Boots is a UK pharmacist and beauty product retailer. The business has nearly 2500 stores around the UK and employs around 80,000 people. Its parent company Alliance Boots, a multinational pharmacy and beauty company owns 170,000 pharmacies and is the UK leader in the field. Last year Alliance boots reported EBITDA profits of £1,443 million, which includes joint ventures and sales. Alliance Boots was formed in 2006 through a merger between Boots UK chemist and Alliance UniChem and is now no longer a publically listed company.
Boots has one of the most successful loyalty card systems in the UK, with over 17 million active card holders and has set a blue print for a rewards system which many rival businesses have imitated. Jonathan Vardon is currently the IT director for Boots, having taken over the role from Andy Haywood. Haywood left Boots mid-way through a transformation program. Boots has introduced a new fulfilment operation for its online business, by consolidating all of their operations to one warehouse which simplifies the processes and product flow.
The CIO 100 panel felt that Boots was once one of the most innovative retailers, but overall they feel that is not evident at present. Vardon in a recent CIO UK interview admitted Boots was guilty of point solutions, which the panel agreed with as an analysis. With Vardon highlighting major investment for 2013 to 2014 the panel again felt this was another one to watch.
Ade McCormack said: "He comes across as liked and a good people leader."
Mike Altendorf said: "He's brought IT back to the board and given them confidence in it."
Mark Chillingworth said: "He's done a good job to to step into Andy Hawwood's shoes. To pick up somebody else's transformation project and write your own one for the next three years in a year is pretty impressive."
In June of 2012 US pharmacy retailer Walgreens acquired a 45% stake in Alliance Boots, the company of which Boots is a part.
As well as its deal with Walgreens, Boots acquired Nanjing Pharmaceutical in China in 2012 and this global reach is a key driver of Vardon's technology and online strategy.
"Everything we are doing has a digital lens," says Vardon. "The new Burton-on-Trent warehouse will drive our online and international business," he says of recent supply chain improvements. Revisions to the pharmacy business are also being carried out by Boots and Vardon says the focus is on making sure in-store and online areas of the business support each other as much as possible.
"We have done a lot of work on pharmaceutical management systems. Boots and IT has been guilty of point-to-point solutions," he says, and indeed industry watchers have been critical of the pharmacy systems and prescription services offered by Boots.
"The leadership understand the complexity of the IT estate and the very old ways of working and there is a great recognition and expectation of what IT can do," Vardon says of the role IT is taking in the business transformation.
"The last couple of years there has been a huge capital investment in IT to really put it at the front of the organisation's transformation. Not only will this continue, but we are significantly increasing our investment in 2013-14 when compared to 2012. IT has never worked more in partnership with our business teams."
IT leader: Jonathan Vardon, IT Director.
In role since: May 2012.
Reporting line: CFO who sits on the Executive Board.
How often does the CIO meet with the CEO: Fortnightly one to one, weekly in Leadership Group meeting.
Board level seat: Boots UK Leadership Group.
IT budget: The IT operational spend compared to company turnover as a percentage is around 1.6% cost to income.
IT staff currently employed: 350.
Split between in-house/outsourced staff: 35% in-house/65% outsourced.
IT management team and reporting structure: Five direct reports:
- Director of Strategy & Architecture.
- Director of Service Delivery.
- Head of Solution Delivery (portfolio).
- Head of Solution Delivery (programmes).
- Head of Business Office.
- My management team also includes Head of Finance (IT) and HR Business Partner.
Primary technology platforms at the organisation: Our supply operation is planned and orchestrated through a suite of mainframe applications. The mainframe also enables a number of finance processes, with the accounting being executed in SAP. We have plans to move to SAP for all ERP execution activities. For EPOS we operate an IBM 4690 environment and we have our own Pharmacy Management system.
Primary technology suppliers: SAP, Oracle, Microsoft, IBM, HP, and Cegedim.
Significant strategic technology deals struck in the last 12 months: Microsoft ELA agreement and the transition of the EUC operation partner to Computacenter. We have also just completed a three year AD/AM tender with Cognizant and Steria.
Percentage of your applications/infrastructure run from the cloud: Around 10%.
Major technology or transformation project recently completed and how did it transform operations, customer experience or the organisation:
- The move from Lotus Notes to Microsoft BPOS and then Microsoft Office 365 which has brought significant improvement to Support Office colleagues ways of working. Improvements include the flexibility in accessing email, calendar and sharing presence plus the ability to access the service externally without attachment to the corporate network via browser or smartphone.
