Supermarket chain Morrisons is to pump £110m into moving its trading, store, warehousing, distribution, payroll and financial systems on to new platforms.
The overhaul, announced in the company’s preliminary results for the year ending 4 February 2007, comes as the complex process of IT integration resulting from the acquisition of Safeway in 2004 was due to be completed.
At the time of the buy-out, Morrisons estimated that integrating the two businesses would cost £1.6bn and set a target date for completion for this year. But the retailer refused to say whether the overhaul was linked to problems with the integration.
A spokesperson said only: “We are investing £110m in IT which will be spent moving from bespoke to packaged software, and in-house operation.”
Morrisons has a tradition of developing its core systems in-house and being slow to take up new technologies – in contrast with Safeway, which until the acquisition, was known for adopting cutting edge systems as the first supermarket to implement Chip and PIN and making early trials of RFID technology.
The company’s low-technology ethos was understood to be behind the departure of Safeway chief information officer Ric Francis in the aftermath of the takeover.
But in a statement accompanying Morrisons’ preliminary results, chief executive Marc Bolland suggested the company had not changed its view. “We will not be seeking to implement any ‘leading edge’ technology, as we believe our competitive advantages come in other areas, such as in-store service,” he said.
Instead he attributed the IT overhaul at the UK’s fourth-largest supermarket chain to the age of the firm’s technology. “Systems are fundamental to the efficient operation of any large retailer, and the Morrisons systems platforms have served the business well. They are now approaching the point of requiring to be changed. Most of the core systems in Morrisons have been developed in-house, over many years, and some are up to 30 years old.”
He added that the three-year upgrade programme would introduce new platforms, “wherever possible using best of breed package software”. The market for retail systems was well developed, and that there were “relatively few areas where we need to continue with home grown applications”, Bolland said.
A new IT director – so far unnamed - had been recruited to lead the
programme, he added.
In September Morrisons selected a new electronic data interchange (EDI) system from Freeway Commerce to streamline its supply chain processes. The system is used to send orders and receive invoices electronically from more than 430 suppliers.
Morrisons made the move after a review of its existing EDI in a bid to rationalise and future-proof its systems following the Safeway acquisition. The Freeway system will give the company the option of shifting to internet-based processes in future.
The retailer has also introduced a new database to provide supply chain information on stock and sales to its suppliers,