Johannesburg, 13 Jun 2006
As one of the country`s most successful retail operations, Edgars Consolidated Stores, commonly known as Edcon, firmly believes in the power of outsourced information technology for competitive advantage. Not only has the company entrusted much of its technology requirements to Business Connexion, but it is also benefiting from on-demand services which allow seamless matching of appropriate resources to its fluctuating requirements.
The organisation`s brands include Boardmans, CNA, Edgars, Jet, Legit and Prato. With growth that has accelerated dramatically in recent years, the group now boasts over 700 stores in three countries.
According to Edcon CIO Henri Slabbert, one of the company`s differentiators in the highly competitive retail market is its ability to apply scientific thinking to its methods.
"From an IT point of view, that means we thoroughly analyse available technologies and options for how these are delivered to the business. Whereas many retailers may see IT as a grudge purchase, we believe in the competitive advantage that technology can and does bring to our environment. So, while we strive to get the most value from our technology budget, it`s never a priority to simply reduce the budget," he explains.
A key contributor to the success of the organisation`s IT strategy has been its decision to outsource substantial components of its infrastructure, data processing, systems development, security and storage capabilities. Notes Slabbert: "There is a shortage of technology skills in the country, so it simply doesn`t make any sense for Edcon to try and develop expertise in-house. Our core focus is retail, so we looked for partners that know technology. It`s more important for us to understand business principles that apply to our market, and leave the technology in the hands of appropriately skilled suppliers," he says.
Like any successful business, Slabbert says the ability to appoint appropriate expertise to take care of specialist functions is critical to achieve and sustain growth. "We live in a complicated world, and it`s not possible to understand everything. Like any other discipline, technology decisions must be made on the basis of business principles." He adds that it is a company policy to outsource any business service that is not part of its core operations - a strategy that continues to bear fruit for the organisation.
"Edcon outsources as much as possible. The principle is not that we don`t want to do it ourselves, but rather that we want it done better by choosing to work with the best in particular strategic areas. For that reason, where we can find a partner like Business Connexion, we get them involved and spend time working with them on how to improve Edcon," he explains.
Slabbert says there is no doubt that Edcon`s approach to outsourcing services - and using on-demand services specifically - helps the company to perform better. In the retail industry, demand for technology which underpins core processes from within stores through to management information systems, is subject to enormous fluctuations with seasonal variations in shopping patterns. This is particularly pronounced over the December period when there is a huge influx of shoppers at store level which puts IT systems under huge pressure.
"Availability of services is essential if we are to deliver a satisfying customer experience at the store level," he notes. "If point-of-sale equipment is down, queues build up and customers get annoyed. Keeping everything running is critical at store level. Careful planning is crucial to ensure that even though resource utilisation exceeds expectations, we won`t be caught short and will be able to purchase more capacity. In December 2005 demand exceeded all expectations. We contracted Business Connexion to provide on-demand services during this period, and this helped us to keep our systems available 24x7."
According to Michele Hall, Retail Sector Industry Executive at Business Connexion, understanding Edcon`s specific resource needs is key. "Together Edcon and Business Connexion plan and build solutions that take account of the cyclical nature of the retail sector. We work with the company to develop strategies and provide services that will help them cater for increased demand over peak periods. Our solutions are built to be flexible enough to reduce the excess capacity between the trading peaks.
"These services, called on-demand services, ensure Edcon is provided with the level of resources they need when demand is high and can reduce this when demand drops - in essence they only pay for the resources they use. On-demand also helps them meet the IT-resource needs of acquisitions as and when they occur," says Hall.
Continuing, Slabbert says technology touches every corner of the retail environment. "IT is in every office. It underpins every process and affects every worker in the organisation, from the CEO to the shop floor, from logistics to finance - it`s there and it is core to the way that people work," he says. "Having access to on demand technology makes us more adaptive to the dynamic market conditions and ultimately makes our business more efficient and cost-effective.
"The more competitors think technology can`t deliver competitive advantage, the more confident we feel of growing market share," Slabbert concludes.
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