When two large retail businesses join forces it naturally sparks a period of alignment and adjustment – perhaps no more so than in the IT department and behind-the-scenes infrastructure as consolidation becomes mission critical.
Sainsbury's and Home Retail Group, comprising Argos and Habitat, will be starting that process in earnest following the late summer confirmation of their merger, and it is the arguably the most noteworthy UK retailer acquisition since the £3.8 billion Dixons Retail and Carphone Warehouse deal in 2014.
Essential Retail caught up with Simon Post, the former CTO at Carphone Warehouse who is now heading up the Dixons Carphone group's Connected World Services division, to discuss some of the technological challenges involved in big company M&A. With over ten years' experience at the top of the tech table at Carphone Warehouse, Post can offer an insider's view on developing and maintaining vendor partnerships – both large and small.
Since Dixons Carphone became one entity, there have certainly been some big decisions to make.
"We had two different sets of providers – BT had some level of commonality," Post remarked.
"There were also some slightly different philosophies about how much you outsource, etc. A lot of what we spent the first couple of years doing was getting those philosophies aligned and, being frank, leveraging buying power."
He added: "IT budgets were not vastly different between the two organisations. We did what anyone would do, not just around getting better prices, but we also upped the service arrangements we get when things go wrong – because they will always go wrong in IT no matter how hard you try. We have some quite crafty contracts terms."
So if the initial period was about aligning the philosophies and then leveraging the scale of two businesses roughly the same size – and having "a little bit of fun" with vendors along the way, as Post described it – what do the next steps look like? It is not Post's job to drive that strategy now, but until two months ago he was effectively in charge of IT operations and the future tech roadmap at the group so he does have a clear understanding of the direction ahead.
"We're heading where you'd expect. Probably more cloud when we can, although you can't always do it depending on regulatory environment, and more SaaS.
"I don't think there's anything strategically that the organisation is looking to do that is rocket science from an IT point of view."
Essential Retail has covered a lot of the post-merger tech arrangements at Dixons Carphone, including the five-year deal agreed with BT for a new in-store IT network covering the deployment of Wi-Fi across the retailer's property estate. In line with Post's comments about cloud technology, the company also chose to migrate to IBM's hybrid cloud which will allow the organisation to scale up during peak season and consolidate thousands of server images and databases into on to one platform.
In addition, Dixons Carphone has leveraged an existing partnership with Tibco to integrate a range of legacy technologies and applications, as well as extending its contract with Accenture to support IT integration of the two brands. The group is also using Applied Predictive Technologies' software to help it make data-driven decisions across its business, licensing the vendor's Test and Learn offering.
Reflecting on his time as CTO, Post said: "I had a tech team and an operational team.
"A lot of it is about how you manage your partners well, because a lot of the underlying guts are done by the likes of IBM or Accenture or whoever. We were an IT department which was more about how you manage relationships and less about how you code stuff. Although we still do code stuff offshore and in other places."
Post was talking to this publication at the Mulesoft Summit in London, where he spoke positively about the multi-year relationship his company has had with the integration platform for enterprise service-oriented architecture, SaaS and APIs. He commended Mulesoft's agility as a relatively young business its integration capabilities across various systems.
Mulesoft powers honeyBee which is the software behind the PinPoint service used in the group's stores to interact with shoppers via tablet device, helping staff find the right product for the right customer. It has worked so well within Dixons Carphone, Post said, that the software is now being sold to other businesses looking to achieve the same kind of service levels in their organisations.
Internally, Dixons Carphone's head office can monitor how staff use the tablet devices and what they are doing when they do access them. Post says it makes for a positive training tool and helps the company digitise the store experience and create the standard of data for shop-based activity that was typically only available in the form of online analytics.
"Every time the tablet is touched, broadly, we can track that – we know the context in how it was touched, we know where in the journey it was touched, we know how long between each touch," noted Post
"We can do a whole bunch of journey analytics that tell us about what a great journey looks like and a less good journey. We haven't yet fully understood the power of some of that information, whereas people have a pretty good understanding of that when it comes to their website."
He stressed that it is not a case of getting to know the behaviours of individual customers but it is about looking at “the mass” of journeys occurring.
"We now have a wealth of information that we haven't even – with all the analytics we do – scratched the surface on how to use, so the whole area of predictive analytics and artificial intelligence is going to be very interesting over the next few years."
The PinPoint system and mobile point of sale has become a central part of the wider group's offering in recent years; using staff expertise in store to push through sales. In fact, the Currys PC World Christmas 2016 campaign, called 'Get it Right', launched today (Friday 4 November) highlighting this offering.
Over the festive season, the company will broadcast commercials showing families creatively giving each other hints about what they would like for Christmas. The ads then showcase the expert gift advice people can receive if they visit a Currys PC World store.
Talking about how tablet devices are used for clientelling purposes in Carphone Warehouse stores – something that was in place even before the creation of Dixons Carphone – Post said it has been influential in improving customer perceptions of the brand.
"We get a high net promoter score," he explained.
"It's helped make it a really good store experience which you won't get if you're an online only retailer."
Post's early career was in accountancy but he worked at BSkyB as group IT & strategy director before joining Carphone Warehouse as CTO in 2005. He subsequently became group operations director before taking what was effectively a hybrid CIO/CTO role in the immediate aftermath of the Dixons-Carphone merger.
He is now actively focused on growing the Connected World Services business across the globe and as CEO of the honeyBee software business is looking at helping other organisations stay better connected and serve their customers in more efficient ways.
As the honeyBee business aims for further elevation on a global scale in the months ahead and as the post-merger process at Dixons Carphone continues at pace into the new year – which includes a major ERP overhaul that even group CEO Seb James has acknowledged will be a complex operation – Post gave an indication of what the wider retail world's approach to technology investment should be in today's market.
"You've got to have the courage to fail fast. The architecture we're running in honeyBee has been iterated quite rapidly and we did some things in the past that didn't have the desired effect," he explained.
"It's about having the courage to say 'that hasn't worked'. The speed the world changes if you don't have the courage I think it'll be really hard to keep up because the tech is moving so fast."
For the wider retail industry looking to make their way in an increasingly digital world, he said there is a balance to strike between investing in potentially risky new solutions and knowing that if those investments are not made, the business could fall behind.
"You've just got to adjust your risk profile and recognise that means with the ability to change quickly – nine out of ten times it's good, one time out of ten you have to reverse out of something. You have to have the courage to say 'let's go back, or let's change'."