Liz Claiborne Upgrades Its Information Systems

Liz Claiborne designs and markets an extensive range of women's fashion apparel and accessories, with versatile collections ranging from casual to dressy. The company also designs and markets men's apparel and furnishings, as well as fragrances for women and men. Net sales for a recent year were a record $2.4 billion.

It should come as no surprise to anyone who has ever tried to keep up with fashion trends, that change is driving the apparel industry today. But change is occurring more than in the design of clothes.  The structure and nature of retailing and manufacturing are also shifting. Geographical boundaries are disappearing. Limitations are dissolving. Above all, consumers today look for versatility and value, and they, not the retailers or manufacturers, define what constitutes those qualities. For example, the move toward casual dress is an attempt to simplify increasingly complex lives. These shifting priorities mean consumers are less loyal to brands or to stores, but more discerning and very time-constrained. 

To keep pace with the rate of change, Liz Claiborne has put all business processes under the microscope. As a result it is concentrating on streamlining the things it does best and teaming with others through licensing and outsourcing arrangements to perform activities in which it has less expertise, from marketing watches to producing footwear and home furnishings. Specific corporate goals include doubling revenue to more than $4 billion by the year 2000, cutting operations costs by $35 million per year, reducing time from product design to availability, and improving communications with customers.

To achieve these goals, Liz Claiborne is making a major technology overhaul that will result in replacing over 80% of its business processes, business information systems, hardware, software, databases,  and network capabilities.  Even ITSpeople are affected as they get training in the new technology and new roles are identified for current IS staff. A key challenge to this transformation process is surprisingly not installing or maintaining the new technology itself  but aligning technology, business needs, and teaching people how to cope with the change.  “What many organizations don’t realize is that if you don’t manage the business part of a technology change, you can fail even if the technology part succeeds” states Naomi Karten, an adviser to the company.

            Liz Claiborne has developed Web-based tools to improve communications with suppliers and retailers. A Web-based application allows retailers to track purchase orders and to check the status of transactions instantly ¾ a process that used to be done over the phone. Over 60% of customer orders are now placed electronically. The company also invested heavily in software to track materials around the world and to help communicate better with service providers, manufacturing partners, and freight consolidators.  The technology changes have even affected the design process.  In the past, Claiborne relied on pen-based sketches from external organizations for designs.  Now the company uses sophisticated software tools to help in the design process. While the company used to fly in retailers to view its new designs, it now sends them electronically via the Web at a major cost and time savings. This networking technology permits the global transfer of textile and design information and is dubbed LizCADalyst.

Discussion Questions:

1.  What do you think Ms. Karten means when she says: “What many organizations don’t realize is that if you don’t manage the business part of a technology change, you can fail even if the technology part succeeds”?  How does this apply to Liz Claiborne?

2. Liz Claiborne has made a substantial investment in upgrading its information systems.  If you had to justify this investment to the board of directors, what would you say?