WM Morrison is planning to invest a further £200 million in rejuvenating its IT systems over the next three years.
By June, the supermarket chain will have invested £110 million in implementing new systems across the business since it began the project in 2007. Morrison said that the total investment of £310 million over six years was "close to an average annual expenditure on IT" for a group of its size.
The investment in IT contributed to a 21 per cent increase in Morrison’s underlying profit, which rose to £767 million by the company’s financial year end of January 31, from £636 million the previous year. The company also reported a growth in turnover of six per cent from £14.5 billion to £15.4 billion in its financial results today.
Under the programme, CIO 100 listed Morrison is replacing all of its core systems, including store-based point of sale, warehousing, manufacturing, supply chain and product management systems.
The company is implementing a complete Oracle retail suite of merchandising, planning and stores applications, plus the Oracle E-Business Suite for financials, HR/payroll and manufacturing.
It is also rolling out Oracle’s Siebel platform for CRM and Oracle Fusion middleware, including Oracle SOA Suite and Oracle Identity Management – all underpinned by Oracle databases on HP servers.
The company signed a three-year deal for a Cable & Wireless IP network at the end of 2008, to support the rollout of Oracle.
Meanwhile, Retailix is providing store-based systems and Wipro is carrying out the systems integration.
The IT overhaul was part of Morrison’s overall 'Optimisation Plan', which started in 2006, which the company said was completed "successfully" in January.
The plan, which involved improving efficiencies in areas such as manufacturing and distribution, helped the company make total savings of £526 million, surpassing its expected cost savings of £460 million. A total £43 million in cost savings was due to the IT investment.
Sir Ian Gibson, non-executive chairman of Morrison, said: "For the longer term, we will continue to utilise our balance sheet strength to invest for growth, with new space, new manufacturing capability and new systems priorities in the year ahead."
Initiatives under the Optimisation Plan included a till queue management system implemented in more than 300 Morrison stores and self-scan checkouts installed in over 260 (75 percent) stores.
Despite expanding and opening 43 new stores over the last year, the company said that these particular initiatives have helped to deliver "an overall year-on-year improvement in store labour costs relative to sales."
The company has also installed new payroll and HR systems, which covers 82 percent of its staff, as well as completed the first stage of new financial and distribution systems implementation.
Moreover, Morrison said it successfully piloted a new Electronic Point of Sale (EPOS) solution, which it plans to roll out to all stores this year. This is a common platform which replaces five separate systems the company currently operates.
In addition, the company has equipped all of its grocery warehouses with voice picking technology. The voice picking technology has helped the company increase depot productivity and pick accuracy at the company, which has led to more products being available in-store.
Over this year, the company plans to implement new manufacturing systems in its packing houses and begin the rollout of the warehouse management system. The company will also start to use its new product master file, which will eventually replace its legacy system.
Next year, it plans to deploy trading tools and continue rollouts of systems. It will also start its work on replacing supply chain systems.
"The Board recognises the strategic importance of this activity [IT investment programme], and has established a separate committee to provide appropriate oversight," said Morrison.
Morrison expanded its footprint by acquiring a series of former Somerfield stores two years ago from the Co-op, which acquired Somerfield in 2008. It acquired rival Safeways in 2004.