloud, from a supply chain perspective.

I have interactions with our suppliers, and most of them are with those who have meaningful substantiations of a private cloud model. They're doing it for the benefits of those services but also to engage with large enterprises like us.

On "shadow IT."

We are a large organization with a lot of different departments. I think it would be naive for any large enterprise to suggest that they don't have shadow IT. I don't think it's not well-intentioned, but at some point there's convergence with greater IT.

On Walmart naming Yahoo CEO Marissa Mayer to its board in 2012.

She definitely brings deep experience in technology to Walmart. From my viewpoint, she brings fresh perspective and relevance and that can do nothing but help us on our journey.

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