One year ago Andy Haywood moved from being IT director at Boots the Chemist to begin a new role as the first group CIO of the Co-operative Group. Both for the man himself and for his diverse organisation, it has been a busy first year.
“The good news is that there have been no surprises! The big challenge is to reposition IT within the Co-operative business,” he says. “Because of the organisation’s diversity and uniqueness IT has evolved over many years. The size and scale has evolved and it’s doubled in size and performance in the last five years,” he explains of the mutual business that benefits its customers and employees rather than any shareholders
“The scale of the business is the surprise. At Boots it’s a single business with a very clear and simple business model, at the Co-operative it is a very divergent business and they are in different business cycles.
“This divergence has resulted in not only the desired diverse Co-operative business, but also a diverse IT environment.
“Now we are trying to bring that together and use the size and scale in the markets we serve. The other challenge is how much is going on in the Co?operative. The ambition is astounding. We are the fifth biggest food business in the UK and we would be in the top 25 of the FTSE if listed. So there is not a lot of time to hang about.”
Project Unity is Haywood’s plan to end the federated IT environment at the Co-operative and he explains that it was CEO Peter Marks that saw the opportunity for simplification and sought out the former Boots CIO to create the unifying technology strategy.
“Peter needed someone to advise him and take a holistic view across IT, and that’s where I come in. The group is of a size and scale that warrants this approach. As with any business, it cannot do what it wants to do without IT.
The Co-operative’sfinancial arm dramatically increased in scale during 2012 when the Verde deal between Lloyds Banking Group and the Co-operative Bank saw 632 branches from the Lloyds TSB and Cheltenham & Gloucester businesses transfer to the Co-operative business, giving the Co-operative a seven per cent share of the current account market in the UK.
“I spent a third of my time on the Verde deal, that has been a big part of my time,” Haywood says, “It is one of the largest deals in financial services IT.”
Not only is the Co-operative expanding as a financial services provider, it also has ambitions to become a key part of the UK’s legal landscape as the current government deregulates parts of the legal process to make certain aspects of the law and legal provision easier for consumers and business.
Haywood explains the Co-operative already has several hundred legal employees and leaders in what it believes will be an industry worth around £8bn to the UK economy.
“With our brand we think it is a brilliant opportunity in areas like mortgages, wills and divorces,” says Haywood. “From a technology point of view we have some exciting ideas of how we can geographically join up services, make legal provision menu-driven and offer services online or by phone. Unless it is a complex case it can be systemised.”
As banking deals are brokered, the Co-operative’s home in Manchester is being totally redeveloped in what is more than just an office move but a complete community regeneration. The new ecologically friendly office began to be populated by “colleagues” as Haywood describes them, in October 2012 and the North Manchester Regeneration Programme – a partnership between the Co-operative and the local authority – is one of the largest regeneration programmes in the UK, creating residential, retail and commercial spaces around the Co-operative HQ. Haywood describes it as “hugely important and exciting for Manchester”.
It says a lot about the history of the Co-operative that as it sets out on its own business modernisation strategy, it takes its local community with it.
“We are modernising the Co-operative and making it more relevant for its members and customers without losing the heritage, trust and brand. It’s been Peter’s strategy and a very successful one over the last five years and is one of the key reasons why I took the job. I was very very happy at Boots. And with this modernisation agenda, Peter and I are very much of the view that technology will play a major role,” says Haywood.
“We are very commercial as an organisation. We do have to be profitable to invest in the future of the business. It is a very commercial business and the benefit of that is that we can do even more. The Co-operative is full of talented and very nice people doing business the right way and that is refreshing,” he says.
A balanced viewpoint
Haywood is modernising the technology strategy and capability his IT people have with a blend of internal promotions and external recruits. The Co-operative has been very active in the market at the very senior and middle manager and technologist levels: people, he says, who have been ‘IT customers’ give his department balance and drive so the IT operation has the end customer at the heart of everything it does.
