Co-op invests in IT transformation

Integration and new product development take place across the entire group

The integration of Co-op and Somerfield is on track

The Co-operative Group is placing a strong focus on technology as it progresses with the integration of acquired businesses and continues to drive efficiency.

In its full-year results released today, the firm said that the Somerfield takeover and the merger with financial services businesses Britannia and Plymouth & South West Co-operative have posed "significant challenges" around integration of IT, structure and the brand going forward.

“These challenges have been addressed and considerable progress has been made to date and full integration is planned during 2010,” the Co-op said, adding that the consolidation of the food businesses has involved "an enormous amount of work behind the scenes".

Co-op set a target of two years from February 2009 to complete the integration between its supermarket chains, which will be met despite the time pressure, said Mark Hale, the Co-operative's director of food retail information systems.

“One of the main challenges here is maintaining the pace of activity we had over the past year and to carry on integrating while causing minimal disruption to store operations,” he told Computing.

Hale added that another challenge was to devise the IT strategy for the food retail business, making decisions about what software to use and which systems to decommission, as well as driving a procurement exercise and consolidating the IT vendor base.

Co-op is looking to generate about £12m in cash savings from the integration of its retail portfolio. According to Hale, a small proportion of that sum has already been realised.

A significant part of the ongoing work involves the rollout of Co-op’s electronic point-of-sale and store management platform across the 700-strong Somerfield branch network.

So far, the system has been implemented across 200 outlets and the rollout will continue throughout this year. The bespoke platform, dubbed In Control, is now being sold to other retailers.

Other projects that have taken place in the back end and related to integration activity include investment in server virtualisation and consolidation.

Co-op will also be working on the first phase of a major programme in its financial services arm during 2010, aimed at revamping its banking systems infrastructure with the launch of a new, more customer-centred business banking service.

Last year, the firm rolled out a new banking system supplied by Indian IT supplier Infosys as the core element of the transformation. The platform is expected to ease challenges associated with the integration process with the new businesses and improve branch-based services.

Elsewhere in the organisation, Co-op’s pharmacy arm made a "sizeable" investment in its IT infrastructure, with completed projects including the introduction of a new financial management system and the rollout of In Control across its branches.