The top man in IT at the retailer talks about a comprehensive organisational change in the department and the technology agenda for the upcoming months
Waitrose is performing a total reorganisation of its IT department which includes the upskilling of its entire in-house workforce of nearly 300 employees and commodity tasks being outsourced.
The technology budget at the supermarket chain has been boosted this year, with a significant proportion of it being spent in outsourcing work to cope with bigger workloads and to introduce more flexibility.
According to systems director Kevin Berry, the amount of IT work carried out by third parties has gradually increased over the last couple of years: the figure in terms of outsourced personnel in 2008 was about 20-30 full-time equivalents (FTEs) in 2008, while this year it will be 80-100 FTEs and about 100-120 in 2011.
"I am using my internal workforce for the more 'intellectual' kind of work: design, architecture, planning, project management, leadership," Berry told Computer Weekly in an exclusive interview.
"If you think of our IT department as a sort of triangle, we are keeping the roles towards the top which add the most value within the company, but the roles towards at the bottom will be outsourced," Berry said.
According to Berry, who is responsible for all the IT supporting Waitrose's activities, the shift will not mean redundancies for the retained organisation, but a 'scaling up' in terms of the jobs the team will be doing in future.
New ways of working
To make the new structure work, Berry pointed out that all the tasks being carried out in IT have to be scrutinised first, followed by analysing how these tasks build up into roles and how such roles can be defined as jobs.
For example, some of the staff doing technical programming jobs are having to improve their skills to manage contractor work. In other instances, skills of systems analysts could overlap with those of business analysts and roles will tend to be combined, because the detailed work both roles do will be outsourced.
The advantage of the new set-up to internal staff is that it gives an opportunity for them to move up the ranks, while giving them more responsibilities and increased pay, said Berry. Though most are happy with that, the IT boss added that the process can also be challenging at times, because some people may not want to change.
"If you look at two years ago, when we had about 20-30 contractors, we had a lot of work on and struggled to cope with that. At the same time, I was asked to take some money out of the budget, which was difficult because so much of my cost was fixed - and we are not the kind of company that makes people redundant lightly, we'll do everything we can to keep people on," said Berry.
"What I am moving towards is a model that has a much more flexible chunk: in theory, in the board said to me that we have to take 10% out of the budget I could do that by cutting back on the outsourced workforce, and some of the projects. There would be painful of course, but I could cut costs pretty quickly," he said.
"The new model is a much better place to be than in the old set-up, where it was really difficult to respond to challenges quickly. If the business wants to ramp up very quickly and I have the right strategic relationships with partners, then I can share the pain with them."
Introducing industry standards
According to Berry, the changes are also intended to bring IT's practice in line with industry standards: Waitrose's technology department has worked with systems development and project management methodologies grown internally for several years.
Introducing standards such as Prince II and ITIL means that people can be recruited from outside and know how things work and also opens a range of possibilities for public training instead of creating bespoke coaching sessions.
"Most IT functions are constantly evolving, you but what we are doing is accelerating evolution: we know where we want to be and we can see that we have some big changes to do, so rather than spending five or 10 years, we set ourselves a target of three years to move from where we were a year ago, to where we want to be," said Berry.
"Our function won't look extremely different to what it is today to the casual observer: you will still have an IT function in Waitrose that is totally integrated with the business, but under the covers it will be very much transformed," he said.
IBM is helping Waitrose with the overall change plan, while other subject matter experts are also supporting the retailer in bedding down the transformation around tasks such as organisational development and design.
"We are not getting [partners] to do it to us, but we are ensuring that we are responsible for and leading the change, but with the help of these experts who have done this type of work before," Berry pointed out.
He expects that senior management may need some training to help their departments through the change, but the coaching will be geared towards improving leadership expertise rather than technical skills.
"Maybe they will need some polishing up in terms of how to lead groups of people through change, which might be threatening," the IT chief said.
"In the end, you want people to feel they have learnt something through a project like this, come out of it older, wiser and more capable."
A closer look at Waitrose's IT project agenda
The biggest projects currently taking place at Waitrose are around the refresh of all the company's supply chain systems in a 'heart and lungs replacement' exercise which was kick-started this year.
This includes the roll-out of a new supplier ordering system from Aldata and Waitrose is also looking into a partner for the replacement of its warehouse management system.
The supplier ordering system that is being replaced is bespoke and has been in use for many years, while the company's legacy warehouse management system has had several updates and still 'does the job', it is no longer able to support future growth.
"Going multichannel is putting more demands on our supply chain and we need more modern systems to support these developments. We are opening convenience and smaller format shops and that throws some challenges to the IT function, because the infrastructure of some of the systems we have will require a different approach," said Berry.
When it comes to developments around multichannel, Waitrose has been working on the revamp of its web platform for several months: the retailer had envisaged relaunching its website at Easter, but the project had to be postponed.
"We realised the project was a lot more complex than we had anticipated and we were not going to be able to provide a very good customer experience," said Berry.
"With so many things going on in the recession, there are things you can take a little longer to do, so we are getting the website ready for launch straight after Christmas," he added.
When launched, Waitrose's new online proposition will link together the online grocery shopping side and rich content including recipes, cooking tips and dynamic imagery. According to Berry, customers will be able to use the two websites seamlessly, with an optimum user experience.
"What our customers have told us is that over the years, the website has become clunky and they will go to other people's websites and the experience is nicer, faster. But it is like that with websites, a bit of an arms race," he added.
"What Waitrose is trying to do is take one big step forward and this has been quite a large project for us."
The web platform is based on IBM's Websphere products. Other partners including Infosys are helping out with commodity tasks.
"We made a conscious decision to use a lot of outside resource for the web project, with the design and management done by my internal team. Other people have done this sort of project before, so we don't want to do it from scratch; we know we can buy in that expertise," said Berry.
"We are also trying to do an awful lot of things in a very short space of time, and my resources are limited, so I have to be very sensible about where I use my people."
A latecomer in relation to self checkout use, Waitrose is now catching up and looking to roll out the tills across selected stores.
The firm is learning from the trials currently taking place with top-range Wincor Nixdorf tills across stores in Windsor and Gloucester Road in London and Godalming.
"Self checkouts are such a prevalent element in retail, but we are not putting self checkouts in because we think it is going to save us a huge amount of money - in fact, it might even be cost-neutral. The reason is that we want to give customers a choice," said Berry.