- Advantage Card Futures Programme which has recently won several high profile industry awards (BT Retail Week Technology & SAP Run Prouder) is a prime example of a true technology based transformational project with customer impact. Centralisation of points via SAP CRM as well as world class analytics from the IBM Balanced Warehouse is giving Boots UK the capability to better personalise and target our deals and offers with customers. This is an innovation with obvious commercial benefits to Boots UK, but also for our customers as they receive promotional material which is more appropriate and meaningful to them as individuals.
- Boots UK has implemented a new fulfilment operation for its boots.com business, which is delivering a step change in the service and care we give our customers and in the profitability of this business. This has been enabled by the consolidation of the warehouse operation into our Burton on Trent warehouse and automation of the processes and product flows. This has created a platform for future .com business growth and to transform the service offered to our customers.
Business transformation programme – beyond technology – that the CIO owns or is a major contributor to: Benefits Realisation – working with Gartner and our finance/change teams to identify approaches to, and embedding benefits realisation methods, activities and accountabilities into each step in the benefits lifecycle of our capex investment.
IT Academy - Our vision is that we will build a sustainable pipeline of talented and energised graduates/college leavers/technical specialists who will infuse the IT function and reduce the need for contractors/external suppliers, which fits with our mission to be the “best value IT team”, delivering services in a way which embodies Boots UK distinctive and unique values of entrepreneurship, partnership, trust, service and simplicity.
Strategic aim of the CIO and IT operation for the next financial year: Deliver value to the business through simplification, innovation at pace especially in consumerisation and healthcare and great cost control.
We have a multi-pronged transformation across supply chain, multi-channel, healthcare, stores and back office. Each change aligns to the strategic objectives and goals of the organisation and, working in partnership with the business, we will bring a customer focused innovation lens to what and how we deliver.
Our IT capex investment has peaked over the last two years and is predicted to remain at the same level for at least the next three. This will enable us to continue our simplification journey, identifying the opportunities for us to further our ERP platform that will support business agility and growth plans.
Strategy in the use by employees of their own technology, use of mobiles and how social networking is impacting operations, customer experiences or the organisation: Colleagues can use their own smartphones/tablets to connect to corporate email services via Microsoft Office 365, these devices are treated as “off network”, and as such are not managed or operationally supported by Boots UK IT.
Colleagues are provided with instruction sheets on how to setup and connect to the service, which are refreshed when the services or devices change, other than that no direct support is provided.
Public Social networks are only accessible from Boots corporate machines by exception only however a POC of an internal social network service is currently live.
Public Social networks are presently monitored manually by an internal team, with another separate POC underway to introduce a level of automation for both monitoring and analysis.
Strategy for dealing with shadow IT and BYOD including influence and engagement with executives, to place the right controls around employee choice: Through our migration from Lotus Notes to Microsoft BPOS and then Microsoft Office 365, we have removed previous blocker to elements of BYOD. Although we don’t have a policy of actively encouraging or more significantly funding BYOD, through the move to Office 365 it has encouraged a significant volume of users to use their own personal smartphones to connect to corporate email. Furthermore, a number of colleagues have given their corporate smartphone back, and now operate solely on their personal device, bringing a direct saving to the organisation.
Technologies being considered to enable transformation: There are a number of technologies that we are trialling and considering for future innovation and transformation across all aspects of the business. Our collaboration with our business partners is excellent and driving the right investments. These include the following considerations:
- POSBC for mobile payments in stores;
- WebSphere Commerce to further enable our .com international plans;
- In memory analytical capability to support RTOM and big data social analytics;
- An in-house Java based pharmacy system;
- Virtualisation via Linux in datacentres;
- Wi-fi for partners and customers in store;
- Mobile applications/multi-functional kiosks to further our multi-channel plans;
- Furthering our SAP ERP development to simplify the landscape.
Transformational inspiration sources: We know where we want to play in order to further differentiate our offer and delight customers and colleagues alike. Inspiration can come from a variety of sources including but not limited to analysts, industry contacts, partners and suppliers, wider media and my team and peers. However, first and foremost we want to do the right things for our customers now and in the future, and our work is always aligned to what they tell us they want now and may want in the future.