Does IT matter… in Australian supermarkets?

2013-04-23

Writing in ITNews, technology journalist Liz Tay compares the IT strategies of Australia's major banks and supermarkets - she see parallels with a University of Melbourne paper that categorised CIOs as either "trusted senior executive leader" (Commonwealth Bank, Woolworths) or "chief technology mechanic” (Westpac, Coles).

She quotes Forrester analyst Tim Sheedy, who comments:

"IT isn't the be all and end all," Sheedy said. "It can be a differentiator for those organisations that choose it to be a differentiator, like the Commonwealth Bank."

Looking at Woolworths in particular as an example of an IT leader (versus Coles, who invested more in marketing, but have also migrated to Microsoft SharePoint Online), they have just announced plans to move 25,000 staff over the next 12 months to Google Apps, which if successful will be followed by a full-deployment to all 200,000 staff.

According to Woolworth's CIO they selected Google Apps because:

"Simplicity and ease of use of the solution, the support for mobility, activity-based working and bring-your-own-device, security and the overall value proposition,"

Interesting to note the use of the phrase, "activity-based working", although its not entirely clear what that means in a retail environment or if this is a reference to office-based staff.

Looking over the coverage of Woolworths in recent months, its still not an entirely homogenous enterprise IT environment (and you wouldn't expect it to be):

With the iPad they introduced a number of in-house apps, some running on Google's App Engine. However, with all these announcements I've heard nothing about what we might classically think of as the 'intranet'. I also wonder if they considered using SAP Jam as their enterprise social network?

Woolworths also appear to have a come along way by embracing the cloud. My memories of interactions with Woolworths in the past was a company with very strict information security policies, so either an IT changing of the guard has taken place or they are confident that Google (and Yammer) can meet their standards.

But the far bigger question, as Sheedy argues, can Woolworths actually use technology in this way as a differentiator?

Because of current market dynamics in Australia, where Coles and Woolworths dominate the supermarket sector (together, they hold 80% of the Australian market versus only 48% and 20% of the major chains in the UK and US respectively) this really is about the ability of both companies to out perform the other in some way.

The SMH reported recently that:

"Coles has posted its fastest sales growth in two years as the resurrection of the once ailing supermarket group enters its fifth year and the retailer continues to strip away customers from rival Woolworths as well as other food stores."

However, Coles is fighting on price, not technology. So can Woolworths be the Commonwealth Bank of Australian supermarkets?

One notable case study from the same industry is SuperValue in the US, who last May talked about using Yammer as a tool to support the turn around of that business:

"SUPERVALU is focused on acting as one company, working toward a common goal of delivering increased value to all of our customers and meeting their needs store by store to become America’s Neighborhood Grocer. Internally, we are working to drive an open, transparent and agile culture, while continuing to bolster what makes us great – our associates, history and heritage."

Unfortunately, a year later the company continues to struggle.

But leading with technology doesn't mean throwing technology at the problem. You need to do something different with it. That's the challenge for Woolworths.

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