Mitchells & Butlers (M&B), the owner of pub chains including All Bar One and O'Neills, has kick-started a group-wide IT change plan supporting renewed focus on its core brands and the transition towards a food-led business model.
As well as driving change, the hospitality firm is looking to generate £25m in overall cost savings this year. IT represents about 1.5% of the company's yearly operating cost and the goal is to reduce technology spending by about 20% over the next two to three years.
Leading the transformation is chief information officer (CIO) Mike Sackman, who reports to former Citi CIO Robin Young, hired as commercial director earlier this year with a brief to get better value for money from suppliers across several areas including IT.
"As we create a blueprint for change and expand through acquisitions, we need to exploit our exiting portfolio and grow our brands, but do it for an absolute minimum cost," Sackman told Computer Weekly in an exclusive interview.
"The goal is to take what is a slightly expensive IT shop to one that spends the absolute minimum to deliver change and apply a much more systematic approach to our commercial strategy," he said.
"We also have to focus on customers - and not because it is good PR - it's because we depend on it. The whole change agenda in this business is geared at improving service and there is a significant IT deliverable there."
As M&B becomes increasingly food-led - the company has sold its budget hotel chain Innkeepers earlier this month to Travelodge and is rumoured to be looking to sell its ten-pin bowling chain Hollywood Bowl - the ability to process transactions quickly is crucial.
Core to that strategy is the update of a legacy point-of-sale system provided by Torex. The new version, provided by the same supplier, is currently being trialled and should go live by year-end.
By reducing the overall cost of maintaining the old system the firm expects to generate millions of pounds in cost savings. Once the platform is in place, further innovations such as mobile payments and contactless shopping will be considered - though the latter is not as attractive to the firm at present, since average customer spending exceeds the current limit of £15 for contactless transactions.
According to Sackman, one of the challenging aspects of his job is introducing the right technology innovation across the brands it will focus on in the future, which can vary between budget pub meals and premium country dining.
"There are discussions going on around whether capturing orders with a handheld device would be appropriate and if it wouldn't place a barrier between customers and staff, for example," said Sackman.
"In some of our businesses it might, as customers may be looking for more interaction, but in others it may just help us get food more quickly to the table," he said.
"From a cost perspective the aim is that a backbone of a restaurant will be the same in terms of internal communication and till systems - we just need to create IT efficiencies while delivering the appropriate tech to the appropriate businesses."
As M&B's food product range grows, a major area of focus is improving stock management, and a Red Prairie system covering that part of supply chain has been recently introduced.
According to Sackman, the focus on food has also prompted more sophisticated requirements around what are the right products to include in the menu and what's the margin M&B is trying to achieve across its brands.
"[Such decisions] can't be made by gut feel. We need modelling tools along with sales and forecasting data to drive decisions appropriately," he said.
"We are playing catch-up in terms of core reference data around what products we sell, but there is a huge focus to reverse that and get quality data all the way down to ingredients and attributes such as nutritional value."
Given that staffing is one of the company's major areas of expenditure, the company is also looking into systems to enable better management of staff as well as employee self-service.
Sackman said peaks of seasonal demand, high turnover rates and the ever growing need for different skill sets in different areas of food service means that M&S accelerated the use of scheduling tools linking people's capabilities with forecasting in terms of labour associated with sales.
"The need to deploy the right people in the right places also meant we introduced e-learning material around areas such as health-and-safety and compliance," he added.
The next step on the implementation of staff-focused tools will see the firm moving towards a more comprehensive employee self-service approach in the next two years, to enable better engagement with retail staff in its restaurants.
M&B has also rolled out HTC mobile phones to all of its operations team, which includes highly-mobile regional retail managers. This enables staff to get better access to data and communicate more effectively. Though the firm has not introduced unified communications to support the process, such tools could be rolled out in future.
"We haven't given a phone to everybody, and have steered clear of the one-size-fits-all way of doing things. If staff bring in their iPhone or other smartphone we will find a way of securely connecting them to the company's e-mail system, but the company provides IT to staff on a role-based approach," said Sackman.
Supplier consolidation ahead
Other enterprise systems, such as human resources and finance - provided by JD Edwards and PeopleSoft respectively, are clear candidates for business process outsourcing. "If we can find someone to do it for less and quicker, we will be exploring it," said Sackman.
M&B's main suppliers include IBM, which looks after the company's infrastructure, and Fujitsu, which covers hardware maintenance. Apart from these major partners, the hospitality firm works with about 50 application management suppliers.
One of the main areas of focus for commercial director Robin Young is to work with Sackman to deliver "outstanding value for money with the current outsourced IT providers", who said there will be intensive renegotiation and consolidation on the horizon.
"When it comes to suppliers, it is all down to how we get over the right messages to people to help get them to deliver what we want," said Young. "The reality in this country is that everyone is tightening their belts, including our suppliers. So we are looking at how to get the most value and if necessary, consolidate significantly," he said.
"Someone has got to hit this table and show us different ways of doing things and develop a proper business relationship. What we are looking for are partners, not clichés."
Looking ahead, Sackman will focus on delivering a "significant change journey" while keeping the cost low.
"What we are doing is all about putting in place the architecture that will enable [customer-facing technology] that we may not be able to do yet, but we will in future," said Sackman. "The trick is to make your set-up flexible and agile enough to implement these things."
"However, the only way you can do that is by being a part of the business debate and not just being a receptacle for orders."
Developing an efficient M&A plan
As part of its strategic review Mitchells & Butlers will look to sell its non-core assets so that it can focus on growing its food-led business, which includes Harvester and Toby Carvery, with acquisitions also in the horizon.
Mitchells & Butlers CIO Mike Sackman said his team is well-versed in handling the IT aspects of disposing of and acquiring businesses - he cited the acquisition of 250 Whitbread pubs two years ago and the subsequent one-third increase in revenue, without an equivalent labour cost increase, as an example.
"If we have a potential acquisition target, we will send some of our team and they will go through a checklist and tell us what will work for us and what won't - it is a very well-oiled machine," said Sackman. "They will come back, download the data into a central unit and then we can see the areas where we are behind and where we can add benefit."
According to the CIO, the IT aspect of a disposal process depends on who the purchasers are and how much of M&B's assets and systems they will want to keep.
"However, to be highly acquisitive and rapid, it is in everyone's interest to get it completed in an efficient manner: no one needs a long transition post-deal. It would be very unusual if my team is not sitting in on the process very early to discuss what can be used and what needs to be replaced," said Sackman.
Sackman added that it would not be unsual for chief executive Adam Fowle to call him to ask advice on IT-related aspects of potential acquisitions such as systems migrations.
"IT has to be an integral part of the thought-process around acquisition and disposals, not just in the receipt of the outcome."
Sackman's tips for IT leaders undergoing a merger or disposal are:
- Develop a plan: "Having a template for doing due diligence is very important, so you are not reinventing the wheel every time you do it."
- Have a vision around future technology synergies: "The ability to drive synergistic benefits from acquisitions is also key."
- Don't obsess about IT: "It is important to not get too dogmatic about the IT strategy to the point that you constrain the acquisition - you have to be prepared to flex your strategy to get the deal done."