The sharing of expertise and teamwork across Halfords, SAP and the consulting team from CIBER Novasoft was a vital factor in the success of this project. says Nick Wharton, Halfords Business Development Director
As leader of a consortium of IT vendors and business transformation consultants, CIBER Novasoft is the primary contractor for a transformational IT change programme at UK car accessory and cycle retailer, Halfords, that are helping to transform the business.
With more than 400 stores across England, Wales, Scotland and Northern Ireland and 12,000 product lines, Halfords is the leading car accessory and cycle retailer in the UK. With a company history spanning more than a century, it can be considered a British retail institution.
Halfords was acquired by CVC Venture Capital Partners from The Boots Company in August 2002. The new owners immediately set about transforming Halfords business systems and key processes to ensure that resources were focused on delivering a first class in-store offer for its customers.
Halfords existing systems were not well equipped to handle the current business, which had grown fast over 10 years, and urgently required a major investment. Halfords had suffered from a general lack of investment in IT in the latter years before the disposal by then parent company, The Boots Company.
The first challenge was to create a new systems infrastructure. Brian Scott, Halfords Head of Business Systems, explains, The Boots mainframe on which all core Halfords systems ran was effectively a burning platform, that had to be replaced with some urgency. While Boots granted us a reasonable transitional period, we were completely dependent on their technology.
The existing platform was stable and reliable but was geared to manage a much smaller entity than the company Halfords had become in recent times. What it was not was flexible or scalable and the various processes ran on different systems and were not sufficiently integrated. Moreover, it was able to handle only the bricks and mortar business, while Halfords internet business was growing rapidly.. The systems also had little or no multi-currency capabilities. In short, as Scott explains, We were land-locked and channel-locked.
A lack of integration between systems was a growing problem; a number of processes increasingly critical to retailers could not be managed on the old systems. With promotions now responsible for as much as 30% of sales for some retailers, Halfords was unable to handle complex multi-buy promotions across its 10,000 SKUs. In addition, Halfords existing HR system contained limited personnel data and was based on a number of home-grown processes, none of which were integrated..
Because the existing systems were also not well integrated, it was difficult to use data from different sources to make business decisions about merchandising, range planning, space allocation, or to dynamically measure store, item or promotional performance.
Halfords accelerated the project following its acquisition by CVC Venture Capital Partners from The Boots Company in August 2002.
The company had already decided to implement enterprise resource planning (ERP) systems from SAP. SAP for Retail was evaluated as providing strong retail functionality and combines supply chain logic with customer relationship management, enabling retailers like Halfords to optimise strategic partnerships and leverage customer data to exploit multiple sales channels.
A key advantage of SAP was that all data would be in one place, making management more efficient and enabling the company to undertake reporting into trends in product life-cycle, comparative store and workforce management, supply chain and replenishment effectiveness.
With the SAP decision made, the focus turned to which integrator would be chosen to provide strategic consultancy, implement the software and assist with the design of new processes. It became clear that Halfords would benefit from a consortium of vendors providing solutions rather than several vendors pitching separately for work. Nick Wharton, Halfords Business Development Director explains, We wanted a lead partner who would fit with our business style and provide strategic consultancy, implementation skills and resources, as well as strong retail understanding.
We also knew that we did not want to be a pioneer. We considered many combinations of vendors until we settled on CIBER Novasoft, realising that they fitted the bill and would enable us to benefit from their existing SAP experience with other major retailers.
The consortium, led by CIBER Novasoft, includes ITNET(now Serco), an IT consulting and business process outsourcing services company with particular experience of hosting SAP implementations, as well as SAP Partner of the year 2002, and Unipart Solutions Practice, the business and IT consulting arm of Unipart DCM, which brings SAP change management and process engineering expertise to the partnership. The consortium was created to tackle the integration hurdles facing most retailers looking to move to a more flexible IT infrastructure. The combined solution will enable them to take advantage of multiple channels to market, extended supply chains and improved in store availability and merchandising.
We also recognised that smaller, niche players would have the special expertise we needed. CIBER Novasoft has implemented SAP at B&Q International, Unwins and Iceland, while Unipart already runs part of our logistics and has SAP experience.
