 ServiceNow Knowledge 14 is sponsored by ServiceNow. Here are your hosts, Dave Vellante and Jeff Frick. We're back, this is Dave Vellante with Jeff Frick. Barry Libenson is here, he's the CIO of Safeway, going through some pretty interesting transformations and we're going to unpack that. We're live at the ServiceNow Knowledge Conference. We'll be here for three days, covering wall to wall. This is theCUBE. We go out, we extract the signal from the noise, we find great guests like Barry, thanks very much for coming on. Sure, my pleasure. So you guys are going through quite a time right now. We were talking off camera about the merger that's going on between Safeway and Albertson. I think you said it's the largest merger in grocery history and what, the sixth largest in retail history? It's the largest merger in grocery history and one of the largest mergers in retail ever and it will create the sixth largest employer in the United States with over a quarter of a billion, a quarter of a million employees. Wow, so okay, so you're busy doing a lot of due diligence, figuring out how you're going to merge systems, flying to Boise. We're flying to Boise and Boise's flying us. Yeah, a little bit of both. Okay, so you were at Land O'Lakes before, CIO at Land O'Lakes. You guys did some acquisitions, right, when you were there? Yeah, we did, we, well, everybody's heard of the largest pudding manufacturer, which is obviously Jell-O. The second largest pudding manufacturer is Cozyshack. Now most people would not have heard of that, but we actually, we did the acquisition of Cozyshack. Land O'Lakes also owned Purina and did the acquisition of Purina Animal Feed and also owned Winfield, which is the largest distributor of seed in the United States. What's it like for CIO and the company that's acquisitive or doing a mega merger? How do you spend your time? What kind of interactions do you have with the business side? How much of it is sort of financial versus process? Can you talk about that a little bit? Yeah, at the end of the day, it really is about supporting the business and figuring out how to integrate two businesses of this size involves a lot of interaction with the business to understand what the operating model will look like. What technology that we have will be adopted, what processes that we have will be adopted, what processes that Albertsons has will be adopted and what technology that they use and sort of figuring out what the best possible outcome is and then building the systems to support the environment is really what it's all about and it's a lengthy process. Do you generally go in? I mean, maybe it probably varies by company, but in your experience, have you gone in with sort of an open mind, let's see which technology works and we're gonna keep, or is it more dogmatic? We're gonna fold this into our process. I'd love to say that it's more open minded, but the fact is it does tend to be fairly regimented and more dogmatic, but that doesn't mean that people aren't open minded. It means you do whatever makes the most sense, but it's a pretty complex, it's like solving this complex equation with a lot of variables and the variables are things like time and cost and benefits and complexity and sort of figuring out what the best possible solution to all of those challenges is what goes into it. So you're essentially running business cases on each of the major parts of the portfolio and I mean, you get huge application portfolios, right? So how do you do that? Do you chunk it into some kind of manageable logical suites or do you go like really granular? Yeah, the thought process varies depending on the acquisition or the merger. In this particular case, it's really about speed. How quickly can we combine the two companies and that involves a lot of things. I mean, we have 1,400 stores, they have 1,000 stores, we have one financial system, they have another financial system, figuring out how to do this the most expedient and most cost effective way possible is a pretty daunting task, but that's really what you have to do is look at each individual process and determine how you're gonna go forward and then prioritize things and execute on that. I imagine some of that is actually documenting some of those. Yeah, well and everything has to be documented and you have to create run books essentially for every function so that it's well documented. There's obviously huge security considerations that have to go into running any kind of retail operation of this magnitude, so it's a huge task. So talk a little bit about innovation because obviously you've got a huge operational machine that's just going and going and going, but in terms of trying to find innovative ways to do things better, whether that be internal development or looking at some new technologies where maybe you don't have a real clear ROI model, there isn't a business case that you can really map out cleanly. How do you integrate that in with, as we heard earlier, the rest of the iceberg underneath the water? Yeah, so anytime you do a merger like this, you look for areas to improve a process that one party may not necessarily have. So for example, one of the things that Safeway is really well known for is its loyalty program and we have a highly customized offering system based on your purchase behavior that allows us to provide offers that are unique to you that may be completely different from