Data is key ingredient in chemists' merger

Alliance Boots takes low-risk, low-cost route on post-merger IT

Alliance Boots, the company created by last week's merger of pharmacy chains Alliance UniChem and Boots, is concentrating its IT efforts on master data management rather than planning a post-merger consolidation of systems.

The retailer, which has 2,600 stores in the UK and a further 400 overseas, is aligning the two sets of master data from Alliance UniChem and Boots so that the company's procurement function can generate speedy cost savings.

The master data reconciliation includes the prices of goods supplied to more than 125,000 pharmacies, hospitals and health centres. Each outlet can stock any of the more than 10,000 drugs that UK doctors can prescribe. They also stock up to 60,000 non-prescription products.

The merged company needs a single view of the 15 million people who use its Advantage card and its 100,000-plus staff in 15 countries.

Alliance Boots' director of IT strategy Adrian Chen said, "We are lining up product descriptions and supplier codes. The next step will be to identify a preferred source of master data for the organisation."

Robert Mack, vice-president at analyst firm Gartner, said, "The two companies have different numbering schemes. Once they rationalise the schemes, the executive directors will be able to see the whole picture and make investment decisions.

"Master data enables senior managers to watch trends, so it is directly related to buying power."

Alliance Boots is running Boots and Alliance UniChem's two underlying businesses - Alliance Pharmacies and wholesaler UniChem - as separate operations. Each of the three operating companies will continue to have separate IT functions and their own IT directors.

Alliance UniChem uses Evant Replenishment from supplier Manhattan Associates as its enterprise management and planning system, while Boots runs SAP for merchandising, procurement and property.

Chen said, "Because we have always had standalone units, we have always had standalone IT departments. It is unlikely that with the merger we will see a benefit in integrating those departments in the immediate future."

Mack said, "The most common thing you see when two companies merge in the same market is the absorption of one set of systems by another set of systems. If you are running standalone units, you need to do separate master data and procurement projects. The only risk is not taking the cost out, but they can always take that out later."

Alliance Boots has already decided how it will collect financial data from its separate units so that it can report its half-yearly results to the City in late November.

Alliance UniChem will use its Codascisys financial management system to consolidate data from its subsidiary companies. Output from Codascisys will be sent to Alliance UniChem's Cognos Frango performance management system.

The financial information from Boots' SAP system will be consolidated into Frango manually.

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