Shoppers Drug Mart moves to outsource its IT

Retail giant Shoppers Drug Mart Corp. Inc. has signed a five-year outsourcing deal that will put its portfolio of existing systems into the hands of IT outsourcing firm, Keane Canada Inc.

Keane has taken over Shoppers’ core applications or the “systems that basically run the company and have done since the early nineties,” explained Don Parker, CIO for Shoppers Drug Mart in Toronto.

The outsourcing company will be focused on three key areas of the existing systems, Parker noted. These areas include enhancements, maintenance and what Parker calls the break, fix or “things that go bump in the night.”

This type of outsourcing is referred to as application services, explained Alaisdar Graham, Keane Canada’s managing director. In essence this means that Keane will be delivering application management services to Shoppers, which would then allow the retailer to improve its flexibility, which was one of its “big drivers” going into the agreement, Graham added.

One catalyst nudging Shoppers toward outsourcing was its realization that the people supporting the existing applications were very specialized and focused on their own individual applications, Parker explained.

He added that Shoppers wanted to widen its IT workers’ perspectives, get more flexibility, be able to move people around between different applications and have access to a bigger pool of resources.

Before deciding to outsource part of its IT operations, Parker said the company had to ask itself some important questions. Should Shoppers start hiring more people to build up its pools of resources, its knowledge and its skills? And should it start retraining its entire staff for the kinds of time to market issues it is currently seeing in the retail business?

“Did we have the capability, the wherewithal ourselves to do that or did we need a partner to do that? We determined that trying to do it all ourselves when we are really in the retail business, we are not in the information technology business, was too risky. So, we decided to go and look for a partner that would help with introducing the flexibility and the agility that we wanted in our existing portfolio,” Parker said.

Outsourcing its applications to Keane meant more to Shoppers than handing over part of its workload. It also meant handing over some of its people. Typically what happens with this kind of agreement, and it is the case here as well, is that there is a staff acquisition, Keane’s Graham explained. The Shoppers IT workers that are responsible for maintaining and fixing the code on the existing systems have left the Shoppers site and have moved over to a Keane site.

All of the affected IT employees were made an offer, nobody was excluded, Parker said. Keane didn’t come in and “cherry pick all the good ones, the deal was that they would make an offer to everybody or they wouldn’t get the business.”

“It protected them in terms of their years of service and their pension and their benefits, it was all written down, it was a letter of employment and 100 per cent of them accepted, unbelievable.” One of the benefits to the Shoppers employees that have moved to Keane is that they will be able to spread their wings in terms of the types of projects they will be working on.

“Some of them already have been starting to work on other clients of Keane as well so they get a chance to broaden their experience. If you are an IT professional, especially for the younger ones, it has a certain appeal because you are working for an IT company and you are recognized for what your value is, you don’t have this whole problem of IT in the back room sort of thing,” Parker added.

To make sure a company is a good fit with Keane, Graham noted that the outsourcing firm makes a point of sitting down with potential clients and going through a list of various factors that the company thinking of outsourcing has to be aware of. “Outsourcing is not ideal for everybody,” Graham admitted, “so going through this process helps the company understand if they are going to see any real benefit from doing it.”

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