Levi Strauss Case Study

. Levi Strauss & Co.

Value for Money? Real Savings at Levis!
Major changes in the IT environment and increased costs of sales prompted Levis to review the costs of their IT investments with resulting cost savings achieved to date in excess of $1.7m

Company Profile
Levi Strauss & Co. is one of the worlds largest brand-name apparel marketers, with worldwide net sales of $6.0 billion in 1998. Through a relentless focus on consumers, innovation and people, the company aims to achieve and sustain commercial success as a global marketer of branded apparel. John Serrato is Vice President of Information Systems for Europe, the Middle East and Africa and is based at Brussels headquarters.

Taking Stock
The IS department had had a busy five years. Several projects had been undertaken, starting with a Business Process Review resulting in Levis implementing a Baan Enterprise Resources Planning solution. The implementation of packages from Manugistics and McHugh followed. As part of this overhaul, Levis installed new Unix hardware and an Oracle database. An effort was also made to harmonise the software system used across the European continent. The ERP project completely changed Levis infrastructure, and a new, centralised support strategy changed their ways of working. As anticipated, the IS team found that these new, more complex technologies drove up compensation costs and increased headcount. According to Serrato, the benchmark study covering Brussels HQ and 7 European affiliates was a method of taking stock following these implementations with a view to optimising operations. Our aim is to reduce costs and to maximise value using a minimal amount of investment. Our goal is to have best of class operating environment, reducing expenditure thereby releasing funds for specific, targeted projects.

The Benchmarking Process

The benchmarking study Levis engaged Gartner to carry out was an Information Technology Overview Analysis (ITOA) centred on the costs and workload of its helpdesk, distributed computing and data centre technologies. Gartners Measurement team was chosen to conduct the benchmark on account of Gartners high level of IT industry experience and expertise and Measurements extensive database of relevant metrics.

Gartner Measurement

Levi Strauss Case Study

The benchmarking process kicked-off with a joint meeting of Gartner and Levis project teams. The meeting covered the processes to be undertaken and the details of the data to be collected, and set the schedule and responsibilities of each party. The Levis team was responsible for collecting the data, which was then reviewed by Gartner analysts, normalised into the standardised benchmarking model, and validated. Once complete, Gartner analysts conducted a detailed analysis of the data to determine the clients performance and compare the results with that of other companies from Gartners database. The results were then presented to Levis senior management. The results showed that Levis IT costs were 24% higher than the peer group benchmark average, with a more expensive helpdesk than any other organisation on Gartners database. Analysing the helpdesk in more detail revealed that the total cost per call was over 350% more than the peer group! Levis disaster recovery costs were also an area of further focus, being 200% higher than the peer group average.

From Analysis to Action

The results of the ITOA benchmark provided Levis with a framework to focus on specific issues within the IS function. A good example of the work that has resulted is Project 900.

Project 900
The benchmark revealed that maintenance and repairs constituted the second largest part of the global IT budget. Project 900 was launched to reduce this spending by 25%. The team assessed the need to spend on each component of the IS structure on the basis of the business or IT risk arising from choosing not to spend. Project 900 has already resulted in over $1 million in savings. Moreover, in light of these findings, Levis is now adopting a proactive approach to new contracts, assessing them according to new criteria.

Help Desk Redesign

As well as addressing maintenance costs, Levis redesigned its helpdesk function and reviewed disaster recovery contracts with vendors. Total savings in these areas so far amount to over $0.7 million.

Building in Benchmarking as our way of working

In Serratos view, over and above the cost savings, the overview analysis has enabled Levis to take a new approach to managing its IT function. By relating service levels to cost, the benchmark helps to forge a linkage between the costs and elements of Levis IT. The benchmarking study was the first step in the continuing process of building a culture of accountability regarding IT costs. Levis is also much more aware of the relevant measurements, and Serrato aims to build back into the IS department procedures which can capture the applicable numbers in a coherent and consistent way. Ultimately, we want to build in the benchmarking mentality as our way of working, so that we are aware of the impact of cost on our operations.
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Gartner Measurement

Levi Strauss Case Study If you dont measure IT, you cant manage IT.
The ITOA provides senior IT management with a comprehensive and complete overview of the relative efficiency of their IT organisation. The metrics and measurements resulting from the ITOA have enabled Levis to understand their current level of performance at a high level based on key efficiency indicators for each functional area. In order to establish relative performance, the ITOA quantitatively analysed the efficiency of each major IS function and drew comparisons with database averages from peer IT organisations, taking advantage of the extensive, unparalleled database derived from Gartners individual measurement services. Since the ITOA, Levis continues to work with Gartner on a drill-down study focusing on users satisfaction with Levis IS function. The measurements and comparisons arising from the overview analysis provided the basis for Levis to identify those areas of IT performance that offered the greatest opportunities for improvement.

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Source: John Serrato Vice President of Information Systems for Europe, the Middle East and Africa Levi Strauss & Co. Analyst: Elaine Brown, Gartner Measurement

Gartner Measurement
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