what I get. Being able to leverage that as a very innovative platform into an additional 1,000 stores and tens of millions of new customers is one of the things that is taken into consideration whenever you do a merger like this. So we'll look at the way the other party does things, they'll look at the way we do things and you try to come up with the best of both worlds, leveraging whatever innovation has been put in place by either side. So it's a good opportunity to really, the whole concept of a merger like this is to get synergies and those synergies can come in a lot of different ways and innovation is often one of them. I wonder if we could dig in a little deeper because you guys had a regular loyalty program for years, I'm a member like in a number and then you came out with a new one about a year ago or so, right? That was a different level of customization or personalization I should probably say. Where was the zenith of that? Is that external, internal? And then I know it was a little bit maybe more controversial than the first one just because you're starting to get into letting people know that you're tracking things closer than maybe they might have thought before. Sure, so the platform is several years old. It was an internally conceptualized system with the belief that doing something that was different from what everybody else did would provide a competitive advantage which has proven to be true. That if we could create offers, so for example, if you don't have children it doesn't make a lot of sense to offer you a coupon for diapers. If you do have children, especially young children and we can determine that from a certain buying behavior like if we notice that you're buying a lot of baby formula odds are you probably could use some diapers or vice versa. And so creating custom offers along those lines really improves the customer experience versus somebody like myself, I mean my kids are out of the house I don't need diapers so sending me diaper coupons is hardly a worthwhile thing to do. And the idea was to really personalize the shopping experience for customers and there is a certain amount of, whenever you sign up for a loyalty program you're obviously acknowledging that there's a certain amount of information that's gonna be collected in that process. I think people are starting to understand that that information is incredibly valuable and we do use it and ideally the customer benefits as a result of us having that information and knowing what they've been buying so that we can offer them things that would be more applicable to their lifestyle and allow them to save money on the things where it really matters. So let's talk a little bit about ServiceNow. You brought ServiceNow into Land O'Lakes and where are you at with Safeway in terms of the implementation? So it's a fairly new platform for us at Safeway but the challenge is very similar but on a much larger scale. When I brought ServiceNow into Land O'Lakes I brought it in very early when I joined the company largely because as I looked at the portfolio of applications that we had and looked at failures and things along those lines I couldn't understand why we were having failures in particular systems and why it was taking so long to get them resolved because I just didn't have the information that was necessary in order to really understand where we should be making investments. The whole idea behind implementing ServiceNow was to be able to better track what was going on inside the application portfolio across all the different lines of business that we had so that we could determine where we needed to make investments and it paid off huge. We reduced the downtime of applications from several hours to about a 20 minute remediation time. The number of failures we had went down dramatically because we knew where the problem points were. So imagine that like on a scale of 10 inside of an organization like Safeway where you have 1,400 to 2,400 going to 2,400 stores where you have services that you're providing to all of the stores and then you have the backstage operation where you've got over 30,000 knowledge workers that are working on all kinds of different systems in order to support the organization. Same sort of challenge, really understanding what's going on within the systems so that you can make the right investments to help speed up remediation and make better investments. And you're in the process of implementing now? We are. Okay, and so you had something beforehand it was a homegrown. Homegrown and some on-premise tools. I mean we did a very strategic look across the spectrum of applications and I will admit I tried to stay out of that. I mean I really delegated that responsibility to my team and with obviously a strong preference and hoped that they would come to the right answer being service now but I didn't, it wasn't my decision, it was theirs. And obviously I fully supported it but. So it wasn't a prerequisite if you come. No, it wasn't. And I say that only because while I'm incredibly loyal to the brand and to the company and I think it's a great product it was important to me that the organization came to the right decision on their own without me having to sort of stiff arm them into picking the platform and so they picked it on their own. Let me just follow, he said 30,000 knowledge workers. Yeah, roughly 30,000 behind the scenes, what we call knowledge