IT 'Insourcing,' E-Tail Expansion at Kellwood

Kellwood Co.—one of the nation’s largest apparel suppliers and owner of brands such as Vince, David Meister, Sag Harbor and Koret—made a bold move last year when it embarked on an eight-month project to “insource” its information technology. The St. Louis–based apparel giant’s acquisition by Sun Capital Partners in 2008 and financial hardships drove it to search for cost-cutting measures, said Linda Kinder, Kellwood’s chief information officer. “We had considered insourcing a few years back but decided it would not bring sufficient value to merit the risk,” she said. This time around, Kellwood was willing to undertake the challenge and realized savings of $3.6 million per year, she said. “In 2010, our drive is to focus on three areas: support acquisitions, support e-commerce expansion and the technology that requires, and deliver information to users.”

Since 1996, Kellwood had outsourced its IT to EDS, a global business and technology-services company. Kinder declined to give exact figures for the cost of Kellwood’s outsourcing but said the company’s annual IT budget was more than $20 million, with more than half of that going to EDS.

As Kellwood looked for ways to restructure its IT department, insourcing wasn’t the only option that was considered, Kinder said, but it proved to be the best fit.

“We wanted to be more flexible and improve our responsiveness,” Kinder said. There was also a problem of too many cooks in the kitchen. Kellwood had grown its roster of brands throughout the years through acquisitions, often inheriting new IT systems with each new brand. With the help of Alsbridge, an advisory firm specializing in information technology, Kellwood assessed its needs, analyzed its systems and developed an entirely new IT organization.

At the end of the eight-month process, Kellwood ended up with a new network, new e-mail, a redesigned support center and an expanded in-house IT team of 74 individuals. Kinder said the new team, which includes approximately 15 existing IT employees, is key to Kellwood’s success. “We were able to transition 41 individuals [from EDS], and that made the process much easier,” Kinder said. Kellwood’s Los Angeles office saw its IT staff grow from six to 10 full-time individuals.

JoAnn Ashman, Kellwood’s vice president of marketing and digital, said the IT renovation gave her the tools to launch four new, direct-to-consumer e-commerce sites for Vince, David Meister, XOXO and Jolt. “These sites are a night-and-day difference from the sites we had in place eight months ago,” she said. “Kellwood has been in business for 50 years, but we’ve only had a direct-to-consumer online presence for less than one year.” Bigger team, bigger branding

Based in Los Angeles, Kellwood’s e-commerce department has grown to eight full-time employees and, as part of the company’s IT focus and e-commerce expansion, has been newly equipped with a photo studio for product shots, graphic artists and Web site managers. Kellwood’s distribution warehouse and customer-service department in City of Industry, Calif., has also become versed in dealing with the company’s new direct-to-consumer pick-and-pack and fulfillment needs.

“Eight months ago [the Web sites] were only shopping sites. Now, we are deliberately transforming them into something more,” Ashman said. The four new sites are meant to act as showcases for the brands, not competition for the retailers that carry those brands, Ashman said. “We’re interested in telling the story of the brands and offering a full lifestyle experience [that isn’t available in brick-and-mortar stores],” she said. Videos, social elements and links to Facebook pages complete with behind-the-scenes peeks, press pages and store-locator tools round out each e-commerce site’s offerings. Kellwood also uses the sites to connect with potential retailers, Ashman said. All of Kellwood’s sites are equipped with sales-inquiry pages and contact information for easy access to the company’s sales organization. “Jolt gets leads from the site every week,” she said.

“The one reason this is all possible is because of the work the IT organization has done, creating flexibility to efficiently move beyond the boundaries of a wholesale system,” Ashman said. “Linda and her team have partnered with me to give me direct-to-consumer flexibility.” More e-commerce sites are in the works for Kellwood, Ashman added, but she declined to name the brands.Plan ahead

Kinder recommended that companies interested in insourcing their IT make sure they have the support of top-line executives. “The process is a challenge, and it took the support and commitment of our senior leadership to get us through it,” she said. Planning meticulously before beginning the transition is another key factor, she said. “The goal is to keep everything running throughout the renovation because business doesn’t stop. We experienced no significant business outages, and I attribute that to the proper planning beforehand and having consultants who are well-versed in [insourcing].” Kellwood also helped smooth the transition by working with EDS throughout the process and then hiring some of their employees to the new in-house IT department. “The more eyes watching each step, the better,” Kinder said.