Virtually all industries are being transformed by digital technology and changing consumer expectations. On this show, we learn about changes in the flooring industry with Roddy McKaig, CIO of Shaw Industries, a $4.5 billion flooring manufacturer owned by Berkshire-Hathaway.

Roddy McKaig has over 30 years of experience in Information Technology leadership. In 2008 he was appointed Vice President and Chief Information Officer at Shaw Industries, located in Dalton, Georgia. In this position he has complete responsibility for the corporation’s world-wide technology services and support, as well as the Corporate Administrative Services groups. These areas are comprised of a staff of 400 professionals, supporting the company’s 23,000 associates in over 200 locations. Roddy took this position after serving 12 years as Director of Systems Development for Shaw. Shaw Industries is one of the world’s largest flooring manufacturers, with complete product offerings of both hard and soft surface products. Shaw has been a member of the Berkshire Hathaway family since 2001.

Before coming to Shaw, Roddy held director level positions at the Bibb Company, an Atlanta, Georgia textile company, and Salem Carpets which was based in North Carolina. He also spent several years in technology leadership at two companies providing technology services in Chattanooga, Tennessee.

Download Podcast

Innovation and Transformation with Roddy McKaig, CIO, Shaw Industries

Michael Krigsman:

Welcome to episode number 178 of CXOTalk. I’m Michael Krigsman and today's show we're going to be talking about transition and change, the impact on business and technology in a large traditional manufacturing organization. My guest today is Roddy McKaig, who is the Chief Information Officer of Shaw Industries. Roddy how are you today?

Roddy McKaig:

Good afternoon, good to be with you Michael.

Michael Krigsman:

Well thank you so much and I especially want to thank NetSuite, who is sponsoring this episode. Roddy, tell us about Shaw  Industries. What do you do, how big is the company, how long have you been in business, how long have you been working there. So give us some background and context.

Roddy McKaig:

Okay, Shaw Industries is a 50 year old company. We are a complete flooring provider, both hard surface products and soft surface products. And then custom made rugs is another soft area that we're.

Michael Krigsman:

So Roddy to tell us about the changes that have taken place in the industry and what has the impact been on Shaw.

Roddy McKaig:

Well the industry has been through a lot of changes for some years now, started back in the 80s with consolidation when most of the flooring in this country was broadloom carpet. And in all the residential carpet now, a lot of mergers and acquisitions through the 80s and 90s. Today there's probably there's just a handful of companies that are in the broadloom carpet business and there’s two major ones, Shaw being one of them.

Then in the late 90s hard surface products started coming more of a preference and that trend is continuing even today. Probably pick up a little bit of pace so you've seen all the big players including Shaw transitioning a lot of their capacity and the manufacturing areas to hard surface products. Carpet still dominates our business. We’re the largest carpet manufacturer in the world. The largest carpet manufacturer in North America, but hard surface is definitely an area that is gaining more and more preference from the consumers. And a lot of creativity and a lot of design improvements over the last several years in that area. And we expect that trend is going to continue to increase as we go forward.

Michael Krigsman:

So this major change has taken place among consumers. Their expectations of you and so what are the implications been on Shaw from a business standpoint and therefore from a technology perspective with you as the CIO.

Roddy McKaig:

Well a lot of changes happened during the recession in 2008 when the big recession hit and any of your listeners listen to the news you know what it did to housing. And housing is a huge part of the floor and business, so it had a dramatic impact on Shaw and our competitors. But that we've seen consumer tastes change. One of the things they went to cheaper products during that time.

A lot more PEP based products were so which were cheaper material. You probably don't get the quality and and endurance that you get out of some other type products. But we seen that trend and Shaw just like most providers you've got to sell what the customer wants to buy. So we went through some transitions there in our plants and capacity to make certain kinds of products and reduced other kinds of products.

So that has changed a lot and we’ve seen you know over the years we’ve seen the amazon dot com’s of the world really picking up steam more and every year. You hear about how much more Christmas shop is done online, well that's finally started to get in our industry. You're not seeing huge sales on the internet yet but you're seeing huge marketing efforts and you see in consumers just like buying a new car.

Most people do a lot of their shopping online before they go to the store to actually make the sale. And by the time they go in they know pretty much what they want. So we're having to cater to that change in consumer trends. And one thing we're trying to learn more about consumers and what their preferences are and what they're going to be wanting in the future.

