When Andy Haywood says he is extremely busy, it is probably not an exaggeration. Eight months after joining the Co-operative Business Group (CBG) as group chief information officer (CIO), he is leading a full-scale IT transformation covering all its subsidiaries from financial services to supermarkets.
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Group CIO is a new role, which Haywood describes as a “very enlightened approach to business enablement and growth” and also “one of the most interesting, challenging, and complex IT jobs in the UK.”
“This is going to be the decade of the Co-op and my job is to make sure that IT rises to the challenge and can deliver this ambitious and stretching agenda, building on what we have already delivered,” Haywood tells Computer Weekly, in his first interview in his new role.
“I want IT to be at the centre of that transformation and for that I need to build the best IT team in the UK."
Haywood is in the midst of one of the first deliverables of his strategy, which is the new operating model for group IT. His first area of focus was to develop and share the strategy, which was then taken to the board for approval before execution began.
The Magnificent Seven
He says the plan’s main cornerstone is a series of initiatives dubbed “The Magnificent Seven”, which encompass the implementation of a flexible sourcing model, consolidation of technology platforms and innovation, as well as the creation of a highly skilled IT team and leadership.
The first part of the three-year plan will take another six months, by the end of which Haywood expects to have a clear IT roadmap, as well as the right leadership and technical capability to take the plans to fruition.
“We are trying to modernise the Co-op. We believe customers lost faith in big businesses - the news nowadays is filled with corporate horror stories, the public feels they are not getting a fair deal from businesses and technology is being blamed for a lot of glitches that have affected customers,” he says.
“So my job is to ensure IT supports all of the Co-op business so it can trade and provide customers with fantastic service."
Haywood says he is driving a “holistic and collaborative” approach to IT, where equal technology partners are embedded in the businesses they support. On the flipside, the team will focus on consolidation and take advantage of shared services where possible.
As part of the plan, Haywood appointed a new group chief technology officer (CTO), who will look at the legacy platforms and plot a new application and infrastructure roadmap for the next five years. The idea is to address legacy issues, rationalise the IT portfolio and drive cost-effectiveness and flexibility for change.
We will collaborate more with our IT suppliers going forward, but of course, the quid pro quo of collaborating more is that we will expect more from them
“The Co-op is consistent with many big businesses in that it's trying to manage its legacy on one hand and deliver innovation and fresh thinking on the other. The Magnificent Seven interventions will enable IT to move from where it is today to where it needs to be to deliver this modernisation,” the CIO says.
“There is one thing for certain: things are changing and the pace of change is faster than ever before. And I want to build the technology landscape that supports the business with as much flexibility and agility that we can.”
Creating a financial services giant
The headline for CBG’s IT is Project Verde, which takes a considerable amount of Haywood’s time. The project's challenging scope entails moving nearly five million customers from 632 Lloyds bank branches that are being acquired for £750m by the Co-op.
“As you can imagine, undertaking something of that scale and complexity to a different technology has massive cost and risk implications. So the scale of how that is going to operate, the work with Lloyds and the migration is huge,” says Haywood.
“Creating the sixth biggest bank in the UK is a tall order and that will take a number of years. In the last six months we focused on the strategic thinking and we know what the technology solution will look like for the enlarged bank. What we will be doing in the next three to five years is executing upon that strategy."
Underpinning the whole Co-op banking operation is a consolidated banking system which is a mix of bespoke and off-the-shelf software – the former being prevalent as it is typical of large financial institutions. It covers bank accounts, mortgages, savings, payments, risk, human resources, finance systems and already supports three million customers.
The combined bank will initially operate on a separate version of the existing Lloyds IT platform. This will be managed by Lloyds for the enlarged Co-operative Bank, on a managed service basis and on commercial terms.
“We are very focused on making the customer journey the centre of our plans and technology will be key in making sure it is all seamless. Once we've done that, we will get into the phase of making it all even better,” says Haywood.
Improving the supermarket business
After successfully completing the Co-op integration with Somerfields at the end of 2011, CBG commenced Project Smart, a multimillion-pound development which includes the upgrade of the supermarket’s supply chain systems, so that products can be replenished centrally across the chain’s 3,500 outlets and on-shelf availability can be improved.
“A lot of upsides can already be seen, with availability going past 97.5%, as well as great feedback from shop colleagues and customers seeing products more available,” says Haywood.
“We are also looking closely at social media and how we deliver tools for our colleagues. That will include the desktop experience, intranet, tablets, mobile and so on, joining up all elements of technology that the colleagues see into a set of compelling tools."
Co-op supermarkets also had the availability of payment points using contactless technology extended before the Olympics. Feedback from customers and uptake was “in line with expectations," says Haywood.
“I wouldn’t say contactless has exceeded our expectations, but it is something customers say they want to see, so there is another way of transacting with the Co-op."
Haywood has nearly completed his capability reviews for the in-house leadership team, and next on the list is analysis of the next level. Currently, the CBG IT team has 2,500 employees spread across the various group divisions.
“The key focus is bedding in that new organisational model to support the strategy and successfully taking our colleagues through that journey of change,” says Haywood.
“Of course it is a sensitive time, but we have a great communication and engagement plan to take it to next level, take colleagues with us respectfully, inclusively and keeping some of the great talent we’ve got while bringing some more talent in to deliver for the business."
Another strand of Haywood’s plan is focused on CBG’s sourcing model. Currently, there are various models in place, and historically each business area has managed their suppliers separately.
“I am looking to develop a flexible resource model, making sure that the real technology crown jewels for Co-op are fully managed and supported. Innovation, roadmaps and things like that should all be done in-house so we are masters of our own destiny – it is very important that we own those processes,” says Haywood.
“Of course, I also want something that can flex with the use of offshoring and partners and contractors as the business changes, considering its fixed and variable elements,” he adds.
“I really have a sense we will collaborate more with our IT suppliers going forward, but of course the quid pro quo of collaborating more is that we will expect more from them - more value, and more thought leadership to help us deliver the business strategy.”
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Haywood also makes clear that while he expects to benefit from suppliers’ market knowledge, he also wants them to overcome the typical challenge of being able to adjust their products and services for a specific customer.
“If suppliers are offering me the same as Tesco, Asda and others, that dilutes the competitive advantage. I am looking for partners to bring their industry and technology knowledge, but being aware of where we are and our current strategy,” he says.
“My commitment back to them is to be honest, open and transparent in sharing our plans and aspirations so they know what and why we are doing so they can figure out how best to help us.”
Looking back at his career, which included IT leadership posts at Boots and HBOS, Haywood says his experiences have been a rehearsal of sorts for his current role.
“There are not many people in the UK who have a plethora of retail experience, general merchandising, health and beauty, pharmacy, financial services. I have an unparalleled knowledge and experience in those areas and if you add all of that up, you have a pretty unrivalled expertise of most businesses Co-op has,” he says.
“There is lots of best practice that I am bringing to the table from previous years. Some of it is industry specific, and one of my challenges is that it would be dead easy for me to find the average of all those things and develop an IT strategy that was all things to all men, but I think that is a big risk as by definition, it will be just average."
The trick, according to Haywood, is to bring experience that is transferable from the industries he has worked in – as opposed to heritage that is not relevant, given that CBG is undergoing a modernisation.
“One of the commonalities that I found between Boots and Co-op is that real sense of trying to do the right thing, in the right way. And I have seen a lot of people here who want to do the right thing.” he says.
“My job will be to combine and coalesce those great people with great ideas, so the whole group can benefit from it.”