Boots the Chemist IT director Andy Haywood is leading a transformation project at the retailer and undergoing a review of his team's requisite skill-set. There is a lot of legacy resource at his fingertips and it's a tough decision to make on what still has value.
“Boots is an SAP house, it’s ERP with a small ‘e’ at the moment. We have no reason not to stay with SAP, it’s an investment choice that we’ve made and will drive.”
He defends the German vendor. “It is not the product,” he says. “Are we clear about the business proposition? And are we clear about the efficiency it will drive?” As with a number of CIOs that have reported major savings and successes with SAP, Haywood believes the key to SAP, as with all enterprise applications, is a clear direction on the business benefits.
The transformation plan means that while Boots has increased its IT capex over the three-year period, Haywood has had to remain rigidly disciplined with the opex. “We have very tough cost targets and we are constantly looking at them,” he says.
Haywood has benefited from a management board that value IT. “They have a very enlightened approach to technology as part of their everyday language. The flipside of that is that they are very demanding,” he says with a smile.
“We have a good dialogue with all of the business forums within Boots. At Boots you can get to the decision makers and that is part of the culture which is very collaborative,” he says of life back at the 152-year-old company’s Nottingham headquarters.
The East Midlands city was the birthplace of Boots as a herbal medicine shop under founder John Boot back in 1849. His son Jesse grew it into the ‘Chemists to the Nation’ and the company remains one of the most important employers in the city.
“IT and I are trying to lead on some of the business initiatives that are nothing to do with [traditional] IT like training and the people agenda,” he says.
As part of the transformation plan Boots has carried out a significant virtualisation project, but Haywood is carefully cautious about some technologies.
“I’m slightly sceptical of cloud computing and I’m not sure if it is disruptive. We are not chasing any clouds, but if it works for us and the customers we certainly wouldn’t rule it out. I’m not going to get any recognition for chasing the latest technology,” he explains.
Chop and change
In October 2010 Boots made 10 per cent of its back-office workforce redundant, with 900 people losing their jobs. IT was not immune, but Haywood explains that for his division any job losses have given him an opportunity to hire new staff.
“All retailers are looking at the cost base and IT is not seen as a cost, so we are growing the IT capability but also reassessing our cost base.
“So the headcount changed in size, but we’ve brought a number of new people in. We need people for the three-year journey. We have developed a lot of our existing talent and we have looked at our sourcing strategy. We have brought more technology in-house so we now have build and development capabilities from partners who are experts in their own fields. But we are now more in control of our technology decisions ourselves.
“We were heavily outsourced and we were sometimes in the hands of the partners. I have brought infrastructure, telecoms, architecture and sourcing strategy back in-house.”
To re-grow his IT capabilities, Haywood has been recruiting from fellow retailers and a wide range of sectors.
“I’m after radiators that know the technology and have the know-how to work with customers and a record of delivery. One of the biggest challenges is to find enough good people.
“We have a new IT structure, which was set up at the beginning of the year. We’ve gone from a manufacturing model which is popular with consultancies to a customer-based solutions model,” Haywood explains. Now the IT team works in three teams focusing on shops & pharmacy, supply chain and back office.
“One of the great things about IT is that I get to see and touch every part of the business. These are the three big delivery engines with senior leaders in each and then architecture separate to them,” Haywood explains.
Online retailing sits within the shops & pharmacy division and forms part of the multi-channel retailing strategy that Boots, like its rivals, is aiming for.
Boots expects online revenue and presence to grow and is aiming to deliver all of its products via whichever channel the consumer chooses.
Boots has always been a big user of IBM through a deal Haywood describes as recently “unlocked”. Big Blue remains a key supplier to the company, but the need for specialist expertise means he has to be able to shop around for ICT partners.
“The technology landscape is becoming more fragmented and specialised. It is simply unreasonable that one or two organisations can give you the breadth of expertise required. We need to be able to respond quickly,” says Haywood.
“One of the things that has changed is the commercial dimension of any partnership. In the last 12 months we have shifted to work with partners who have the same culture and value set as Boots. High-energy, delivery-focused and flexible organisations,” he explains.