Cost management and control is an everyday part of the IT director’s role, says Gerry Pennell, chief information officer (CIO) of the Co-operative Group.
But he believes one of the most important reasons for keeping a close eye on the purse strings is to enable innovation. ‘Making sure that the services as usual are being done as cheaply as possible is what gives you the headroom to innovate and drive the business forward,’ he says.
Pennell is working on a number of projects designed to reduce costs and IT spending. Pennell says that over the past few years he has managed to reduce IT spend by up to 20 per cent in some parts of the business.
One of the biggest contributors to this saving has been a project to consolidate the IT infrastructure for the four separate divisions in the Co-operative Group: banking, retail, food and specialist. The project has reduced administration and maintenance costs significantly, and will deliver long-term savings. ‘Ultimately, we’ll have one single IT function for all parts of the business,’ says Pennell. ‘Having just one IT system means I can also drive better deals with suppliers and exploit greater economies of scale.’
As well as consolidating IT infrastructure, Pennell has taken steps to consolidate the number of suppliers he deals with. Over the past couple of years, IT executives at the Co-op have sat down with suppliers and negotiated better deals in return for larger contracts. ‘That certainly has not been easy, but it’s something that lots of IT departments could do,’ says Pennell.
By reducing spending in these areas, Pennell says he has been able to invest in new IT systems that will add value to the business. For example, the company is currently re-engineering its back-end databases to try to create a better understanding of customers. With a single view of customer data, the Co-operative Group will be able to improve its dividend loyalty programme. Pennell says the new database management technology will also allow the bank to potentially improve its payment processes, since same-day processing is a big issue in the financial services market.
‘Ultimately, innovation will enable us to understand the customer better and serve them better,’ says Pennell.
‘That’s what will help us gain market share and sell to customers more effectively.’
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