Michael Krigsman:

What are the implications for the culture inside the company? What are the implications for as CIO what you're doing with technology as a result of these changing expectations and changing consumers changing how they shop?

Roddy McKaig:

Right well you know at Shaw technology has one purpose, and that’s to server a business need and as  consumers want to shop more online, then we've got to be in a position where we can provide them with what they need to see online, and to make them want to go to the store and buy our products.

A lot of that will be more detailed imaging of our products so that they can get a very good feel for what that product would look like when your mind flooring, especially carpet. The one thing you can't get there is the touch, because everybody wants to feel that soft product.

But as far as we can go with giving them clear images of the products, all the specs of the products what they can expect when they go pick that product up and have it put in the floor. So all the web marketing is very very important.

Our customers who sell to consumers they need us to do more to support their sales to that consumer too, especially in some of the online. We're seeing a little bit more of the hard surface product, the palletized goods can be sold easier online, especially hard surfaces. And our customer’s need us to be able to support their consumers with samples or whatever they need that close the after sale. So we've been doing a lot of work over the last year preparing to support that part of our business better to.

Michael Krigsman:

So it seems from what you're describing there is a kind of two parts to this there is the business changing its understanding what consumers want and adapting itself along with the technology changes at the same time.

Roddy McKaig:

Yeah there is, and we have to support the business in that. You know with the way the world is today depending on technology, whatever a business needs to do, that it dictates that we're gonna have to do something with the technology to support that business change. And we're seeing a lot of that.

You know just we now have people in the company whose sole job is to understand and learn more about consumers, and used to we didn't worry about that. We just sold to the retailers and they worried about the consumers. But if you think about our business, and we have thousands of very small customers around the country that have very small foreign stores and they do not have the manpower or the know-how to provide all this technologies to consumers. So it's really come back to the manufacturers are going to have to do that. And Shaw is stepping up on that and really pressing that, trying to get better at that, and to provide their customers, our customers customers, what they need to get them into those stores to buy our products.

Michael Krigsman:

So you're the manufacturer and then you have thousands of stores through which you sell and so you're considering with the needs of both your customers - the stores, as well as the end buyer.

Roddy McKaig:

Absolutely, you know we thought the more we know about the consumer the better we can market to them, that we can help our customers market to them also. And we're even going to the point of helping our customers with technology in their stores are web presence to support their individual retail stores. So all that helps us to; the more the better job our customers can do selling to the consumers a better job we're doing for the overall company.

Michael Krigsman:

So there's this shift among consumers in terms of how they want to buy which has forced your customers, the thousands of stores to adapt and change. And as the kind of big fish behind the scenes you're helping them through that transition.

Roddy McKaig:

Absolutely right and a lot of it is you know they just don't have the manpower or the know how to do it. A lot of them have no technology expertise on staff at all and you know we have to help because they're our success depends on their success. So we we’re actively in several ways out there trying to support them and trying to give them better digital marketing materials for their websites, and to support them all we can to to be a better retailer to the consumers.

Michael Krigsman:

So that's on the marketing side, but when you talk the people viewing may not realize that when you talk about hard versus soft flooring you're talking about goods that are palletized vs say carpets on rolls. So maybe can you explain that distinction, and then let's talk about the implications on manufacturing.

Roddy McKaig:

Well when a typical roll of carpet comes out of a plant it will be 12 foot wide and it will be somewhere 125 to 150 foot long. And that could end up being sold to 10 or 12 customers, or it may go to one customer depending on what their orders are. So it is a long roll, 12 foot wide carpet for the most part that’s cut up into room size pieces and then installed around houses around the US.

Palletized goods, all the hard surface products for the most part whether it’s wood, laminate, luxury vinyl tile, or common stone is palletized, because they come in either strips or tiles, square tiles or rectangle tiles and they’re box and palletized. And they can be shipped a lot easier. And as far as the plant’s there's no comparison whatsoever.

A plant that makes carpet cannot make vinyl tiles and carpet plant  on a point cannot make hard surface. It takes totally different manufacturing equipment and processes and systems to support those environments.

So you know, it's a matter if you have a shift in demand between carpet and hard surfaces, you're looking at the potential for slowing down the carpet capacity and growing the hard surface capacity, and we've been through a lot of that over the years to. We have to shift the capacity in our plants to meet the demand that’s coming in. And you know we have to sell the products that the consumers are wanting, so we're constantly adjusting our capacities with our plants to manufacture what we need for sales.