“One of the big opportunities for the Co-operative is in the digital space with our spread of services. Joining them up is crying out for a digital solution,” says Haywood. The time is right as well with continued customer dissatisfaction in companies like Vodafone, Amazon and Starbucks avoiding tax payments and the continuing global slow-down begun by the banking sector.
“A lot of the public have lost faith in big business and we have seen more people coming to join what we offer. This could and should be the decade of the Co-operative,” he says of the mutual business model as well as his own organisation.
“The principles that the founder wrote down are so relevant to today and we really connect with them – working with others for the benefit of others working for yourselves. We need to modernise, but not lose that vision.”
With such a big agenda it is no surprise that Haywood sits on the Co-operative executive board, which is then accountable to the Group Democratic board that represents the mutual members. The Co-operative has three trading operations: food, banking, and specialist retails that includes its travel, pharmacy, funeral care and car dealership arms.
“You get to help shape the way the business is going. I give IT the voice and be a force for collaboration so that we get the most out of transformation with IT, especially given the change agenda we have at the Co-operative.
“It’s about the relationship you’ve got with the CEO and that starts with the CEO. You have to share similar principles and values about what IT can and can’t do. I have got that with Peter, we have no intermediaries, which classically [for the CIO] is the CFO. The amount of stuff you can get done is ten-fold. You are sat there as a voice around the top table with no favours and not treated as a second-class citizen.
“The business knows what we stand for as we will have a voice. I’ve been very clear with what the business can expect – constructive challenges and that we enable change.
Haywood’s new group technology function has CIOs in the business lines of food, banking, specialist retail and the corporate business that report to the COOs of those business lines and sit on their operating boards so that IT is at the top table of each area. He has also introduced a group CTO role to concentrate on the strategy, architecture and innovation, and a COO role has also been created to drive a new sourcing strategy with the Co-operative’s wide range of suppliers. Then he has a group technology director for the infrastructure, networks, telephony, storage and desktop environment. This is one of the biggest and most complex technology sets in the UK, he says. IT represents a huge opportunity for efficiency and value creating at the business.
This strategy, he says, ensures that each business line has an IT leader shaping and delivering the IT strategy, but the group level provides the scale.
“The beauty of it is that we have, in my opinion, real CIOs in the business lines. They are not account managers and we are taking the chance to build on the best. I have been heavy in the market and looking for people, both those with experience and newcomers.”
This new IT function has a budget of in excess of half a billion pounds weighted towards capex, but Haywood is very clear that the Co-operative has a good ‘shopkeeper’ approach to managing costs and is clear about where it expects the payback from the IT investment. The IT team consists of 2200 people, with around 400 of those contracting.
The Co-operativetraditionally is not a major user of outsourced services, but Haywood says his team and he are getting the best from relationships the company has with Infosys and Steria and has much more to do in this space yet.
While Haywood has been recruiting IT leaders to manage the business lines, he has also been increasing the technology skills base at the other end of the organisation with the impending launch of a new IT apprentice scheme that, like the regeneration programme, aims to benefit both the Co-operative and the North West.
“I’ve kids in their twenties and it’s hard out there. I want to really go for it on this apprentice scheme,” he says.
Haywood is always an enthusiastic realist when it comes to retail and retail technology and as we reported in our previous interview with him, he saw Asda through its Walmart merger integration, a project he spoke of enthusiastically. With the Co-operative he has a similar scale challenge and benefits that go beyond the till, bank counter or webpage.
CV: Andy Haywood
January 2012-present: Group CIO, The Co-operative Group
2009-2011: IT Director, Boots
2007-2010: Director of Group Applications, Halifax Bank of Scotland
2006-2007: IT Director – Retail Bank, Halifax Bank of Scotland
2002-2005: IT Director, ASDA
January-December 2001: Deputy IS Director UK, Walmart
Co-op to create new IT jobs with legal services expansion