Boots is taking back control of its IT from a time of outsourcing. The leading purveyor of pharmaceuticals in the UK is building up its own IT capability, including in respect of its SAP estate.
The organisation’s SAP centre of expertise has helped it take back control of the strategic direction of its IT. That is according to Steve Clark, SAP programme head at Boots – part of Walgreens Boots Alliance internationally – speaking with Computer Weekly at the recent SAP user conference in Birmingham.
The centre of expertise is largely based in the company’s home town of Nottingham, and comprises some 200 people. About half of these are permanent staff, with the rest coming from Indian IT services company Cognizant.
Clark, himself a “Nottingham lad”, recounts how Boots holds an important role in Nottinghamshire’s business landscape. “We do a lot of charitable work, for example with [cancer charity] Macmillan.
The Boot family did a lot of work with the university, granting it land to build it, so there is a long history of caring for people and customers,” he says. “I think that’s part of why our Advantage Card is successful. Customers trust we’ll look after their data and present things to them both ethically and responsibly.”
The SAP centre of expertise was a function of the company’s UK department. It has been spun off into a separate IT shared services organisation that operates beyond the UK.
Boots merged with the Illinois-based Walgreens pharmacy chain in 2014. The US company had not been an SAP user in the way that Boots had been. But now they are converging their business applications landscape on SAP, with Software AG as the supplier for integration.
Clark says his expertise centre owns the SAP architecture for the group. “It’s a full lifecycle implementation model from architecture definition and roadmaps, through to production support.
Steve Clark, Boots
“When I joined Boots in 2015, I had been consulting for years. I told my wife I’d always had an eye on what was going on at Boots because I’m local to Nottingham,” he says. “If there was ever a great SAP job at Boots, I was going to go for it and stop travelling so much. But I was asked to go and set up a programme in Chicago within a few weeks of arriving, and the irony of that has never quite been lost on me.”
In staffing the centre, the company has recruited similar IT professionals, in the mould of former consultants who are local to the area and have reached a stage in life where they want to spend less time travelling and more time with their families.
Walgreens how has a stores-based greenfield implementation of SAP, with S/4 Hana for finance at its core.
Previously, the US company had an Oracle financials product. “We’re trying to design a common retail and finance template for both Walgreens and Boots,” says Clark.
Boots on Hana
Boots itself has a full range of SAP products, with ECC, CRM, SRM and Business Warehouse. It has been running Customer Activity Repository on Business Warehouse on the high-speed, in-memory, columnar SAP database Hana, ingesting electronic point of sale data from 16,000 tills. This underpins the customer relationship management intended for the Boots Advantage Card.
“That’s been a significant differentiator of Boots for years,” says Clark. “We were one of the first companies to really push having a card. We’ve got in the region of 17 million cards deployed. We can use it to segment customers to do more targeted kinds of product advertising and offers. So, for instance on the handheld app, if a customer puts in their advantage card details, we can present offers particularly for that customer based on their purchase history.”
The newer architecture underpinning the analysis of the card data has allowed Boots to achieve an improved segmentation of its customer base.
“Whereas we might have previously made three or four different categories of segmentation, we’ve now created eight or nine categories for analysis of customer purchasing behaviour, which enables us to carry out our space and ranging in stores more effectively,” he says. “It means people can present their card in a store and get bespoke current offers, based not just on the offers in-store but also on their own purchase history.”
Boots started to look at insourcing in 2012. “We had a couple of programmes of work in SAP and decided we needed to invest in internal capability.”
They had been working with IBM and Steria, says Clark, a former EDS and HP consultant with experience in outsourcing, as well as a formative period of eight years of service with the RAF.
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“You get to a stage where you start to deploy SAP into your production estate, and need to develop internal capability in understanding how the software works and what you want to do with it next.
“Typically, customers get to a stage in a programme lifecycle where it’s gone into production and they are still only able to talk to their suppliers about what might be coming next,” says Clark. “We decided to have an internal capability to do that, and it was not just to implement software but also to run it in production.
“We’ve been on a journey over the past five years, where we’ve increasingly brought things back in-house. We had quite a big programme a couple of years ago, called Own IT, which was a larger kind of insourcing effort, having been heavily outsourced. That was a broader approach, taking more control over our future and how we run our estate, having been heavily reliant on partners previously.
“It’s about being in control of our own destiny,” he adds.
Seek advice before starting an insourcing programme
In undertaking an insourcing programme such as the one at Boots, Clark advises others to actively seek advice from those who have done it before. “There are some well-defined organisational models for centres of expertise, or excellence. We also did some work with SAP to define what that organisational model was going to look like.
“You don’t just start with a massive internal function and then think ‘Oops, I’ve gone too far and now I need to do a restructuring exercise because I have overstaffed the permanent team’.”
SAP’s innovation lab in Potsdam, Germany, was the location for a centre of excellence conference Clark attended this year. “SAP was showing us things it was doing to try and help people reimagine SAP as an organisation. It’s renowned as being a tremendously effective transaction engine that’s very robust, running the guts of the company. So I think that’s a key part of its strategy – to help people understand they are thinking about innovation in their product suite deal.
“As for us, Boots does have a strong internal centre of expertise, and we’ve had a significant growth agenda in the group that we need to deliver on. As we continue to grow our global centre of expertise, we want to keep it fresh in people’s minds that Boots is a great place to work if you are an SAP professional, as well as if you want to work in the retail sector.”