Thought Leader Interview Randy Fields: Automating "Administrivia" Decisions CEO and President of Park City Group, Inc. Preface On Wednesday, February 18, 2004, Dan Power, Editor of DSSResources.COM, interviewed Randall K. (Randy) Fields, the CEO and President of Park City Group, Inc., a software development and consulting services company based in Park City, Utah. The phone interview lasted approximately 25 minutes and the following comments are excerpted from that interview. Dan Q1: In the mid 1980s, you created a software system that supported decision-making and management at the store level for Mrs. Field's Cookies. Would you please tell us that story? Randy's Response: There were really 2 objectives. On the one hand, I had a view that if I could put Debbie, the co-founder of the company with me into a human Xerox machine, and put Debbie in every single location, it would enable us to grow a large, very successful business for several reasons. One is that she knew how to take care of her customers. She knew how to take care of the product and by being able to do that we would have a tremendous amount of expertise at every location. At the same time we realized that there was an issue with regards to retail store management. That as the business got larger, local store managers tended to spend more of their time on what I call "administrivia", instead of on the same issues that Debbie, as a manager, would take care of, specifically customers, product, etc. So, the objective of the technology was really then to do 2 things. To automate all of the administrival things that store managers unfortunately seem to preoccupy themselves with, the paperwork, the planning, the forecasting and all of that processing stuff, and enable them to focus on the quality of their product, and more importantly on their customers. So, the objective then of the technology was really to leverage Debbie into every store sort of real time with best practice advice ... how would Debbie do this? At the same time, freeing the managers from being chained to their desks and being paperwork jockeys. Dan Q2: You called that system "Retail Operations Intelligence". Randy's Response: Exactly. ROI -- Retail Operations Intelligence. Dan Q3: Can you tell us what was involved from a technical perspective in creating that decision support and management capability for the chain? It says on the Park City Group website that you and Paul Quinn developed ROI. Randy's Response: Right. Actually, what ROI was in large measure was an artificial intelligence based technology that would analyze information in real time, compare it to expectation, and then allow the store manager to receive suggestions with regards to changes and production schedules depending on very local store conditions. Whether special events, etc. so the business objective was really to have the right product, in the right quantity, at the right time, but clearly algorithmaticaly speaking that isn't as simple as it sounds. So the idea was to use a combination of mathematics and AI, way, way, way, under the covers to do what a terrific store manager with an amazing memory would be able to do. My background was in statistics and AI when I went to school. So, what was underneath was an inference engine that we built ourselves and parsing tools that we built ourselves. All of it was internally developed. It was a technology that was originally deployed on Tandy TRS-80s and people remember those from many years ago. I think we first rolled it out to our stores in 1985. Dan Q4: Yes, I remember the Tandy TRS-80 well. We have come a long way. That is a good transition to the next question I had and that's to get you to look ahead. We call this a "thought leaders interview". What do you think the computerized applications to support managers in the future are going to look like? Randy's Response: I think, to be perfectly candid, the objective isn't to support managers, but to eliminate them. Management is a very interesting, but possibly not a very important job in the future. Information technology will very likely ultimately turn on the very people who have been feeding it over the course of the last 10 or 15 years. We have used technology brilliantly to eliminate primarily clerical jobs. Suddenly, the beast is going to turn on those people who have funded projects and felt as if their skill-set was not a replaceable skill-set. The managerial skill-set. Dan Q5: That perspective is certainly controversial. Randy's Response: It may be controversial, but it is without a doubt true. Dan Q6: So, for example, in a chain operation, you don't envision there would be a store manager? Randy's Response: Well, I think you are going to begin to see an evolution as to what the responsibilities of the person that is called "store manager" might be. Right now, there is a need to be, what I call a general manager. Meaning that you need a skill set of both cost control and sales management, right? What if, for all intents and purposes, that was part of the vision of our technology? What if you basically said, we are going to split the managerial responsibilities here. We're going to have someone that's a sales manager and his job will be to take care of customers and revenue. And we are going to have a cost-controlling manager whose job is to take care of the cost side of the ledger. What if you had instead of 2 people, what if you had 1 computer and 1 person who was a sales maniac in building the business. That would enable you to spread that person over multiple units or multiple departments in the case of a supermarket, so you would begin to thin the managerial ranks. Above the unit level, you could take a look at what is likely to happen. The weakest link I think in retailing is the so called district or area manager, the level right above unit manager. I think the business reality there is also grim in the sense that they tend not to make brilliant decisions necessarily, so, giving them better tools to make decisions may not be the best technique. It may be that you use machines to make the myriad of decisions that they make day in and day out and allow them to evolve more into coaches, support people, auditors, etc., which would very substantially broaden their spans of control. So, the number of managers