Gotta be cruel to be kind

The head of IT at UK supermarket chain Sainsbury's has a story to tell that anyone contemplating large-scale outsourcing might learn from.

The head of IT at UK supermarket chain Sainsbury’s has a story to tell that anyone contemplating large-scale outsourcing might learn from. This one’s a success story, so the advice of Maggie Miller, who calls herself Sainsbury’s “business transformation director”, is worth listening to, although there’s a sting in the tail.

First, some background. Sainsbury’s is a massive company by our standards, clocking up annual sales of about $40 billion. It’s an old outfit -– established in 1869 –- employing 140,000 staff, operating 19 depots throughout the UK and moving 15 million cases of goods each week. In 2000 a new chief executive came up with a plan to carve $1.8 billion from the company’s costs, through an overhaul of stores and IT systems (50% of the sum spent on the project would go on store refurbishment, 30% on IT platforms and 20% on rebuilding the supply chain).

Miller joined the company in 2000, inheriting a freshly signed outsourcing deal with Accenture, which saw 1000 Sainsbury’s IT staff move to the consultant firm. How that seven-year deal (since extended by three years) has panned out was the subject of a presentation by Miller at a Gartner outsourcing conference in London a fortnight ago.

The company was seeking to return to the times when it was an industry innovator (it was the first supermarket to introduce wire shopping baskets!), but Miller says IT was hindering rather than helping the process. It also wanted to chop IT operating -– or “keeping the lights on” -- costs by half. When 95% of IT spending was operational, you can see why.

The project’s far from over, but Miller reports big improvements. For example, the company’s 13 point of sale systems have been replaced by just one system (converted at a rate of 22 stores a week); it has rationalised the numerous flavours of Unix (“including some we’d built ourselves”) it was running; and implemented a data warehouse and online shopping platform.

Pragmatism –- and lack of sentimentality –- have been the keys. The company wants to lead the market in terms of customer capability, but has chosen a “middle of the road” approach to financial accounting, Miller says. And while it has replaced its systems from top to bottom, it hasn’t forgotten to attend to the people part of the equation. About 200 staff were trained in “benefits realisation planning”, so that the company’s changed –- and more efficient -– processes were well understood. Brutally, perhaps, those IT staff who weren’t able to transform themselves in line with the system makeover were hurried out the door.

Making a project of such scale work takes a focused, committed team, Miller says. That spells bad news for those she calls the “masses of middle of the road talent you haven’t the heart to fire”. Ouch.

Doesburg is Computerworld’s editor. Send letters for publication to Computerworld Letters.

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