UK’s Co-operative Group to centralise IT teams across various divisions, warns redundancies ‘inevitable’

Exclusive The tech function is being consolidated across The Co-operative Group with redundancies “inevitable”, the company has told staff. At the same time, the management of certain areas including application support is to be outsourced to Tata Consultancy Services (TCS) along with the TUPE transfer of some staff.

Techies working at Co-op – which includes a supermarket, funeral care, legal services and insurance divisions – were told about the sweeping move internally a a little more than a fortnight ago, but the TCS deal only came to light this week.

“Two weeks ago, we told you that we’d be reviewing the way we work, with the aim of reducing duplication and simplifying how we do things,” read a memo sent on 15 July, co-signed by Co-op’s Mike Clifford, infrastructure and service delivery director, and Dave Robertson, retail director.

It continued: “This morning, we confirmed that we’re transferring the responsibility for delivering a number of services in Application Support, Information Security Operations and Infrastructure Support to Tata Consultancy Services.”

As a result, a “number of colleagues within Co-op IT will TUPE transfer” to TCS from “September at the earliest”. The Register understands around 60 of the more than 500-strong IT department are earmarked to make the move.

The rationale, Clifford and Robertson said in the memo, is to “make it simpler and more efficient to run our business which in turn means we can invest more heavily in developing our businesses.”

On 2 July, when discussing a centralised operating model, Co-op told staff in a Q&A document: “We’re looking at how we can work more efficiently and effectively, right across Co-op. We know our people are great, but we have duplication of effort, double handling of activity and inefficient systems and processes in many areas, plus we’re not always organised in the best way to allow us to manage capacity and resources efficiently.”

As a result of the consolidation there will be redundancies throughout the tech teams, the company admitted. “It’s inevitable across the whole organisation.” The number was not confirmed but it looks to be at least 100 as the consultation length, which is under way now, is 45 days.

One insider told us: “Co-op has always been a highly federated business and each main business unit has gone their own way. They announced they are going to change that to a centralised model.”

The design of the centralised technology organisation, in granular detail, has yet to be communicated to staff but will be executed in two waves with the first due to complete by 14 August.

At a top level, the IT and Digital team will come together. The legacy structure “felt like it was set up to compete not collaborate. The proposed operated model has been designed for collaboration,” the company told staff via the Q&A document that was seen by us.

Co-op described the move as “radical” and wants to “balance delivering that with how much change we can design and deliver at the same time”. The company insisted it is “creating a new technology function, this isn’t a merger. We are bringing the best of both teams to create something different”.

Major re-organisation

A Co-op document on the proposed Technology team revealed that the Service Management functions in IT and Digital, for example, will be made into one unit. “Details around Risk and Release Management are still to be worked through fully, but we’d certainly expect to see some part of that work done within the new Service Management function, working alongside other areas as appropriate.”

A head of the new tech team will be appointed and a CIO will be sought. The office of the CIO was said to be “the right hand function of the CIO to drive strategy, change and transformation, people and culture and functional performance across the Technology function”.

The Information Security and Risk team will become one; the Engineering practice will span the entire Technology team; and the Enterprise Service function will bring together applications, hardware and services operations.

“From cloud infrastructure, to collaboration tooling, to the hardware in our physical locations. A single application management team run those applications that require less change or are being wholly outsourced,” said Co-op. It looks like part of this work will be done by TCS.

Platform teams have been created to pull together common products, services and applications in sub-teams for Customer, Operations and Commercial.

Rob Bowley, head of digital at Co-Op said in another document to staff that the vertical IT set up “aligned vertically” to the food, funeral care, insurance and legal units made it “hard to solve problems collectively and collaborate on common activity”

“When we say horizontal we mean the Technology function being organised with the bias towards common and shared over business aligned, but still keeping a strong relationship with each business area.”

This is easier said than done.

A Co-op spokesperson sent us this statement: “As part of our ongoing work to improve our efficiency across our IT function we have taken the decision to transfer responsibility for delivering a number of services in Application Support, Information Security Operations and Infrastructure Support to Tata Consultancy Services (TCS).”

We asked about the centralisation strategy but received no comment. ®

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