PACKAGED SOLUTION SUPPORTS IT STRATEGY

DENISE POWER

PARIS -- Back-office applications -- the nuts and bolts of running the business -- are being standardized with packaged solutions as Tesco, Cheshunt, England, moves forward in developing its IT solutions, said John Lister, European IT director.

Lister presented an overview of Tesco's IT strategy here during the Global Retail Technology Forum here earlier this month.

What Lester termed "Tesco in a Box" is a key strategic component of the U.K. supermarket retailer's international IT strategy -- flexibility for customer-facing, front-end applications, but common systems and architectures behind the scenes, he explained.

"Tesco in a Box is a back office that is the same throughout the world," he said. "We are talking about consistent systems, consistent architecture and consistent business processes."

Lister said Tesco is now profitable in nine of the 10 countries where it operates, and Korea will be a major engine of growth in the future.

As the company grows internationally, its technology strategy will continue to honor the maxim "Tesco is your local retailer" with a focus on customer service supported by front-end systems and practices adapted to each environment.

"Through standards and architecture we can enable flexibility at the front office," he said.

While Lister is a proponent of packaged solutions, he emphasized that this is not where retailers will get an edge.

"You can't get a competitive advantage from a package," he said at several points in his presentation. "You beat your competitors with what you do through EAI [enterprise application integration] and the architecture and the other applications that hang around the edge of that, because that's where you deliver your point of difference."

EAI refers to the process and systems of coordinating in harmony the many applications in an enterprise, both existing legacy systems and databases together with newer applications such as electronic commerce.

"The package is something that you use mainly to focus more of your efforts on the things that are really important," he added. "If you don't go with packaged applications, you will always have to engineer the interfaces and have the spaghetti to knit."

In adopting packaged applications, Lister advised retailers to accept a few trade-offs. "There are some prerequisites. A 'profit' should be a 'profit' -- defined the same, measured the same, calculated the same wherever you go," regardless of which country's system is being deployed. "There's nine different measures of sales margin -- that's a classic. What do you mean by that? Just decide what 'margin' is."

Lister said it's not necessary that all terminology be uniform throughout the enterprise, but it is a good idea to standardize some key metrics. "Have some that are the same so that you can compare, so you can get best practices, so you can look at your cost-effectiveness, so you can look at productivity" across the organization.

Another key prerequisite of deploying packaged solutions, he added, is to resist the temptation to modify the applications to accommodate specific needs. "Don't customize," Lister said. Anticipate this request will come from users with the organization and prepare to say no.

"I've never bought a sports car and then used the four wheels to build a truck," he said.

Lister said much of this learning and the development of Tesco's IT strategy emerged from its experience in 1998, when it decided to open some hypermarkets in Central Europe.

"We had looked at our U.K. systems and they weren't really suitable, so we decided we had to use a package," he explained. Tesco chose supply chain management software from Aldata, Paris, and implementation was completed in nine months.

"The outcome was successful, but the key point was the learning. It was this process that helped with the development of what our strategy is now and going forward," he said.