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Asda is embarking on what it terms “Europe’s largest IT transformation project”, as it aims to change 2,500 systems across every part of its business.<\/span><\/p>\n The transformation, named Project Future, is a necessity as Asda separates its systems from that of former owner Walmart following its \u00a36.8bn acquisition by the Issa brothers and TDR Capital in 2021.<\/span><\/p>\n But it\u2019s not been smooth sailing. There have been reports of a delay to the project, its move to a new payroll system led to a glitch that impacted thousands of employees, and the man tasked with leading the transition, chief <\/span>transformation officer Mark Simpson, stepped down from his role \u201cby mutual consent\u201d last month.<\/span><\/p>\n Meanwhile, in Asda\u2019s annual employee survey, only<\/span> 48% of the 75,591 employees who participated felt they could articulate the benefits of \u2018Project Future\u2019.<\/span><\/p>\n Retail Gazette looks into what\u2019s going on with its dramatic transformation and whether it\u2019s on track?<\/span><\/p>\n The grocer says it is planning to build \u201cworld-class systems in a once-in-a-generation IT transformation\u201d to separate itself from its previous Walmart systems.<\/span><\/p>\n The three-year project is a massive undertaking and involves changes to 2,500 systems across the whole company, <\/span>including infrastructure, POS, ERP, HR, and payroll<\/span>, to move to a new cloud-based system.<\/span><\/p>\n It has hired hundreds of new roles to work on the transformation and has plunged \u00a3430m into the project, according to Asda parent company Bellis Finco\u2019s latest accounts.<\/span><\/p>\n Asda chief financial officer Michael Gleeson says that while it spent the first two years of the project \u201cdesigning, planning, building and testing\u201d for the separation, it has been \u201cfirmly in implementation mode since the beginning of this year\u201d.\u00a0\u00a0<\/span><\/p>\n It has already transitioned some major systems, including introducing <\/span>series of new checkout technology<\/span> to its stores, and completing the rollout of its new online groceries picking system, store-assist.\u00a0<\/span><\/p>\n However, the ambitious plan has hit some stumbling blocks with the transition to a new payroll system leading to a glitch that impacted thousands of workers, although this has now been resolved, the retailer has confirmed.<\/span><\/p>\n Gleeson points out that last week it paid staff on Workday for the sixth time this year. <\/span><\/p>\n In another big change, Asda plans to outsource some of its technology function to Indian-based supplier Tata Consultancy Services (TCS).\u00a0<\/span><\/p>\n Between 130 and 135 staff members have entered the outsourcing consulting process, which is due to finish in September.<\/span><\/p>\n An Asda spokesperson said the move would \u201censure we have the necessary skills and capabilities in place to support these new systems\u201d.<\/span><\/p>\n There\u2019s no doubt that the complexity of the transformation project is immense, however, Asda has made the task even more difficult, according to former Sainsbury\u2019s group CIO Phil Jordan.<\/span><\/p>\n He says Asda is \u201ctrying to do three really difficult unbalancing things at the same time\u201d.\u00a0<\/span><\/p>\n \u201cSwapping out core systems when you\u2019re still running a business, doing it in a really cost constrained way,<\/span> and swapping out partners or outsourcing,\u201d he says. <\/span>\u201cAll those three are such high risk that when you do one of them it\u2019s challenging, to do all three together is deeply challenging.\u201d<\/span><\/p>\n Former Sainsbury\u2019s, John Lewis and House of Fraser CIO Julian Burnett notes that the decision to outsource staff to TCS isn\u2019t \u201ca wholly uncommon action to take\u201d for the grocery giant.<\/span><\/p>\n \u201cThe vast majority of grocers do outsource and have outsourced reasonable chunks of their technology operation to organisations including TCS, Accenture, Capgemini, Wipro and various others,\u201d he says.<\/span><\/p>\n \u201cIt\u2019s not an untypical pattern where a tech services business is invited to deliver a transformational investment programme that results in a new set of technologies and a new set of capabilities required to manage those technologies.<\/span><\/p>\n Commenting on why Asda has decided to outsource staff, Burnett says: \u201cThere will be a blend of benefits they\u2019re seeking to gain. Ultimately it\u2019ll be an economic decision, but it\u2019ll also potentially be the sustainability and scalability of the service.\u00a0<\/span><\/p>\n \u201cIt could be that because of their purchasing scale, TCS are able to access economic benefits in the relationships they have with the software and technology infrastructure providers.\u201d\u00a0<\/span><\/p>\n Asda CFO Gleeson insists it is on track to complete Project Future – which since Simpson\u2019s departure, will be led by chief digital officer Matt Kelleher, the former CIO of Morrisons, who started his role last month – by the end of this year.<\/span><\/p>\n The executive explains the supermarket has \u201cachieved an awful lot in half one,\u201d including “closing quarter one and two on its new systems\u201d.<\/span><\/p>\n Its next big project will be changing its in-store replenishment system.<\/span><\/p>\n Gleeson says: \u201cWe\u2019re piloting a number of stores through September and then we go into implementation in October and November with a view to being complete at the end of this year.\u201d<\/span><\/p>\n Jordan believes the hard slog isn\u2019t over for Asda yet. \u201cThe only certainty is that there will be more bumps in the road. You simply can\u2019t do any of the things they\u2019re doing and not create negative impacts,\u201d he says.<\/span><\/p>\n \u201cAnd of course its competitors will take every opportunity to capitalise on the instability created by Asda,\u201d he says.<\/span><\/p>\n Some believe it is already causing harm in the here and now.<\/span><\/p>\n In fact, in the wake of Asda unveiling a 5.3% like-for-like decline in its second quarter results last week, GlobalData associate retail director Sofie Willmott shared her view that its technology transformation had become a distraction.<\/span><\/p>\n She says: \u201cNo doubt this will bring benefits and cost savings in the long term but while it has taken its eye off its core product offer, distracted by these projects as well as buying EG Group and a number of Co-op stores, its competitors have been laser-focused on food at a time when consumers have been extremely budget-conscious and willing to switch.\u201d<\/span><\/p>\n Despite the challenges ahead, Jordan insists the tech transformation presents a \u201cfantastic opportunity\u201d for the supermarket.<\/span><\/p>\n \u201cI don\u2019t think any other retail business would contemplate replatforming itself and changing its operating model in the way Asda is,\u201d he says.<\/span><\/p>\n \u201cIf they can do it, they could certainly leapfrog capability, they could go from having pretty old Walmart-based systems to having the state-of-the art technologies.<\/span><\/p>\n \u201cI personally think the journey to get there is deeply challenging and will take a lot longer and cost a lot more and probably create a lot more of the instability they\u2019ve seen before they get there.\u201d\u00a0\u00a0<\/span><\/p>\n Burnett agrees, and believes the new IT paired with TDR taking on a majority shareholding in the supermarket in June leaves Asda \u201cstanding on the departure point for a better future\u201d.<\/span><\/p>\n Hopefully it will be short-term pain for long-term gain at the supermarket as it works towards its looming Project Future deadline.<\/span><\/p>\nWhat is Asda\u2019s Project Future?<\/h3>\n
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<\/h3>\nWhat next?<\/h3>\n
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Will it be worth it in the long run?<\/h3>\n