How Sainsbury's overturned IT operations to supercharge agility

Tom Allen
clock • 3 min read
How Sainsbury's overturned IT operations to supercharge agility

Group CIO Phil Jordan told delegates at the IT Leaders Festival, “We’ve unlocked a cadence of change we’d never seen before.”

Sainsbury's is one of the UK's largest companies, and certainly among the largest retailers. Twenty-three million customers pass through its sliding doors every week, and it works on a revenue figure in the tens of billions of pounds - although with margins of just 2%.

"We have a lot of pressure to run in an optimised way," Group CIO Phil Jordan quipped at Computing's IT Leaders Festival this morning.

That means the company has to ensure it gets great value from technology across all the brands it runs: Sainsbury's, Argos, Nectar and more.

To that end, back in 2019 Sainsbury's began rolling out a new operating model for IT: End-to-end product lifecycle management (E2EPLM), which aims to ship stable, secure and high-performance technology products as early and often as possible.

Products are central to the model, and Jordan said Sainsbury's tries to avoid projects "at any cost." The company has distilled IT down to just two functions: Engineering and, of course, Product.

"We believe these are two enduring capabilities for the future. Great product management and great software engineering are the core differentiators of a great tech organisation."

Product and Engineering come together to discuss the viability and feasibility of what the business wants, through Product Councils. Here they make decisions about what a product should - and can - be: "What are you going to do next, what features are you going to include, what vulnerabilities are you going to remediate, what costs are you going to take out?"

There are 16 technology product areas in Sainsbury's, each governed by a Council. They have been so successful that Sainsbury's changed IT's funding model. Each Council has a share of the opex budget, and capex is allocated twice a year based on projected outcomes.

"This is a very much a change of mindset... We're not talking about going to a to an investment committee looking for a project funding. We're saying to Product Councils, ‘Here is six months' worth of money based on a set of outcomes you agree to. The business plan is over to you to make sure you deliver value on that capital investment.'

"That was probably one of the biggest unlockers for us: having the tech operating model match the financial planning of the business."

There have been other changes, too: suppliers have been consolidated and their management taken out of the technology function, because these capabilities are valuable to the business at large. Tech itself is now organised similarly to retail, split into different categories (like ‘Cereal' or ‘Order fulfilment') with a group of products (muesli, granola, Cornflakes) in each one.

Jordan began this work in 2019. Since then, "We've unlocked a cadence of change we'd never seen before," even as the IT team has shrunk due to outsourcing. Over the last three years, Sainsbury's tech headcount has fallen by 8%, and middle management and leadership by 50%. However, there has been a 400% increase in new starters, graduates and apprentices joining the business, who are driving a rise in team diversity.

"It's been tough," says Jordan, "and you have to take the pain before the gain. But it's a better model for long-lived teams."

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