workers. Now a knowledge worker also includes some of the senior management in the stores as well. Still a big number. How will you leverage the platform, the service now platform for the merger? What specifically will you leverage? Well, you know, when you start taking and combining financial platforms and merchandising systems. I mean, how you distribute goods to all of these stores and then how do you handle all the logistics and transportation of supplying goods and services across the country to 2,400 stores. There's a tremendous number of systems that are touched. Every single one basically will be monitored and ticketed and service now will be the platform that we will use in a follow the sun. We have an organization out of Manila that has close to 600 employees that pick up support after hours from the US. We've got a team in Arizona, team in Pleasanton that trade off. So the tool will be used pretty much on a 24 hour basis to monitor everything that we're doing across all of the platforms and that will be particularly important during the merger activities. But this notion of service now as an application development platform and you got CIO, your developers, your application heads. They're kind of like your quarterback, your wide receiver, your money players. What are your thoughts on service now as an application platform for development? Where do you see that going? You know, it's one of the things that we'll ultimately look at. It's not at the top of the list given the merger activity. It's pretty much all consuming. But you know, we're seeing obviously platform as a service whether it's the service now offering or the other guys that are located in San Francisco who are a great company too, who I won't name. But I mean, you're seeing it is a more progressive. And there's a lot of them everywhere. That's a land grabber. It really is. I think that service now is particularly well positioned in that space. It's not something, most of the development we do right now, for example, around the loyalty platform is done in Java and sits on a very resilient database architecture because of the scale. I mean, there's over 12 million active customers on it and the number of offers that have to go out on a daily basis is enormous. So we haven't looked at platform as a service as a way of distributing that yet, but it is one of the things that will probably be diving into it. You said you thought service now was well positioned. Why? Because of simplicity? Because of the service orientation? The focus? I think all of the above, I think, first of all, they're one of the first companies to really, you know, Salesforce and service now are really the two players that I think are best positioned in the platform as a service. And I'm probably annoying some of my other suppliers by saying that, but it is what it is. I mean, early on, you know, kind of get the model. But it's closer to a solution than, I mean. And it integrates so well with the service desk offering and all the capabilities that you need around that. So you can build, you know, there's a lot of examples of applications that have been built around the service desk, leveraging the platform as a service architecture. The whole past discussion is kind of fuzzy. You get, you know, I always say you got infrastructure service plus, you got SaaS minus, you got, I think the land grab thing is a really good, that's a very accurate. And people see it as a huge opportunity, all these big data apps, they say, all right, we got to get a piece of that action. It's almost as though the vendor community is saying, all right, we're going to invest in this for us. Sure. Because we got to be there. And I do think that ServiceNow's mindset is different. Hey, we can do this. It's easy. Let's put it out there. You know, for, you know, the other thing I'll say about ServiceNow is, you know, the execution, at least for me and for my organization has been near flawless. I mean, you know, four years of running it at Atlanta Lakes without a hiccup. And so I have a high degree of confidence in the company's ability to scale and deliver solutions in a way that is, you know, and that's exactly as a CIO what you rely on from any service-based provider. You don't want to have to worry about it. No phone calls, no problems. It just runs 99.99% of the time, you know, and that's what they do well. So. Okay. Let's see. Last question. We've run out of time. So other stuff that's exciting. You drive a Tesla, that's pretty exciting. Yeah. How long have you had that? I got it. I picked it up at the end of March. I've sort of really bought into the California lifestyle. Well, you get the ROI thing going too, was one of our guests, Ray Wang, told me. No, Dave, the ROI of a Tesla is fantastic. Well, and I have solar panels on my house, so it doesn't cost me anything to charge it either. It's sort of all in. Yeah, that's good. You got kids? Older kids. You know, do you let them drive the Tesla? No. They didn't get to know. They've never got to know. No, that's great. Didn't even know. It wasn't even a consideration. My insurance agent's very happy about the Tesla. All right, Barry, we'll leave it there. Thanks very much for coming to Q. Really a pleasure. Good luck with the merger. Thanks. All right, keep it right there, everybody. Right back with our next guest. This is theCUBE. We're live from Moscone in San Francisco. We'll be right back.