My Second-to-Last Piece on Overstock.com: “The Best CIO in America”

‘Check out this whopper:The IT staff’s ability to make fixes now exceeds the number of bugs being detected, a sign that the system is nearing stability.

Information Week, Sept. 26, 2005

You might guess—and rightly so—that the “IT staff” referred to in the above quote is that of Overstock.com, seeing as how Overstock is one of the few internet retailers I am aware of that is still having problems getting a handle on this whole IT thing. The problems arose as Overstock was preparing to go live with Oracle financial and order-management apps designed to reduce the load of the company’s proprietary shopping engine. Information Week, Sept. 26, 2005 And you might guess that I am prepared to make plenty of sarcastic references to Overstock’s CEO Patrick Byrne and how he said the following in his second quarter 2004 shareholder letter:

Shawn Schwegman (VP, Technology) remains a star. This year Shawn has assembled a team of mature, experienced Database Administrators (DBA’s). Our network has become quite stable… By the end of July, I think I will be able to say, “I could not be happier with the IT team nor the level of understanding between it and its internal customers.” And you might guess I am prepared to show how different a picture from that soft-hued-Monet-style-watercolor of Overstock’s IT system is painted by this week’s InformationWeek article:

Before the Oracle deployment, Overstock relied on its homegrown system to route orders to the appropriate distribution facility. But Schwegman says it wasn’t good at detecting and correcting order and delivery errors, a problem that required a great deal of manual oversight and one the growing company could no longer live with.

Information Week, Sept. 26, 2005 And you might expect even more sarcastic comments about the August 3, 2005 earnings call (not quite two months ago), when Byrne said this to investors:

But this is the architecture and we’re putting the finishing touches on it now, and it’s cost us $35 million. But I think it has been brilliant, I think our CIO, Shawn Schwegman, has done – is the best CIO in America. I think he’s done a fantastic job over two years taking us from really a rinky dink arrangement into this architecture. And what’s beautiful about it is not only heavy duty, it’s so scalable. It’s scalable at each layer. And you might expect me to question why, regarding the very same IT system described as “brilliant” and “scalable” and “beautiful” on August 3, we read in the September 26 InformationWeek that:

The IT staff’s ability to make fixes now exceeds the number of bugs being detected, a sign that the system is nearing stability.

But I’ve had it with this one. There’s nothing more to say.

Oh, I know I’ve said the same thing once before…and kept writing. But in my own defense, that was before Byrne kicked it up a notch, what with Sith Lords and Master Manipulators and all that Conspiracy nonsense, followed by the Friday-after-the-close oops-we-had-a-five-week-$30 million-inventory-upload-problem press release. I think Schwegman’s frank admissions, in contrast to Byrne’s well documented public pronouncements on the “brilliant” IT strategy at Overstock.com, tell any observor everything that observor needs to know.And whoever doesn’t know it by now doesn’t want to know, and never will…which is, of course, their right. After all, as Paul Simon wrote, “a man hears what he wants to hear and disregards the rest.” So, you have just read my second to last piece on Overstock.com.

Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.