Customer Solution Case Study
/ Global Grocery Chain Uses IT Services to Shape Future of Online Retail Market
Overview
Country or Region: United Kingdom
Industry: Retail
Customer Profile
Established in 1996, Tesco.com is one of the world’s largest online retail services. It operates in the United Kingdom, Ireland, and South Korea, and has 850,000 customers worldwide.
Business Situation
A fast-growing customer base led Tesco.com to align IT with business strategies and goals. It needed to standardize, scale, and improve its enterprise architecture, and develop a strategic roadmap.
Solution
Working with a Microsoft IT Architecture and Planning (ITAP) advisor and applying the Microsoft enterprise IT management framework, Tesco.com developed a multichannel enterprisewide architecture.
Benefits
· Consolidated IT portfolio
· Enhanced expertise
· Supported roadmap
· Enhanced management
· Increased efficiency
· Supported growth / “We now have a roadmap that matches the ambition of the business. It helps us plan and manage the growth of our existing businesses and launch new services.”
Patrick Cooney, Head of Architecture, Tesco.com
Tesco operates the world’s largest online grocery service, Tesco.com. The Tesco.com IT team faces the continual challenge of tailoring the company’s IT strategies to suit its exponential growth. Tesco engaged a Microsoft IT Architecture and Planning (ITAP) Advisor to help formulate the IT transformation strategy and plan. The company also needed to implement the right operating and governance models to help optimize IT performance and value realization. These form the IT basis for continued business growth, enhanced return on investment, maximized performance, reduced risk, and increased business agility. Tesco benefits from a simplified IT architecture, enhanced technical expertise, a clear direction for future initiatives, improved IT management and operations, a more efficient and collaborative work environment, and enhanced IT leadership to help spur business growth.
Situation
Established in 1929, Tesco is now the world’s third-largest grocery and general merchandising retail chain, operating in 12 countries in Europe and Asia. In 2007, the company, which employs 450,000 people, generated revenue of £46 billion (U.S.$89 billion). In the United Kingdom, it has a 30 percent share of the retail market and delivers to 97 percent of its population through 1,988 stores.
Originally specializing in groceries, the chain has diversified in the United Kingdom into areas such as clothes, electronics, consumer financial services, DVDs sales and rentals, music downloads, and consumer health insurance and dental plans.
In 1996, Tesco launched its online home-shopping website, Tesco.com. Today, it is the largest global online retail service, growing at a rate of 30 percent year on year. It serves customers in the United Kingdom, Ireland, and South Korea, and offers a range of products including groceries, books, electronic goods, and Internet broadband services. In 2007, Tesco.com generated revenue of more than £1 billion in the United Kingdom alone. Tesco.com currently has 850,000 customers worldwide. More than 250,000 online orders are completed each week, with up to 5,000 orders placed per hour during peak business periods.
The IT team at Tesco.com is responsible for managing and developing all aspects of IT, including:
· Online commercial, marketing and selling systems
· In-store and order fulfillment systems
· The e-commerce infrastructure
“Our customers expect Tesco.com to be available 100 percent of the time,” explains Patrick Cooney, Head of Architecture at Tesco.com. “As well as keeping the website running, we also have to move quickly to try new ideas and launch new businesses. The success of the business is directly related to how we work as an IT team.”
In September 2007, Cooney and his team decided to perform a long-term review of the organization’s technology requirements. “We decided on clear goals for the future of our architecture—to standardize it across the organization, make it more scalable with the growing business, and apply consistent guidance and review procedures,” says Cooney.
The next step was to source the expertise to achieve these goals. “We were looking for an expert to work alongside our IT team and establish the required architecture practice,” Cooney adds. “We wanted help to set priorities for technological improvements, and develop our architecture capability.”
Solution
Tesco.com researched several options, and decided to engage a Microsoft IT Architecture and Planning (ITAP) Advisor on a full-time basis for one year.
“Microsoft proposed an objective, step-by-step approach to help us realize the value of our IT investments on a global scale. This clear understanding of our needs led us to select services from Microsoft,” says Cooney.
Microsoft ITAP advisor Roy Sharples works from the Hertfordshire office of Tesco.com, alongside the company’s IT team. He advises Cooney on the development of a long-term, strategic IT management framework and technology environment, to manage IT as an integrated portfolio of assets in a business-smart way.
“The first step was to perform both a top-down business capability analysis and a bottom-up technology capability assessment,” Sharples says. “This helped us understand and align IT with the business at a strategic and operational level to help ensure that Tesco.com makes the most innovative and efficient use of its IT resources.”
By using the Microsoft enterprise IT management framework, Sharples planned his consultation schedule in four steps:
· Assess business and IT capabilities
· Formulate an IT direction
· Develop the delivery plan
· Implement the framework to continuously manage, operate, and improve
By January 2008, just four months from the start of the consultation period, Sharples delivered the design and implementation plan for the enterprise architecture, split into seven principal work streams:
· Business Model and Strategy. The value drivers in Tesco.com lead to business strategies and investment priorities, which subsequently drive the business processes of the enterprise.
· Business Intelligence. Solutions that support the analysis and reporting of information to facilitate strategic and operational business decisions.
· Business Information. Conceptual, logical, and physical data architecture that addresses many aspects of data, including access, standards, and relationships.
