Intergamma recently announced to having allocated a 100 million euros to the updating of its stores’ formula and its online channel. And in doing so, Intergamma moves more and more from a product- to a service organization, that allows customers to do their DIY by offering just the right products and advice. E-commerce has only been a part of this since 2014. 

 

“At first, the DIY industry wasn’t really ahead of the curve,” says Simon Hansen. “But once the decision was made to open a web shop, we really jump-started the industry in the online sphere. It’s shown a steady increase in sales, traffic and conversion. Relative to our total revenue, the market share increases rapidly. Furthermore, you can see that our digital channels mainly serve as a means of product orientation. An important part of our customer journey starts with online browsing and ends up in our DIY stores. To us, the ROPO-effect (Research Online, Purchase Offline) is substantial. 

 

The IT landscape that’s supposed to facilitate Intergamma’s strategy, Simon divided in four different categories, measured in business value and competitive advantage —or: the level of differentiation. The purpose of these categorizations is to pinpoint where customization offers added value and where Intergamma should just use ready-made solutions.

 

Services with a meager business value or little competitive advantage —say, commodities— ought to be standardized anyway. “I don’t want to build or maintain those services myself. Like with gas, water or electricity, I’m fine paying a provider who also takes care of maintenance, so that we can direct our attention at retail —and to do so at minimal cost.” 

 

Back office applications with a potent business value and that are undiscernible to the customer Intergamma wants to use standard systems for as well. “We try to conform our processes to these applications and strife to comply with the provider’s roadmap, so that we’re left with as little need for customization as possible. So, the technique for these standard applications has to come from the provider, but at the same time I do want to retain an in-house expertise to understand the inner workings of the company’s processes. In other words, we must always remain on top of the functional know-how.”

 

With both a potent business value and a strong competitive advantage however, Intergamma is prepared to deliver custom-made work. Here, you can see much more cloud-based microservices architecture emerge. “We started with Hybris in 2014 as an all-in-one solution. The idea behind it was: we want to move product fast and with an all-in-one package deal, we’d be assured of a short time-to-market. The downside of any all-in-one solution however, is that it offers functionalities to a wide variety of mainstream parts. Bottom line: such a solution excels in nothing, really.

 

That’s why for the past three years we’ve been ‘stripping’ Hybris down to a ‘best-in-breed’ landscape. The architecture is based on microservices whereby the various components —mostly Java— communicate with one another. Hybris has become the motor, the heart. The benefit of a setup like this, is that to all elements you can opt for the best solution as well as that you can quickly switch if something better were to be introduced to the market. Something that these days, happens very quickly. About 80 to 90% of all functionalities that we had in Hybris, we’ve invested in other applications by now. And to our full satisfaction.” 

 

And if an idea were to have little business value, but does have a strong competitive advantage, Intergamma would still be prepared to invest in custom work. A fine example of this, is the in-store, self-service kiosk whereby customers and employees alike, can order items that are out-of-stock or not in the store’s inventory. In addition, the self-service kiosk is used to provide customers with advice. “We developed it with Google and based it on? Chrome. You start in the innovation quadrant and proceed to find such a development to rotate circularly. From that point on it’s up to customization —the microservices quadrant. The kiosk is mainly a success for products that need configuration, like custom-made roller blinds. Naturally, in the future every retailer would have such as kiosk however. After which it becomes a standard application and, eventually, just gas, water and light.” 

 

About half the IT budget, goes to customization and innovation. The other half’s on the left which according to Simon, is also very important. “The supply chain is of crucial importance to the DIY market/branche?, because our products aren’t easily transported. Which is why we work a lot with dropship suppliers, who can deliver certain orders straight to the customer for us. In consequence, we need solutions that allow for seamless inventory management, as well as a tight hold on the daily amount of orders hat suppliers can process —so-called capacity management. There is a lot of complexity to the logistic chain that, in the back-office, we need to realize and account for.” 

 

Management wise, the new way of working has brought about some serious changes. This transformation is still in the works at Intergamma. “We have agile teams tasked with developing new functionalities based on microservices. With most standard applications, the IT department traditionally only ever thinks in terms of big projects, as it’s accustomed to. That’s why Intergamma is exemplary for dual speed IT —even though that’s changing rapidly right now. You can see a crossbreed emerge. An example of this is that we were looking for a new ETL tool. Instead of the traditional choice of sourcing, we explored the possibilities in the AWS cloud.

 

This offers Glue, for example. A tool that allows for speedy experimentation so you’re off to a racing start. This way more and more technology becomes available from the cloud faster and faster. Technology that you won’t directly see back at Gartner, but that you can put to good use optimizing your company’s processes. This also means that the IT personnel that’s responsible for development and maintenance of the standard applications, will start to work increasingly more according to the principles of agile. This process is actively operational. The next step is to grow towards an agile organization in the business as well —where the first steps of mainly the commercial side of things are prepared.” 

 

The autonomously operating teams under Simon’s wing, ensure flexibility and speed in the development. But: there are some cons of the chosen working method as well. “The autonomous teams are responsible for maintaining ‘their’ applications and microservices, but in my capacity as IT, I do however need to remain in charge. That’s a challenge in the microservices architecture compared to the software-oriented architecture. With software oriented-architecture, we work with a bus and if the messages there bog down, the responsible team instantly raises the alarm.

With microservices, that’s more complicated. Right now we’re looking into how we can exercise a more central direction towards this from IT, without trespassing against the principles of agile. It is however the case that microservices can operate independently from one another, making it less of an issue if one ceases to work. If, for example, the opening hours-plugin is down, the customer can still order items and pay for them in the web shop. Five, six years ago, one fault meant the whole website would fall apart.

 

So how has this benefited Intergamma up till now? According to Simon, the first thing is that the company has become a more appealing employer. “We’re in a much better environment now —and busy working for customers rather than bothering with just back-office processes. There’s an upcoming culture of engineering within the biggest DIY-retailer of the Netherlands. Furthermore, you can see the business and IT grow steadily towards each other in terms of cooperation as well as that the line between the two is increasingly fading. Do the figures confirm this? Both formulas, Karwei and Gamma, perform fairly well in the market. We’re at a healthy level of revenue, growth and profit. It’s hard to pinpoint which part of this is a direct result of the digitization You can’t quite isolate it. Nor does it really matter, as choosing for only one channel isn’t an option. Omnichannel is what the customer wants.

This article was originally published on Emerce.

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