of that sort that you would need would be decreased, and just keep moving that up the chain. Dan Q7: So, at the district management control level, do you think managers will have more real time data and monitoring of the stores? Randy's Response: Well, that is what I call the conventional view, which is we are just going to give the "speeds and feeds" argument. Technology should give people more information, more quickly. Why would it do that? Let's go to the way technology ought to work and I think the analogs here are either temperature control systems for environmental control for a building or auto pilot or cockpit management as it is called in an airplane. What we haven't done with airplanes is to give captains 500 different gauges so that they can make better decisions about what to be doing moment to moment in real time by having more information displayed more quickly. What we have done is to take control away and let machines make the decisions. It is a fundamentally different view of the role of technology. We haven't built thermostatic systems that flash to people, little engineers running around, and tell them in better real time or audibly what the temperature in the room is. We have the sensors, coupled with processors make decisions and implement them. The humans just set the strategy. Dan Q8: So you are really focusing on making fairly routine, predictable decisions, rather than ones that are unexpected or non-routine? Randy's Response: Sure. Those non-routine decisions are the ones that humans are best equipped for, but they are episodic in nature, which means that the number of managers that we need is substantially smaller than the number we have. So as you begin to contract the number of managers at the base of this pyramid, that we built hierarchically, you increase the spans of control in each of the levels as you move up. You can begin to see how that has this ripple in terms of the number of managerial jobs that are going to exist. We aren't outsourcing managerial jobs; we are doing away with them. Dan Q9: Given that challenge and the expectations and issues of liability, what do you think will be the issues that software developers face as they create these new management software systems? Randy's Response: Well, I think as you take a look at goal based technology, we all know there is enormous trouble in testing them. We have our own theories as to how one ought to do that, in a more robust fashion than has historically been the case. So, I think the liability management issue is certainly an issue. I don't think it is going to get any better or any worse than it has been. It is going to be up to the users of technology to be sure that businesses are in fact turned over to systems that can adequately run them. I still think we are in a buyer beware sort of market, but I think to remain competitive, to bring cost structures down it is going to be beholden on businesses to use tools like that to reduce their cost structure, reduce their time to market, increase their market sensitivity and responsiveness. Dan Q10: I see that at Park City Group you have two primary software products: Fresh Market Manager and ActionManager™. What can you tell us about the decision support projects that are underway and about these 2 products that you are marketing right now? Randy's Response: Well, both of those suites are very much akin to the kind of technology that we used in context with Mrs. Field's Cookies. Specifically, the ActionManager™ suite does all of the work-flow and paper processing, analysis, labor management, labor scheduling, etc. that retail managers or location managers have to contend with. And our Fresh Market Manager product, which is also now about to be expanded to what's called center store in the supermarket industry does all of the perpetual inventory, computer-aided ordering and short interval and longer term interval forecasting. The goal is to reduce both shrink and inventory on hand to improve the replenishment function for retailers of food stuffs and perishable goods. Dan Q11: And you have a new project underway for the "center store" too? What does "center store" mean? Randy's Response: "Center store" in the supermarket world is all of the things that are non-perishable. If you go into a typical supermarket, that really shouldn't be called center store anymore, about 52 cents of every dollar today is spent in the perishable departments, everything from meat to deli, and all of the rest of what you see there, health and beauty aids, Tide, dog food, Campbell's soup, is called center store. So we have now developed a complete inventory system that runs across every kind of inventory that we can imagine. And it does the same kind of forecasting we used to do at Mrs. Fields, that AI based stuff that would decide not just on the basis of history but on forward looking data, how much of what product should be available in what quantity at what time. Dan Q12: The last question I had was to ask you to tell me a little bit about Park City Group. I know you went public recently, maybe you can give the readers a brief overview. Randy's Response: Terrific. Park City Group is actually an outgrowth of our experience with Mrs. Field's Cookies where we took the same technology we used to grow and control Mrs. Field's and began to sell the software to other retailers. So our customers are everyone from Home Depot to Tesco Lotus in Asia or Price Choppers in New York or Schnuck's Markets or Williams Sonoma, The Limited --several dozen of the worlds' foremost retailers. We are certainly proud to have customers like that, who are using the very same kind of tools brought forward obviously with more modern architecture, we used at Mrs. Fields to allow managers to spend less time doing "administravia" and more time focused on both their product and their customer. And Park City Group is a small, publicly held company, trading under the symbol PKCY. We have just finished a very good year and the current year is looking even better. About Randy Fields Randall K. (Randy) Fields is CEO and President of Park City Group, Inc. a software development and consulting services company based in Park City , Utah. Fields is responsible for the strategic direction of Park City Group's two application suites: