Company: SAPCustomer: Northern FoodsSubmitted by: Digica LtdDate: April 2001Northern Foods is one of the biggest names in the UK fresh food industry. Not only do its brands include such household names as Fox’s Biscuits, Ski, Bowyers and Pork Farms, but it also manufactures many own label lines for the major food retailers such as Marks ; Spencer, Sainsbury, Tesco, Asda and Safeway. The Group now comprises 17 operating companies employing more than 20,000 people, and has an annual turnover of £1.
1 billion.Traditionally, Northern Foods supported its operations – 20 AS/400 machines around the UK – from a centralised IT department based in Nottingham.
Why Northern Foods Chose Outsourcing
In 1991, the Company made its biggest ever acquisition by buying Express Dairies and Eden Vale Ltd from Grand Metropolitan. As a result, there was an immediate requirement to bring the new companies’ IT systems into line with those of Northern Foods. With the aid of additional resources from Digica, this exercise was successfully completed.Northern Foods then decided to review the position of its IT department.
Their aim was to develop quality management information systems which made the best possible use of available technology. They also wanted to ensure that all companies in the Group adopted ‘best practice’, and used the AS/400s to deliver to the decision-makers the right information in the right format at the right time in order to help manage, rather than simply monitor the business.It became apparent, however, that the centralised IT function which then existed would have had great difficulty in meeting this challenge without significant changes.The department had shrunk through natural wastage, and systems designers were increasingly called upon to provide applications maintenance and support instead of developing new systems, thereby restricting progress.Decentralising IT provision could have resulted in the danger that each IT department would duplicate the effort of other departments in developing IT systems that were common to many of the operating units. In addition, economies of scale would be lost along with the purchasing power that a large company can wield.
A Problem Solved
Northern Foods decided to outsource its applications management to Digica, a specialist provider of outsourcing services to mid-range, client/server and desktop users.The contract with Digica covers all major development and support of the applications systems, as well as technical support and help desks. Digica undertakes all of the applications processes from design and analysis through to implementation and training.Digica set up a core team which included 35 IT specialists transferred from Northern Foods. This team liaises directly with all Northern Foods’ operating companies as well as its central information systems department. The central IS department now comprises a team responsible for technical and telecommunications strategies, electronic commerce and quality management for standards and controls.
Reaping the Benefits
By maintaining a central IS department, Northern Foods has ensured that the hardware and systems strategies are co-ordinated, and that the company maintains the ability to plan its own future IT investments. Although the department is now far smaller than it used to be, the experience and expertise it offers, combined with that provided by Digica, gives Northern Foods all the necessary resources to respond to business demands. For instance, in line with its established strategy of developing its operations through both organic growth and selected acquisitions, Northern Foods recently acquired Cavaghan & Gray, manufacturer of chilled and frozen foods, and confectioner, George Payne & Co. It also demerged its dairy business as a separately listed company, Express Dairies plc. With Digica’s help, Northern Foods was able to respond to these changes with the minimum of disruption to the business.In addition, Northern Foods enlisted Digica’s expertise to help with its Year 2000 date change conversion.
Digica is adapting the core systems code, whilst Northern Foods’ IS department is concentrating its efforts on other issues ranging from the adaptation of process control equipment to the individual PC. Only by doing this can Northern Foods ensure that all its systems will be compliant by the year 2000.The outsourcing arrangement has encouraged changed attitudes within Northern Foods. It has facilitated more user involvement and the old hands-on approach has been replaced company-wide by a structured project management methodology.Prior to the outsourcing contract, the fixed cost of the support team was increasing. Northern Foods wanted to move that fixed cost to a predominantly variable one and outsourcing allowed them to achieve that.
Now they have more flexibility, so if they want to reduce certain developments or increase others, it is Digica’s responsibility to provide the resource.Outsourcing has also proved beneficial for the staff who transferred from Northern Foods to Digica. The move has given them the opportunity to work with a professional IT company rather than in a food company where IT is, effectively, a non-core activity. This gives them a much wider choice when it comes to career development.Bob Boyle, Group Information Systems Executive at Northern Foods, commented: “Northern Foods could not have hoped for a better result, nor a smoother transition from the change.
We feel that outsourcing has provided the necessary impetus to refocus the role of the IS department to help meet our business objectives.”Into the Future – Implementing SAPIn 1998, Northern Foods awarded a further five-year outsourcing contract to Digica to provide operations support for two new top-of-the-range IBM AS/400 machines to be used as the main platform for Northern Foods’ multi-million pound SAP implementation project. The AS/400s, which were sourced by Digica’s sister company, CSI, are housed in Digica’s datacentre in Nottingham, and were delivered preloaded with SAP together with its operating system, BASIS, and the MIMIX product to provide a highly resilient system architecture.Under the contract, Digica is providing systems installation, WAN installation, operations and technical support, disaster recovery and, in partnership with BT, a managed network linking all Northern Foods’ sites across the UK and Eire.Geoff Ledger, Northern Foods SAP project director: “Some of our systems are now 20 years old, generally bespoke and not integrated.
By standardising all business critical applications and decision support systems on to SAP R/3 across all 17 business units, we will not only achieve significant operational efficiencies, but also gain a consistent view of our business performance. At the same time, we will be able to retain enough flexibility to meet the needs of each individual business. This is very much a business-led project and represents a substantial investment by Northern Foods. By outsourcing the operation of the hardware to Digica, we will be able to concentrate our resources on developing new business systems to meet our current and future needs.”