Michael Krigsman:

Okay, so you are changing your manufacturing mix based on the demand that comes in, and at the same time though you need to be increasingly agile adaptable in terms of your ability to do this quickly. And I’m assuming that the recession that hit in 2008 must have had a big impact as well. So how do you do that and maybe talk us through some of the technologies that enable you to adapt and change in ways that in the past you didn't have to.

Roddy McKaig:

Well part of the story is you've gotta plan ahead you know you don't start up a new plant we're in the process right now building three new plants for various product lines, and that's not something you do in a few weeks or a few months. You've got to predict where your business is going to be a couple years ahead of time, because at best it's probably going to take you about a year to get that plant built and get all the equipment ordered and installed and up and running. So it's predicting where your future’s going to be is critical when you're talking about making that kind of changes in your capacity.

So you know once you get a set of technology set up for a new kind plant, we’re building right our first rug through vinyl tile plant and we have developed a modified systems to handle all that. In some cases we have new systems that handles that new product category. Once we get that, open up another one won't be nearly as time-consuming on our part; on the technology part, as it will on the people who are building a plant and installing the equipment in it. So the key part, the critical path of any new capacity like that is what kind of manufacturing equipment you need. Those odds are I can get technology in a lot quicker than they can get manufacturing equipment ordered from a supplier and onsite and installed.

Michael Krigsman:

And I know you're using automation, you're using sensors, you have a lot of advanced technology in your plant.

Roddy McKaig:

We do, we spend a lot of years of open manufacturing and distribution. We have a very big distribution process. we have a regional DC's all around the country where we will ship products from from Dalton to those locations, and then they will deliver to our customers, all Shaw owned, all our distribution centers are highly automated with conveyor belts and all the lift trucks have computers on them and a better computer drilling. And when they go pick up a roll of carpet and drop it off, we call them where to go to get the next product and move it. So at all that automation is there.

Manufacturer's the same way. We spend a lot of money on automating our plants you know, there's there's three things that we find very very important in our company. And one is our service. We pride ourselves on providing the best service in the industry. The second one is quality. There again we pride ourselves on selling the very best products that we possibly can and some of the best in the industry.

And then the cost. The lower we can keep our costs, the better it gets for our customers and then ultimately consumers. So automation helps us in all three of those areas in manufacturing distribution, to making sure that we're getting the best value out of our products, and the best quality of our products. So all that automation it either reduces labor or we have automation on our manufacturing lines that are constantly checking temperatures where temperature is critical critical. Checking moisture rates where moisture’s critical. Checking the speed of the lines. All our product specification says how fast the machinery ought to be running and what the temperatures are to be and all that.

And we have sensors that will alert people if those get out of sync on where they should be, because if they do you run the risk of starting to have quality problems. And when you've got a big manufacturing line running carpet at a very high rate of speed you can produce a lot of off quality real quick like that. So sensors and knowing what is going on in the actual manufacturing equipment is very very important to us in our quality.

Michael Krigsman:

So Shaw is an old company. It’s been around for a long time.

Roddy McKaig:

Fifty years.

Michael Krigsman:

So it's a $4 million company, it's been around for 50 years and that means that the company has gone through many changes with historical traditional processes. So as you've been going through this shift building automation in, shifting to the cloud which we're going to talk more about in a few minutes, what have the workforce implications been, what have the cultural implications been? What were some of the challenges that you faced in making these transitions and how did you overcome these challenges? How did you address them?

Roddy McKaig:

It's been interesting. You know we often talk about years ago in our industry when you wanted to put in some automation most of our users in the plants and the DCs were afraid of it. They didn't want automation because they didn't know anything about it. Where the new generation love automation, so today you know they're constantly, they're ready for the new automation or whatever technology you want to provide them.

So that culture has changed the whole lot and I think it's just to the way our country has gone and then fell in love with technology when kids are old enough to reach a computer mouse or whatever. But the trend has changed the whole lot. We have a lot of people that will help us know where technology ideas. Where it used to we had to come up with all those ideas. And we made tremendous progress with the people in the plants and the people in the distribution center.