· Business Process. The various business processes, rules, and activities associated with execution of the Tesco.com day-to-day business operations.
· Business Application. Custom and packaged transactional solutions that automate business processes and help with the creation, management, and sharing of data.
· Enterprise Integration. Application and trading partner integration that helps to ensure the successful flow of information throughout the enterprise.
· Enterprise Infrastructure. The hardware, system software, and networks that serve as the “plumbing” for the business applications.
With this architecture plan, Tesco.com will consolidate its 70 customized applications into a standardized and integrated solutions portfolio, keeping its custom developments focused on key value-differentiating business activities. The Tesco.com team and Sharples designed a multichannel service-oriented architecture that permits disconnected applications to exchange data and unifies business processes. The architecture will help Tesco.com drive continued business growth, enhance return on investment, and maximize performance.
For the next phase, Sharples has outlined a range of initiatives to establish the company’s application and technical architectures:
· IT Roadmap. Sharples worked with the team to develop a detailed multiple-year delivery plan. It includes initiatives such as software-plus-services, cloud computing, social networking, streaming media, and customer relationship management. In addition, Sharples prepared a business value model detailing projected IT investments over the short, mid, and long term to support the strategy and map the cost and respective return on investment.
· Operating Model. To improve IT management, Sharples prepared a blueprint that codifies agile governance practices, policies, and processes. He also established an architectural center of excellence—a framework that drives architectural leadership throughout the enterprise. It defines the core competencies required for the future success of IT initiatives, including individual roles and responsibilities.
· Leadership, Direction, and Knowledge Transfer. Sharples put the Tesco.com IT team in contact with industry experts and product teams at Microsoft. The two parties discussed the business and technology requirements of Tesco.com and how to fulfill them. In addition, Cooney attended the Microsoft Strategic Architect Forum, where he shared best practices with the Microsoft IT architecture team.
Another important step was Cooney and his team’s visit to the Microsoft European Operations Centre in Dublin. There, they discussed the data center’s highly integrated and efficient processes, operations management practices, and new versions of Microsoft technologies, and they applied the knowledge to the Tesco.com IT environment. This helped develop the relationship between Tesco.com and Microsoft.
In the next phase of his engagement at Tesco.com, Sharples plans to integrate new channels of customer interaction, such as mobile devices with the Tesco.com e-commerce environment, so that it is more widely and easily available to the company’s customers.
Benefits
Since the arrival of the ITAP Advisor and by using the Microsoft enterprise IT management framework, Tesco.com has seen significant improvement in how it plans, manages, and delivers architecture. In particular, better alignment and integration with the business, and establishing a dedicated enterprise architecture capabilities, processes, and standards has resulted in the following benefits:
Consolidates Applications
into a More Integrated Portfolio
Tesco.com now has a more comprehensive plan for its business, information, application, and technology architectures. This simple design helps the company to consolidate 70 customized applications into a rationalized, integrated solution portfolio. It has also improved the system’s security, scalability, and performance.
“This simplified multichannel architecture ensures that our entire IT system is much more integrated and manageable,” says Cooney.
Enhances Technical Expertise
The IT team at Tesco.com now follows architecture best practices that support clear business goals. Cooney gives credit to the ITAP Advisor: “Roy worked closely with me and my team—we got great exposure to Microsoft expertise,” says Cooney. “We’re ready to implement the plans and roadmap that he has helped us develop.”
Technology Roadmap Provides
Clear Direction
The roadmap includes a detailed breakdown of business strategies, objectives, and capabilities and links them to the organization’s IT initiatives, services, and technologies. Cooney says: “For instance, if the business is planning to launch a new business within the next six months, my team knows exactly how to gear up for the change in terms of people, technology, and knowledge resources. In this way, the roadmap integrates different parts of the enterprise—which is a huge achievement,” says Cooney.
By working on standard processes, the Tesco.com IT team can also reduce time to market of new online services and help the company maximize revenues.
“We now have a roadmap that matches the ambition of the business,” says Cooney. “It helps us plan and manage the growth of our existing businesses and launch new services.”
Structured Approach to IT Governance Improves Management and Operations
In addition to detailed architectural plans, Sharples also prepared a model for IT management and operations. “We have a really good model for governance and ongoing management,” says Cooney. “Everyone in my team has a clear idea of their roles and responsibilities and what they need to do to support the business.”
Promotes an Efficient and Collaborative
Work Environment
During his time at Tesco.com, Sharples has looked beyond his original remit. He has implemented new approaches to service improvement and IT systems monitoring, to enhance the work environment for the operational staff.
Sharples has also established work processes that give Cooney’s team a greater sense of purpose. Cooney says, “My team has a much better understanding of our goals. And the roadmap has helped us collaborate and communicate more effectively, as individuals with different skill sets have come together to work on common projects.”
IT Leadership and Vision Supports
Rapid Business Growth
Sharples provides IT leadership across all aspects of the enterprise and helps the IT team develop its vision, transformation strategy, and delivery plan. “He always focuses on how we work and our people,” says Cooney. “This approach is different from a typical technology consultant’s limited involvement in these areas. It helps to better manage the changes that come with our rapid growth.”
Microsoft Services
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