Tesco’s CIO Mike McNamara on supplier relationships

See also: Tesco’s Mike McNamara on supporting a global business

Mike McNamara’s corner desk faces out to the window and his PC sports a telepresence camera, which is used for two of every four quarterly reviews held by the CIO of retail giant Tesco.

A meeting table dominates the room. This layout tells you something about McNamara. He is warm, engaging but with a mind as sharp as the pricing on the shop floor.

McNamara has no need to hide behind a huge desk and rule the IT empire like a retail Kitchener, and at the meeting table McNamara is at home, relaxed yet totally focused and like his organisation looking beyond the nondescript Cheshunt office from where Tesco has taken on the world.

Tesco is considered to be a bit of a darling in the CIO world; after all there are not too many global corporations from this, or any, shore that have a former CIO as their CEO.

McNamara’s boss Philip Clarke formerly held McNamara’s position until March 2011 when Sir Terry Leahy stood down as CEO.

Under Leahy Tesco undertook significant expansion in the UK and overseas as well moves into banking, telecoms and the internet.

McNamara sits on the Tesco executive committee alongside the chief executives of the four regional Tesco businesses and the services business that includes the new banking and telecommunications arms.

“Philip is a brilliant retailer, not just a technologist,” McNamara says of Clarke when asked whether there are any challenges to having the former CIO as your boss.

“You don’t get much by him. He has a great sympathy for IT and he can understand what it can do to make shopping easier and better for customers and our staff.”

CIO met McNamara as the company announced an eight-year extension of its relationship with Microsoft. “It is a long contract. It is about as long as we would sign,” he says.

McNamara describes the deal as an “enterprise subscription agreement”.

“So we have unlimited licensing over the duration of the contract. It is important not to count them [licences] all the time when you are a large distributed organisation like us,” he adds.

Microsoft will provide its Windows, Office, SharePoint, Exchange, Lync, System Center, BizTalk and SQL Server technologies across the 14 countries that Tesco operates in, as well as to the rapidly growing Tesco banking, online and telecommunications businesses. The Microsoft Services Enterprise Strategy consulting programme is also in the deal.

Long-term partnership McNamara explains that Tesco has had a long-standing technology relationship with Microsoft. The CIO began working with Microsoft when he was CTO of Tesco.com back in 1999.

“You have to wear down a bit of shoe leather. There are a few companies that I spend a deal of time forming a relationship with and Microsoft if one of those,” McNamara says of his vendor management style.

“We have quarterly meetings, twice a year in the US and I know I can pick up the phone to speak to Kevin Turner [chief operating officer at Microsoft] if I wanted to. You have to put the time in to relationships and I know it works for me,” he adds.

Motorola, NCR, Oracle and Retalix sit alongside Microsoft as the core technology providers to Tesco, supplying in-store mobile, self-service tills, till software and checkouts respectively.

“You end up with an ecosystem and you can encourage them to work together,” the CIO says.

“We have enough money to do what we want to do, so I have never felt constrained and during the credit crisis we continued to invest.”

As anyone who has been into one of Tesco’s hanger-sized supermarkets will attest, mobile connectivity disappears, but McNamara will end all that with wifi access for customers, the latest in a line of technology investments which he sees as part of the continuing technology journey that retail is undergoing.

“I spend a lot of time with our technology team to make our staff’s role better and now it’s about customer-facing technology. The reality is people check prices and social review and I think we should help them.

“The difficult conversations will happen, you can choose to participate or ignore them, but the debate will happen,” he says of security and access abuse issues that could arise with people using the wifi to download movies, or play fast and loose with the Tesco brand in store and on the retailer’s network.

“If you look at the role of technology, 14 years ago IT was a transactional process. Wifi is a real example of technology the customer will see, but it is not always the case; take our queue technology for till queues. We were an early adopter of self-scan tills and our supply chain is uber-sophisticated.”

Tesco’s supply chain has been vaunted by industry commentators as the edge that took it past rivals J Sainsbury, Asda and Morrisons to become the undisputed supermarket leader in the UK it is today. McNamara is proud of the supply chain.

“In the UK we ship half a billion items to thousands of shops in a just-in-time basis. It is very sophisticated and I think we are innovators. We are now bringing the same attitude to the shop floor.

“It will change the way we retail. Price transparency is important and it will change the way we trade.”

Fly by wireless McNamara cites targeted promotions as a benefit Tesco expects to see from its wifi innovations, replacing the existing broadcast promotional methods it currently uses.

He added that the Tesco Clubcard App could provide authentication for regular customers to get access to the wifi. Again Tesco is lauded for its innovations in information management by analysts, consumers and suppliers and in-store wifi could increase the power of this already impressive tool.

McNamara believes shoppers want to use the information Tesco can supply via wifi to inform its consumption decisions.

“Why shouldn’t I know what are the best selling wines, shirts or television sets? These are the things that are on the internet and we can now bring into the store,” he says of the Amazon-type experience Tesco shoppers will have via their smartphones.

Improving mobile access to Tesco information will also benefit the store’s 480,000 global employees.

Only 20,000 Tesco staff work in an office environment, while the majority of its employees are in the stores or the supply chain.

“Mobile is a huge opportunity for us and it will change the equipment staff use to do their jobs,” he says enthusiastically

The rapid expansion of Tesco into Asia and Eastern Europe is in no small part to the Tesco Operating Model, dubbed by many Tesco in a Box, which allows the supermarket to replicate its successful UK stores in foreign economies very easily.

“It is far more than IT, but there is a bedrock of IT, it is about processes and organisation,” McNamara says of the operating model. The latest Microsoft deal will modernise that IT bedrock.

“One of the big jobs is about how we collaborate across all our operations. SharePoint is fantastic in that we can do a short video on a yoghurt fixture. That may seem trivial, but for sharing and learning the technology helps considerably,” he explains.