Now one challenge you know, we talk about jobs in this country and everything, but it sometimes it's hard not only to find technology people working in our technology group but even in operations. It's hard to keep a hold of staff sometimes, and with all of automation that is going into our plants and into our distribution centers, that workforce needs to be better educated. They’ve got to have technical skills and be able to use computers and be able to use lift trucks that are automated and to read sensor readouts and that sort of thing. So we have to have a higher degree of education.

I’m not saying it takes a college education, but we're looking for more educated people as every year goes past because we got more and more automation and that their jobs  include that they will have to know how to use certain technologies and sometimes that can be a challenge on finding enough of those kind of resources.

We’re always just about always hiring and got openings in our operations where we need more people. So that's a little bit of a challenge you know, as you implement more technology, your workforce has got to grow and be able to take advantage of that technology and we have things that we do as a company to try to support the college's, local colleges and even high schools in encouraging the kids to get more of a technical education. So they'll be ready for the jobs when they come out of the school and into the workforce.

Michael Krigsman:

What about the impact on IT inside IT, because I'm sure that the skill sets have changed both the type of equipment as well as you've moved to the cloud.

Roddy McKaig:

Yeah, I mean we seeing just dramatic changes. I’ve  been here a little over 20 years and we've seen dramatic changes in the technology we use. But for the most part the people who go into the technology field and go to college to study technology love it. They love the next new thing.

So it's not as much of a challenge for the technology people to learn the next thing that we're going to be using in manufacturing and distribution or even inside the offices here at Shaw. But they usually are excited about the next big thing coming in and eager to get their hands on it an learn it. So it's not as big challenge.

You know sometimes finding resources, there again I think most people who are involved with technology around this country know that it's getting harder and harder to find technology resources to. There's such a demand and a lot of it is what I was just talking about. More and more companies are putting more and more technology out there, and as you do that you got to have more technology savvy people in the workforce, and that's becoming more of a challenge I think for the colleges and universities around the country.

Michael Krigsman:

What about just the overall impact on IT, how is IT changed over the last call 10 years say for example.

Roddy McKaig:

Well I think a lot of it, that’s several ways one that we talked about a lot is the person who is in IT. I remember the day when a technology person was somebody that was in the back room and they just did the stuff and send it out people start using it. But today most of our technology people are out in the business. They're out in the plants, they’re out in the office buildings, they're out in the distribution centers working with the user's hand in hand on putting in the new automation or fixing the new automation, upgrading the automation. So people skills are a big part of what we do today and 20 years ago you didn't worry too much about that unless you were a manager or something, so that's been a drastic change.

We have a lot more types of technology that we have to take care of today. Very different mix than we had 20 years ago and most companies that I know of. There's so much more technology, the high-speed networks, the Internet. Communication is critical, wireless everywhere in every facility. So just a lot more responsibility and today the technology can very easily bring a company to his knees if everything is not working correctly, so it's a lot more pressure I think and a lot more responsibility on technology groups I think probably just better company.

Michael Krigsman:

Let's talk about the cloud. You're  a large company again $4.5 billion dollars in revenue, your owned by Berkshire Hathaway and so tell us about what you're doing with the cloud which I know is quite quite significant.

Roddy McKaig:

It's growing, you know most of our systems we host in our data center where they've been for probably close to 30 years now. We're very customized operation. Historically ERP systems have not catered to the carpet business in particular it's a very unique inventory and and they just could not handle the inventory systems that we needed. So over the years we have built a set of customized systems that is specifically what our industry needs.

Over the last few years we have started using the cloud options where it makes sense to us. Cloud is another option. It's another tool. It's not a destination that we're striving to get to but it's also not a destination that were afraid to embrace.

We always look for what solution do we need for the business that will provide the best service at the best cost, and if that's hosted in our data center here in Georgia that's fine. Or if it’s in the cloud with one of our service providers that's fine too.

We do have a number of things in the cloud now. One of our first big moves was we moved the Google Mail and Docs, probably be about the three - three and a half years ago and have been very successful for us. We have nothing on our mail or docs here in our data center anymore. It's all in Google's environment. When we started an international expansion about three years ago, I knew we were going to need a different set of systems for that because our customized system here were developed strictly for the US dollar and the English language. And we had a companywide initiative that we were going to be focused on international expansion around the world. So I knew I was going to have a different solution and after careful search we chose a company called NetSuite to use their ERP for everything outside of North America as far as our ERP system goes. That is 100% cloud base SaaS true SaaS  system that's hosted in the cloud.