Fresh Market Manager, software suite that addresses the needs of organizations with perishable inventory, production planning and product forecasting and category and costing requirements and ActionManager™ a suite of 20 integrated software applications for business operations management for geographically distributed multi-unit businesses. In the early 1970's, Fields established a financial and economic consulting firm called Fields Investment Group. He co-founded Mrs. Fields Cookies with Debbi Fields, and served as its chairman from 1978 to 1990. During his tenure at Mrs. Fields Cookies, Fields pioneered the development of Fresh Market Manager and ActionManager software systems to provide innovative management solutions for Mrs. Fields Cookies. Based on the acclaim surrounding Fields; use of technology in operating business environments, and the effectiveness of the software in producing benefits and results, he founded Park City Group in 1990. Randy and Debbi co-founded the Mrs. Fields Children's Health Foundation and served as Directors for several charitable institutions, including the Primary Children's Hospital and the LDS Hospital in Salt Lake City. He is a contributing editor to Chief Executive Magazine, and has written extensively on the subject of using technology to solve business challenges. Articles regarding Fields' concepts, companies and products have been featured in business publications such as Forbes, Business Week, INC Magazine, The Wall Street Journal, Management Review as well as computer and trade magazines including Computerworld, Information Week, PC Week, Network World, Datamation, RIS News and Chain Store Age Executive. Fields holds both bachelor and masters degrees from Stanford University , where he was a Phi Beta Kappa, Danforth Fellow and National Science Foundation Fellow. Park City Group Business History (from parkcitygroup.com) When Debbi and Randy Fields married, Randy agreed with everyone that Debbi made the best cookies ever. Mrs. Fields' special chocolate chip cookies became famous with Randy Fields' business associates, who urged her to open a store and sell her specialty cookies. Consequently, on August 13, 1977, the first store opened in Palo Alto, California, near Stanford University. From that first store, Mrs. Fields Cookies has grown into an international institution with a reputation for exquisite taste and superior quality. As the number of Mrs. Fields Cookies stores increased, Mrs. Fields concluded that the hour-to-hour management skills she used in her first store made the company successful, and must be implemented in each of the stores. The Company needed to meet this goal but still retain a flat company management structure. However, designing a flat-line management structure was thought to be very difficult; the objective would be to maintain the same high level of success realized in the first store in both product and management efficiency. By 1984, Mr. Fields and Mr. Paul Quinn, Mrs. Fields Cookies' Vice President of Management Information Systems, had created a solution: Retail Operations Intelligence (ROI), an innovative computer software system. Simply stated, the system allowed store managers, district managers, and regional directors across the country to have daily contact with Mrs. Fields and the company's top administrative staff, via computer. Additionally, the very first versions of today's Fresh Market Manager applications were developed for the Mrs. Fields Cookies operation. Designing, implementing and having patents granted on the innovative aspects of the technology, this software that helped to make Mrs. Fields a successful company has been enhanced with state of the art technology and is available to the retail market. Faced with the daunting task of accurately forecasting product demand in a low margin business with a short shelf-life product (2 Hours), Fields and his team built a solution that has incredible applicability to today's perishable departments of grocery and supermarkets. These supermarkets are faced with the intense pressures of Wal-Mart and other super centers for their very existence and Fresh Market Manager and ActionManager together provide the only end-to-end solution in the market today. The systems address operations management tasks, such as: •  Item level category management •  Scheduling crews •  Interviewing applicants •  Generating supply orders •  Producing sales reports and projections •  Managing inventory and production planning •  Administering skill tests •  Transmitting memo •  Assessing employee knowledge Using Retail Operations Intelligence (ROI) automation, district and regional managers reduced administrative paperwork by 60% to 70%. Consequently, the store managers were freed from the back office to concentrate on driving sales and developing skills within their sales teams. The success of ROI software at Mrs. Fields Cookies generated widespread interest in the product from the business community. In May 1990, Riverview Software Group was spun off as a separate, privately held company from Mrs. Fields Inc. and became known as the Park City Group. Today, the applications are known as the Fresh Market Manager and ActionManager application products. Park City Group was founded by Randy Fields. It has been a public company since May 2001. The Park City Group’s strategy is to rapidly expand its market share in decision automation within the grocery and specialty retail sectors. Park City Group offers a robust set of solutions and it capitalizes on its prestigious user base as customers rapidly deploy and license additional software for their multi-location businesses. Park City Group’s customers include such well-known names as The Home Depot, Foot Locker, Inc., The Limited, Albertson’s, Schnuck Markets, Pacific Sunwear of California, Wawa, Busch Entertainment and Tesco Lotus. For more information check www.parkcitygroup.com. Citation Power, D. J., "Randy Fields Interview: Automating 'Administrivia' Decisions", DSSResources.COM, 04/09/2004. Randy Fields had an opportunity to review the final version of this interview prior to publication. The Park City Group business history background information is used with permission from www.parkcitygroup.com. This article was posted at DSSResources.COM on April 9, 2004.