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1/30/2004
04:32 PM
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No Whining Here

Gallo CIO Kushar is confident technology can help ease price pressure

Two controversial ideas are circulating that take direct aim at the future of business technology: IT is a commodity and no longer provides a competitive advantage, and offshore outsourcing will destroy the IT profession. But Kent Kushar, VP and CIO at E.&J. Gallo Winery, says they're both hogwash.

While PCs, networks, and data centers are commonplace, they're still the tools of innovation, Kushar says. "A child using a hammer and chisel doesn't make nice sculptures. But look at what Michelangelo did," he says. "The tools may be commodities, but how you use them is not."

Kent Kushar

The economy has forced Gallo to get closer to its customers, Kushar says.

Kent Kushar
The need for innovation, Kushar says, torpedoes that other theory about a dismal future for U.S. tech workers. "There will be new markets, new consumers, new companies, and new growth--all of which will require new technologies," he says. "Those new technologies will create jobs in the U.S."

Kushar's belief in the value of business technology has resonated at Gallo, resulting in a number of innovations that earned the privately held winery the No. 3 slot on last year's InformationWeek 500 list of the best users of technology. Kushar, who joined the company as CIO in 1996, has helped lead those innovations, such as mining sales data to help distributors and retailers better categorize and position wine brands and improve consumer sales.

Yet revenue growth is the biggest challenge facing the U.S. wine industry, with the influx of low-cost good-quality wine from such places as Australia and Chile and, even more worrisome, the "Two-Buck Chuck" phenomenon. The latter refers to Chardonnay produced by the Charles Shaw winery in California, which has gained a cult following among some consumers who insist it's pretty good, even at $1.99 a bottle. These factors have resulted in consumers who expect decent wine at lower prices, and that's driving down retail prices.

But Kushar is optimistic. He says the "more-for-less" expectation will be a continuing theme in his industry and in the broader business world for some time to come, but says there are big benefits to the added pressure. "This particular economy has really allowed us to get closer to our customers, our retailers, and distributors," he says. "They're making demands on us, and those demands help us focus." Internal business demands also have intensified, with the expectation that Kushar's team provide better technologies for equal or less money.

Focus and execution will be key themes for all companies in 2004, Kushar predicts. For Gallo, that includes increasing investments in voice over IP to cut global communications costs and investigating technologies such as Web services, radio-frequency identification, and business-intelligence systems. "We need more and better data about where our products are going and who's buying them," Kushar says. "Those are market demands [that] will allow us to get ahead and compete differently."

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