So we're running operations in China. We're running operations in Australia and we're running operations about to go into Europe and all those are hosted in the cloud on the NetSuite system in the US and been very successful with that.

We use Concur, which a lot of companies do for expense management that's in the cloud, big salesforce dot com to support our sales force that's all in the cloud, and have a couple of apps from HR that's hosted in the cloud also.

Michal Krigsman:

So why do you like the cloud?

Roddy McKaig:

Well I wouldn't say I like it, but I'm not afraid of it and it is you know being a creature of habit, if it's all in my data center I have complete control. But the best cloud vendors have gotten very good at this, and what it let’s you do is take our international expansion for instance. If we hadn’t have went cloud then I would have been looking at putting software and hardware and people in every country we go in. And we're all over Asia, where in Australia, We’re in South America, about to go in Europe and that would be a huge undertaking to put hardware, software and staff locations to take care of that hardware and software in all the countries we’re in and all the countries were going into.

By going to the cloud with NetSuite, you know I don't have to do any of that. I just bring up another subsidiary within NetSuite, set up a set of the languages that I need and the currency I need and any localization rules that I need, and I'm up and running. So it instead of been up to a year event to go into a new country, you just know in just 2-3 months we can be live in another country.

So that's one reason I like the cloud for that area because it's very flexible, it's very quick. Once you get the original install done it's very quick to add and expand on it then. So that's one reason we like it a lot for that part of our business.

Michael Krigsman:

So have you created a shall we say a kind of a template that you use to roll out new offices or new countries.

Roddy McKaig:

Well we have processes and a road map will use but with with NetSuite you know

everything runs off the same instant. It's not like you're bringing up another version or another server. We just plug in more data and more rules and it just adds to the existing instance. So everything we're running on NetSuite runs on one instance. You know a lot of software companies if you go with a traditional system, everywhere you go you have another version of it. That's not the case with the cloud, a true SaaS app, you have one version and you just set up new rules for what you want the language preferences or the currency or whatever the case may be, and you're up and running. So it's very quick compared to the old way of doing it and getting in a new location up and new business.

Michael Krigsman:

So it sounds like you're interest in cloud is a combination of a cost and ease. I'm sure there are also staffing implications, you don’t have to buy as you said, you don't have to buy the equipment, you don't have to send people over there. So it sounds like its combination of all of those things.

Roddy McKaig:

There again that's cost absolutely. Speed is important to us and then service. You know I don't even like to talk about service because we demand great service from all our providers, and it if they don't provide the service then they're not an option whatever. It don't matter how much it cost if you get poor service. So we assume service when we go with our cloud suppler or any supplier really. So it's all about speed and cost with us and what's the best solution for our business.

Michael Krigsman:

What about security. I've spoken with CIOs, much smaller companies than yours who have made the argument, well we're nervous to go to the cloud because we want to have the control and we're going to manage all of that ourselves so what about that argument.

Roddy McKaig:

Well you know I can understand that, but you’ve got to keep in mind I think a lot of it depends on who your client partner is. I would wager a bet that there's probably not too many countries in the world that has better security, and more security expertise, and people than Google.

You'd be hard-pressed to be a better secure site than Google can provide just because of their manpower and expertise and money that they put into that, because it's critical to their reputation. NetSuite is the same way. They're very very good, we’ve had it done very strongly before we went with them because that to be honest that was one of our only concern to. And I think you can, it is a valid concern if you don't pick your partners careful.

You can get in a mess because if your cloud partner is not got all the tools and expertise they need to secure your data, your equipment when you are at risk. But I would wager also the bet that there's a lot of companies around this country that are not as secure as they think they are. You know, hackers can get in just about anywhere and if you listen to the news some of the places they’ve got into nowhere bulletproof.

But I do think that the cloud providers have gotten much much better over this and in this in the last few years and the big players, the true SaaS suppliers like Google, like NetSuite are very very good at it. And we've grown to trust them completely.

Michael Krigsman:

So you feel that the major cloud providers can do a better job with security and securing your data than you can.

Roddy McKaig:

I think so because they have more resources and more people expertise to do it. I don't know how many customers Google got, NetSuite’s got over 30,000 customers Google has got more than that sure I’m sure. When you’ve got that much and that much responsibility you're going to be the best you can possibly be. And we vetted both of them very closely on security before we went with them, and we were very very comfortable with where they, and where they're going.

