Currently, Somerfield outsources its IT operations to Tata Consultancy Services, an Indian outsourcing firm, with a only small in-house IT team to manage the relationship and keep control of its IT strategy.
Meanwhile, the Co-op runs IT in-house, and though it works with many major vendors, also retains development expertise internally.
It is hard enough to bring together two retailers’ systems, IT departments and to align their strategies when they are similar. But in this case, the differences between Co-op and Somerfield will make any merger of the IT departments even more difficult.
When Somerfield signed its deal with TCS back in November 2006, it was careful to fight for flexible termination clauses as well as clearly defined change, exit and retirement processes.
So it is possible that the Co-op could continue to let TCS run Somerfield’s systems in the near-term while it works out what to migrate to its own control.
In comparison, it seems unlikely that the Co-op would now choose to also outsource its IT operations to a third party, having not gone down this path so far.
But if there is one lesson that these two companies can learn from a previous supermarket merger – Morrisons and Safeway – it should be that the best strategy wins, not just the strategy of the acquirer.
In the case of Morrisons-Safeway merger, Morrisons’ systems were adopted though Safeway was arguably much more advanced in its use of technology.
For instance, Safeway had examined self-checkouts prior to the takeover, a technology that Morrisons is only now beginning to implement in its stores.
Now the Co-op and Somerfield must tread a careful path to make sure that the opportunities to take the best of each company’s IT are maximised.