Ian O'Reilly, Tesco's IT director, spoke for the first time to VNU Newswire's Jonathan Lambeth about the IT department that has helped drive Tesco's recent growth to become number one UK retailer.
When you are taking a gamble by introducing a new retail concept for 10 million customers, it's good to have a wise man at the helm of your IT operations.
Tesco's Ian O'Reilly was once asked to form part of a committee of Wise Men to advise the last government on IT issues. He seems to have justified his nomination by running Tesco's IT during a period of growth that has taken the store to number one in food retailing and created a concept of loyalty cards that every major retail chain is now forced to adopt.
An affable and soft spoken soul, he is reluctant to take much credit for IT's contribution to Tesco's recent success. He is on the UK board, though he says it is for his business knowledge rather than his IT specialism.
"I consider myself a retailer," he explains. "Tesco as an organisation tends to be low on bureaucracy, fairly high on risk taking from the board down and quite high on freedom to innovate. Of course with that freedom comes the risk," he said.
He is willing to take those risks. He was once asked to can an executive information system development by a former managing director, but continued it by changing the name to a 'management alerting system'. The risk paid off and it is now used extensively by over 1,000 staff.
He says part of the risk comes from having to anticipate what the board might ask from him before they actually ask. When the loyalty card project was agreed by the board, Tesco was able to launch within four months, in part because the IT department had begun a wide area network upgrade 18 months earlier.
O'Reilly has been IT director for six years and at Tesco for more than 18. Suppliers who have worked with him talk of his quiet pride in the achievements of his IT department, but publicly any successes are always through the combined efforts of all parts of the business.
He was in on the installation of the first barcode scanning tills in the UK in 1987 and now a new generation of PC-based tills goes into every store as part of a #60 million contract with Siemens Nixdorf to completely replace the existing proprietary software with an open system.
O'Reilly said he expects suppliers to share in the development process for new systems, including the costs, in return for which they get the benefit of the development work.
Despite his self-admitted risk taking, he is not running Windows NT with the Siemens Nixdorf Epos systems, as other retailers who have bought this solution are doing. Instead, he is sticking with Dos-based software for now.
"It works and its cheap. I don't mind taking the risk [on NT] but where's the benefit," says O'Reilly. "The cost of change of a distributed application in stores is huge and takes a long time. I have to get right what I put in store."
He admits that he usually has little involvement in the day to day running of the core IT systems. His focus now is on the challenges of internationalisation - Tesco has subsidiaries in five European countries - and diversification. He is heavily involved in the Tesco Direct business, through which Tesco sells its groceries via phone, fax, Compuserve and most recently the Internet.
One retail consultant who has worked with Tesco on the development suggests not all is sweetness and light. He said in confidence that, while putting the initial six stores online went extremely well, Tesco is now hitting scalability problems with Microsoft's back end software. Also, Tesco Direct still only allows access to Microsoft Internet Explorer users.
O'Reilly is visibly irritated by the continuing debate about the technology. He says Tesco is aiming for the maximum number of home users, a quest that will expand far beyond the simple browser wars, and hints that other channels of access - possibly via television - will be offered before too long.
He claims Tesco Direct is proceeding well and generating more revenue than expected, though he is unwilling to say if it is in profit. He hints that in the short term every major city will have a home shopping option.
"We are very serious about the home shopping market and believe there is business to be had. It is pioneering work and we think we've got a lead. We aim to maintain that," he confirms.
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