Michael Krigsman:

So you're owned now by Berkshire Hathaway, and as you were choosing your cloud software was their interaction with the folks from Berkshire Hathaway? Did they have a view on cloud at all?

Roddy McKaig:

Not really you know the stories you hear about Berkshire Hathaway is pretty much true you know mr. Buffett always says he wants to buy good companies that are managed well and leave me alone. That's pretty much what they have done. They do not intercede or interfere with operations of our company whatsoever. They do offer advantages sometimes with volume discounts or whatever, but no, as far as technology decisions and things like that it's up to us as a company what we think is best for company. Now they do audit us like they do all the other kind of companies quite often and that's good because that helps us get stronger and better. But we will go through probably three or four audits a year from something from Berkshire Hathaway’s auditors, and that's all good. But no, they do not dictate or tell us what technology we should or shouldn't use.

Now if we were going to do something really out on the edge or something, we would probably feel obligated to make sure they were okay with it. But we don't do that anyway so they let us run the company the way we always run it and doing what we think is best for Shaw. And they don't claim to know what's best for all the companies they own and they look to us to make those decisions.

Michael Krigsman:

So I think people are interested in this. I certainly am, so Berkshire and Warren Buffett, it sounds like pretty much the way they present themselves on the news, on television.

Roddy McKaig:

We found nothing but that to be true. You know Warren Buffett has been here a few times and spoke to our management team and he's no different than the image that you read about and see on the news. He just that person and he runs the company and all the companies they own just like he says he does. He finds good companies and leaves them alone, and as long as they're doing a good job on running them he does not interfere with it. And he lets them make the decisions because they feel like they're closer to the business and make the right decisions. Fortunately, our management team has always done that at Shaw. So his image is real as far as we’re concerned.

Michael Krigsman:

So he comes across in person as he does on the news or what have you.

Roddy McKaig:

Absolutely, 100%, no different.

 Michael Krigsman:

So getting back to the cloud are their sections, parts of your business of your data that you would be hesitant or reluctant to put into the cloud for any particular reason?

Roddy McKaig:

We're more comfortable with that today than we were five years ago or three years ago. You know, there again I think the key is picking the right partners and somebody you really feel good about and can trust. But as time goes on we’ve put more and more of our data in the cloud. And we don't have it all up there today because we don't have a business reason to do it, but as business reasons come up to move more data I will not be hesitant to do that. And like I said as long as we feel good about partner we're going to entrust to take care of that data.

Michael Krigsman:

So for you the issue with moving to the cloud has to do with business case given the equipment, the software, the manpower and so forth that you have. It has nothing to do with concerns about security, and so therefore as you said really what it comes down to is do you trust the cloud vendor the cloud supplier.

Roddy McKaig:

Yeah as far as you know we run the bulk of our work in our data center, but that's because we've had it there for 30 years. We built our systems exactly the way we want them. We have all that expertise to take care of our networks and hardware and software, and staff. And once you get that environment built you've got to have a good reason - financial reason to dismantle that, because it costs you money to do it a drastically different way. And we pulled off pieces of it over the years, but the bulk of its still here because we have no reason to move it. It would take a business reason, a pretty good magnitude to financially justify that kind of changed. Now if it comes up we will address it and we will embrace it. But I’m not against that but from a service and financial viewpoint right now, it just makes all the sense in the world for us to keep the environment we got, because it works very very well. It's already highly appreciated and it's paid for itself many times over and we don't have a business reason to dismantle it at this point in time.

Michael Krigsman:

But you did have a business reason on the international side so again in this context, can you just summarize why did you decide to do it with international whereas domestic you're staying on premise with your existing systems.

Roddy McKaig:

Well if you think about it historically you know, high nineties percent of everything we did was in North America. We did a little bit of business overseas but it was strictly export. When we announced we were going into international expansion and one of the first big moves was to build a carpet manufacturing plant in Nantong China, I knew we had to have another system because our systems wouldn't handle Chinese language and the Chinese currency and all the localization rules that the Chinese government has. So we did not have any option enhancing our systems to handle all that wasn't an option. We could not have got it done in anywhere close to the timeframe that we we’re going to need it.

And so I knew we had to have a different solution, and to be honest with you,  I really wanted a cloud option because I did not want to have people everywhere we were going around the world. And luckily at that point I had never really heard of NetSuite other than one thing.

