In his first interview since becoming Domino's Pizza IT director last September, Colin Rees talks to Computer Weekly about the fast-food chain's IT agenda
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Domino's Pizza is preparing for its first experience of IT outsourcing, as it focuses on continued innovation to meet the demands of its impressive online growth.
The UK's biggest pizza delivery firm reported a 17.8% year-on-year increase in total sales for the 13 weeks leading up to Christmas, with its online business growing by 63% to £128m.
To lead the technology plans supporting the firm's expansion, web veteran Colin Rees was hired to replace former IT director Jane Kimberlin, who left Domino's in May 2009 to form her own consultancy.
Rees started his career in retail IT in the mid-1980s at Argos, where he spent a decade. After that, he held senior positions at companies such as News International and businesses with a strong web presence, such as easyJet and lingerie retailer Figleaves.com.
"I will be using my grounding and lessons learnt over several years at easyJet, a fast-moving company that is continually using digital technologies to drive the business forward," he told Computer Weekly.
Rees' job will involve maintaining the company's innovation edge, as well as controlling technology costs and "keeping the show on the road" which, he says, is a challenge in itself.
Out with commodity IT
Rees will be looking to outsource as many commodity tasks in IT as possible, and the 2011 agenda will see significant activity in the back-end infrastructure.
The first area that will see change is Domino's datacentre, which is located in Milton Keynes and hosts about 100 servers supplied by Dell.
"Online sales have been up 60% and the growth has been phenomenal, so we will have to scale up the infrastructure to cope with that on a regular basis," says Rees.
"We are looking for partners to help us run an externally-hosted datacentre, so that will be a change in strategy for us. The goal there is to give the internal team more time to focus on innovation."
A key aim for the datacentre, says Rees, is to achieve a "much higher level" of virtualisation - about 30% of Domino's servers are already virtual and that is likely to increase to 50%-70%.
The company is considering alternatives, such as infrastructure-as-a-service. Cloud computing is another option, but the IT director implies that this approach is not mature enough for the company's needs.
"Cloud is a bit harder," he says. "We are still investigating it, but at the moment it is hard to see how we can deliver the service levels we need through a public cloud solution.
"However, it could be that a private cloud could give us the higher service levels we require, as well as some additional flexibility for dealing with the big peaks of demand we have."
Another project due to take place this year is the review of Domino's wide-area network (WAN), which could potentially be managed by an external supplier. There will also be other infrastructure-related work around the company's move to a new head office.
Rees reiterates that the projects' main goal is not necessarily to reduce cost, but to enable the department to scale up to meet growth requirements.
"It is not really about cost reduction, it is about allowing the department to support business expansion without increasing costs," says Rees. "It is also about improving the level of service to our customers.
"I have inherited a pretty lean and efficient IT function, so this is all aimed at driving revenue rather than pinching pennies."
To reinforce his point that the decisions around sourcing have little to do with reducing IT spending, Rees says he does not have a projection of how much the company will save when the datacentre and WAN operations have been outsourced.
"If we can get a cost advantage by outsourcing, then great, that would be very useful," he says. "But that isn't the goal at all - hence I haven't got a [savings] figure in mind."
This year, Domino's will begin to replace its entire electronic point-of-sale set-up, which covers a network of 665 stores nationwide.
The first pilot store was upgraded last month and involves a new application provided by Domino's US parent and equipment supplied by Computacenter. The full roll-out will happen over the next two to three years.
An overall refresh was carried out around the website infrastructure in March 2010, but Rees says web improvements are a never-ending job.
"With the web, it needs to be a continual process," he adds. "There will be a lot more incremental improvements around the web this year. We will look at more 'licks of paint' as well as more significant changes.
"The trick with the web is, you should look at a website today and not be able to tell the difference [of incremental change], but if you compare it with what it was a year ago, it should look totally different."
Following the release of several web-based sales channels over the years, Domino's is reaping the rewards of its iPhone app, which has brought in more than £1m worth of business since it was launched last August.
The application was promoted via Domino's Facebook and Twitter channels and has had almost 400,000 downloads.
An Android application is due to be released this year, and Domino's will revisit its mobile strategy around the other mainstream platforms in the next six months.
"There is a huge range of mobile platforms out there, but a lot of them don't have the market penetration and active users that would make it worth the investment of a bespoke platform," says Rees.
"Mobile is a fast-changing area and while we don't have any specific plans for new things, we will be proactively looking at what is out there and what makes sense for us to be developing against."
Rees says the firm's multichannel strategy will remain "largely the same", but the team will keep its ear to the ground for developments around areas such as mobile- and tablet-based applications and web-based TV.
Future of the IT function
The IT director does not expect any redundancies in Domino's 29-strong team because of the decision to move some IT work to third parties, but he does plan to equip Domino's staff with the skills they will need for the future.
"We have incredibly dedicated and professional people, but, as in any organisation that grows, those people need to grow as well and that will undoubtedly mean training and upskilling for everybody," he says.
"Also, this is not a broad outsourcing operation. What we are trying to do is find areas that are commodities that others can do more efficiently than we can, and so refocus our efforts."
The need to make the most of internal resources is nothing new, but Rees concedes that the needs around technology at Domino's have changed because the company relies increasingly on IT to grow.
"That is driven by a lot of changes in the marketplace," he says. "Online sales are up and represent nearly 36% of our total sales. The business now places different demands on IT and we are reacting to those changes."
Managing change is what Rees expects to be the most testing aspect of his job in the coming months.
"The main challenge will be to manage the shift from having everything predominantly in-house to managing third parties," he says. "Online sales will continue to increase, so developing and managing a structure to support that will be another big part of what I do.
"In a year's time, I expect to see us much more closely aligned to the business and also spending a high percentage of our time on development projects and new initiatives, and a lot less time on the day-to-day support operation."
|Best practice in outsourcing|
|Moving from an IT set-up that has been traditionally managed internally to an external supplier can be a daunting task, even for seasoned technology managers.
Colin Rees at Domino's Pizza says the key commandments to keep in mind when leading such an exercise are: