Fitted with outsourcing shoes

Aldo Group Ltd. and IBM Canada Ltd.’s Business Consulting Services recently announced an outsourcing agreement worth close to $13 million.

This agreement is in addition to another outsourcing contract the two companies had signed in early 2002 where IBM agreed to manage the shoe company’s business applications portfolio and IT infrastructure. This includes managing Aldo’s data centre environment and overseeing the migration of Aldo’s legacy systems to a new environment.

Martine Nadeau, a spokesperson for Aldo in Montreal, said the decision to outsource was based on common sense.

“Our ambition is to stay the leader in the design and merchandising of shoes….It makes no sense at this point to try and manage our infrastructure and software,” she said. “It makes total sense to give it over to an expert in the field.”

Nadeau said it is imperative that a system be built that evolves along with the business. While Aldo cannot do this on its own, IBM can.

“It will enable us to grow [as a company] because we will have more capabilities. We will definitely have more people on the payroll after it’s complete,” Nadeau said.

Nicole Levasseur, IBM’s Montreal-based project manager for the Aldo project, said the retailer is growing quickly on an international basis, and so part of the challenge is to harmonize the business process for the Canadian, U.S. and British stores into one system, with one scope. She explained that the system must support the three aspects of retail: to buy, to sell and to distribute.

The new system is based on the Retek environment. Retek Inc. is a supplier of collaborative software solutions and services geared toward the retail industry. IBM Business Consulting Services developed a new version of Retek after analyzing the characteristics of existing systems.

According to Levasseur, many of Aldo’s IT staff have become amalgamated with IBM’s IT people.

“We are using a combination of resources – ex-employees of Aldo are now in the IBM family and are assigned to the Aldo project. From an IT perspective, Aldo is relying on our knowledge, expertise and our experience, but we use the Aldo people because they know the Aldo business,” Levasseur said.

Lise Dellazizzo, program director of Canadian ASP research at IDC Canada Ltd. in Toronto, said that while the retail industry is a sensible vertical to opt for outsourcing, it is not leading the way.

“It’s a rather gradual growth. The rule of thumb is that any sort of transaction-intensive industry, such as financial or insurance or retail, would be appropriate for outsourcing because applications are necessary to run the business, but aren’t core to what they do,” she said.

In general, Dellazizzo sees a trend to increased outsourcing, but says retail is behind the other verticals.

“Generally, retail needs to modernize and become more efficient before it will turn to outsourcing,” she said.

“Wins like Aldo are good, because it allows the industry in general to see that outsourcing is the way to go moving forward.”