We have bought a little company probably about 11 years ago in Australia that used a product called NetSuite, and I was not even familiar with it but they loved it. So when the China deal come up, I called them back and they said yeah we still use it. You're not going to take it away from us are you? I said no, we we will look at it a little closer actually. So that's one reason we actually knew about it when we chose NetSuite. But they were the only true cloud SaaS option that we had on the table. You know you had Oracle you had SAP, J.D. Edwards, Microsoft. But none of them were true SaaS, and when NetSuite went out functionality and price over the others, than I got the SaaS as a by-product of that which I was pleased with.

 Michael Krigsman:

We have just a few minutes left and so what advice do you have for companies who are undergoing the kind of change that your industry has undertaken and that the company has undertaken?

Roddy McKaig:

Well I would say probably the sooner you start looking at it in the future the better you'll be; a strategic planning, and thinking about your future is critical because it gives you more time to adjust, and to make your plans to get where you need to go.  Technology is changing very rapidly and I don’t think that's going to slow down. I think we're going to go on see that continue to accelerate.

The the more you can get out in front of what your company needs and get your plans and thoughts gathered and ready, the better off you'll be.

I would advise to be open-minded. Don't turn your back on the cloud because I do believe we're going to continue to see the transition to the cloud in all areas of Technology. A lot of it is just going to be the timeliness, the cost, and the staffing. You know technology resources are getting harder and harder to find. If I was starting a company from scratch today I would look 100% cloud. I would not even look at anything on premise.

I would suggest that people think long term as your active short time. You know you’ve got to keep up with the day-to-day business, but keep your mind and your thoughts on what you need long-term to support your company. And as any technology that you're considering but especially cloud, I would advise you to pick your technology providers very very careful.

I think your success is dependent on the partners you pick, and if you can pick a true partner not just a provider but a partner, your chances of success will be much better. And once you go cloud you need to be careful because it's hard to back out. If you go cloud and you dismantle your own premise staff, you dismantle your own premise hardware it's hard to go back. So you need to be very careful on that and I’m not saying don't do it. I'm just saying be careful as you do it.

But think long term especially on negotiations, because you think about it, you move to the cloud but a very long commitment to that provider. And if you don't have your negotiations where you have house protection ongoing, at some point in time you can have a bad story with them.

Michael Krigsman:

So very briefly because again we're almost out of time, give us your advice on negotiation since you brought that up.

Roddy McKaig:

Well I think you know, if you don't ask you're not going to get it. And I think having a good partner who wants you to be successful, and they want to be successful is a big big step. If you have a partner that they're just in it for every dollar they can then that can be a concern. You bet, it should be a red flag it goes up. But if they are truly wanting a long-term partnership with you then they should be willing to put something in the contract that will protect you and give you predictability going forward, especially in a cloud environment. Because you are very dependent on them, more so than if you've got hardware and software in your data center because you can fire them and get a third party take care of it. But if you're in a cloud environment, you can’t fire them unless you move completely away from them.

Michael Krigsman:

So there's a closeness that ends up happening between the cloud vendor and the customer that doesn't happen with on premise is what you‘re saying.

Roddy McKaig:

I think it's a necessity that worse than that we’re failing. You know a lot of our technology on premise providers are just that; they're providers. But true partners for the most part are in a SaaS environment, and that's a necessity because we’re completely in bed with them. I mean we're committed to them, we’re committed to us. And that's a very hard partnership to undo.

Michael Krigsman:

Okay well this has been really quite a glimpse inside a changing and evolving manufacturing business. We’ve been talking with Roddy McKaig, who is the CIO of Shaw Industries, and Roddy thank you very much for taking time to talk with us today.

Roddy McKaig:

You're very welcome. I appreciate for inviting me.

Michael Krigsman:

Next week, no let me take that back. On this coming Friday our guests on episode number 179 is Michelle Dennedy, who is the Chief Privacy Officer of Cisco Systems, so join us on Friday. And a big thank you to NetSuite for sponsoring this show and also thank you to livestream our video distribution partner. Thanks so much everybody and we will see you on Friday.

           

Companies mentioned in today’s show:

Shaw Industries           https://shawfloors.com

Concur                         www.concur.com

Google                         www.google.com

NetSuite                      www.NetSuite.com    

Oracle                         www.oracle.com

Salesforce                   www.salesforce.com