Health and beauty retailer Boots is embarking on its biggest IT project to date, implementing wall-to-wall SAP across its 1,400 UK outlets and Boots Healthcare International.
Although Boots ill-fated Digital Wellbeing and Boots Healthcare International have used SAP, this is the first roll-out of the ERP software on the retail side. The current project will replace a mass of legacy systems.
Andrew Hey, head of application infrastructure at Boots, said, "In many ways it is a greenfield SAP implementation. We are setting up a new business architecture. Hey said the implementation would result in "almost wall-to-wall" SAP. "When completed it should be the biggest R/3 SAP implementation in retail," he said.
Embarking on such a large-scale project is a bold move - especially when large SAP roll-outs have a reputation for over-running and being hard to implement.
"It is quite risky going for such a large project," said Hey. "It has been hard to find benchmarks in the retail sector. In some ways we are bucking the trend for retailers by going with SAP."
Hey admitted that, compared to other options, the finished result would lack functionality but this would be outweighed by other benefits. "We can build on it, it will last and it is safe," he said. "We can derive value and increased flexibility and we will be able to deploy new initiatives much more effectively."
The project centres on finance, human resources and datawarehousing based on the SAP Business Information Warehouse. Elements of all three will go live over the course of the year.
The initial phase will take about two years and replacing finances alone will take one year. Future projects include SAP customer relationship management software, "initially in a limited way", to help manage the firm internally.
"I do not think we will ever really complete the project," said Hey. "It will be a continual programme of building business capability into the SAP backbone. It is the biggest IT project Boots has ever undertaken."
Boots will tightly integrate SAP with existing applications such as its forecasting and replenishment engine and its tactical software for planning the location of goods in-store. Over time, the company will migrate its supply chain to SAP and use it for merchandising and supplier master data.
"The integration benefit is the largest aspect," said Hey. "There is also a positive return on investment in this project, which was the main vehicle for getting the board behind it."
A key focus is to build a business model for Boots Healthcare International and retail businesses that supports the re-use and sharing of systems and processes. "There are all sorts of economies to be had, but you need to understand where to maintain independence," Hey said.
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Boots' IT drive
- Boots to standardise on SAP in its largest ever IT project
- It has increased its annual IT budget from £12m to £79m for the year to 31 March 2004 to improve infrastructure and integration
- It has announced 500 more job cuts - mostly IT and human resources - at its Nottingham head office.