CIBER Novasoft was chosen by Halfords to provide a modular applications software suite based on SAP for Retail, to support the accompanying business re-engineering. CIBER Novasofts role therefore was to transform all core activities merchandising, finance and human resources.
Alison Vasey, Business Process Manager for Halfords, added, We were aware of CIBER Novasofts reputation in the market place as SAP implementation experts with an ability to bridge the gap between "system speak" and "business speak". This gave Halfords confidence that they would be business focussed and remove much of the learning curve for us.
She continued, Everyone we met was knowledgeable and approachable. They did not appear as a big consultancy house. They provided excellent support during the buying process, evidencing their expertise through thorough answers, and always found time to build a relationship with us. There was a good cultural fit between the two organisations.
Despite the pressure to exit the Boots mainframe, Halfords understood the link between pace and risk and were not simply focussed on a fast implementation.
In order to make sure the business got what it wanted, a programme structure was formed comprising business and IT users from the 60-strong IT department, who worked together to with the consultants to deliver the project.
Wharton said, We wanted to make sure the new processes were fully and accurately mapped. SAP is like a 60-room mansion. You redecorate and move in as you go, a room at a time, rather than try to refurbish everything at once; this is the approach we took with SAP and we were supported in this thinking by CIBER Novasoft.
That is also why we chose to implement SAP in our Human Resources department first - because HR is not a front-line operational system and the success factors were not too demanding. At the same time, we could see that HR has broad distribution across the business; we wanted to share our success with as many people as possible.
Halfords then moved onto Finance, the heart of any ERP system, followed by category management and replenishment to the stores and finally distribution centre replenishment. Halfords also deployed SAPs business warehouse for business intelligence in stages at each milestone.
Merchandising systems were key to the solution provided for Halfords. Wharton said, The store replenishment capability within SAP is central to the business case for investing in the development of Halfords enterprise technology, improving stock availability for our customers while reducing overall levels of stockholding.
The sharing of expertise and teamwork across Halfords, SAP and the consulting team from CIBER Novasoft was a vital factor in the success of this project, said Wharton.
Wharton said, We are interested primarily in hard benefits from our IT investment. Soft benefits are important but we regard them as the icing on the cake.
Wharton said, The store replenishment capability within SAP is central to the business case for investing in the development of Halfords enterprise technology, improving stock availability for our customers while reducing overall levels of stockholding. A modular, integrated approach is the only sensible option for bringing together and leveraging diverse systems for competitive advantage.
Alison Vasey, Business Process Manager , said We wanted to increase the stability and integration of our IS infrastructure, and provide greater value to the business - from increased efficiency, improved processes and also better category management and supply chain capability. In effect, we wanted the business to present a more tailored, dynamic and flexible customer offer.
While it is too early to quantify the benefits, Halfords is clear that the transformation of Halfords systems has had a strategic impact on Halfords business.
CIBER Novasofts SAP input has enabled the company to maintain and boost profitability, and to get the company into good shape. With the growing threat of competition from the supermarkets, these systems are enabling Halfords to support the business in terms of merchandising, pricing and promotions.
Replenishment to stores has been improved, ensuring that the right products are available at the right time. Double digit sales growth was maintained across the business despite the distraction of new systems being implemented. Brian Scott adds, The cost of IT has been lowered significantly, by over 1 million to date, despite the fact that our new systems are delivering much higher benefits.
Speeding up the internal heartbeat
With a solid systems backbone now in place, we are now in a position to make further improvements across the business, says Wharton. This includes, improving our supply chain in the Fast East, from where so many of our products are sourced, better management of promotions, which are so important to our profitability, optimising space and stock management.
CIBER Novasoft UK, part of the CIBER Novasoft AG Group one of the leading SAP consulting companies in Europe, specialises in implementing SAP systems in the retail sector and has worked with leading high street names including The Big Food Group, B&Q, Woolworths, Kwiksave and Uniqlo. The CIBER Novasoft Group has operations in the UK, Finland, Switzerland, Singapore, the USA, Spain and the Czech Republic. CIBER Novasoft AG has been listed in the Neuer Market at Frankfurt Stock Exchange since November 1999.