IT Visionaries: How Ocado Delivers Innovation to Your Doorstep
By Kim Honjo
Ocado is the world’s largest online-only grocery retailer and they do it like nobody else in the world. Based in the UK, they reach over 70% of British households, shipping over 165,000 orders a week during 2014 and growing fast. They are both a retailer and a technology business. Paul Clarke, Director of Technology, manages a fast growing team of over 600 software engineers and IT specialists who are responsible for building Ocado’s disruptive end-to-end technology solution. Like many businesses, Ocado’s customer facing systems take priority over internal application development. In this latest edition of “IT Visionaries” Clarke shares how as part of the continual process of “innovating the innovation factory”, his team are now building a new generation of internal business applications.
1. Tell us about how Ocado is changing what it means to be a retailer.
Technology is at the core of almost everything Ocado does. Our vision and culture are much closer to technology companies such as Google or Salesforce than a traditional bricks and mortar retailer.
Our customers place their orders online via our webshop or mobile apps. These orders are then picked and packed in our highly automated warehouses (the largest of their kind in the world), before being delivered to customers’ kitchen tables in one hour delivery slots by our own delivery fleet.
Our mission is to change the way people shop for their groceries by providing the widest choice, best service and highest quality at compelling prices — if you can offer luxury airline service at budget airline prices, why would you go anywhere else?
2. What is Ocado Technology and how does it drive your business?
Our business is all about making the process of grocery shopping as simple and convenient as possible for our customers. However, that simplicity is delivered by an enormous amount of complexity and technology under the surface.
Ocado is powered by a huge Aladdin’s cave of software technology almost all of which is built in-house by my division, Ocado Technology. What we do here is not IT, it’s technology in the true sense of the word and our technology estate is very broad and deep — real-time control systems, robotics, machine learning, simulation, data science, forecasting systems, routing systems, inference engines, big data and so on.
We are the fusion of two businesses — retail and technology. Our retail businesses help drive the innovation and the customer proposition. Our technology business builds the solutions which we then deploy back in our retail businesses. This allows us to do what neither a pure retailer nor a pure technology company can do — create a virtuous circle of innovation dogfooding.
3. Tell us about the “cobbler’s shoes” dilemma Ocado has been working to solve?
For us, staying disruptive is all about acceleration rather than velocity — how to “get better at getting better” or “how to innovate the innovation factory”. As we continue to grow fast, we need to drive efficiency, scalability and sustainability. But as the saying goes, “the cobbler’s children have no shoes.” Like many technology companies, however fast we recruit engineers, there is an endless backlog of customer and production facing projects that take priority over developing new internal business applications.
So why not buy them? Well we want the same sort of integrated ecosystem of internal applications as we take for granted in our external platform and which enables us to interconnect these two worlds. So after suffering this resourcing challenge for many years, we finally accepted that it would never change — we needed an alternative approach.
4. What made you look at the Salesforce1 Platform?
We decided we needed a development platform that would allow analysts to build most of these applications without software engineers getting involved. We also wanted to facilitate building short lifetime applications quickly and cheaply, such as you might need to manage a one-off event or campaign. Finally we wanted a platform that provided for free the sort of stuff that often gets left out of internal applications such as: Security and permissioning, reporting, APIs, integration between applications and release engineering.
Having looked at and evaluated Salesforce1, our conclusion was that it addressed all of these requirements and more.
5. How has Platform been a solution for your team? Can you share what you have built so far?
Salesforce has provided incredible commitment and support through the decision and evaluation process. During our evaluation phase we decided to set one of our analysts the challenge of learning the Salesforce1 platform from scratch and then building three of the applications from our backlog: Expenses, Project lifecycle management and Reporting defective equipment/ facilities. The objective was to assess the scale of the learning curve and the functionality of the platform. From knowing nothing about Salesforce1, it took him six weeks to get them live.
The “What’s broken” app needed to be mobile so that employees could log issues about things like a conference phone, a vending machine or a printer, and then track the resolution of the issue; this was achieved using the Salesforce1 Mobile app.
Next on our list is an application for new joiners which will act as an online mentor during their few days working at Ocado. For each day of their first week it guides them on what they need to do, provides links to useful resources, arranges lunch buddy meetups, organises training, identifies groups they need to join and so on. Their team leader has the same app, but running in a different mode, that helps manage the workflows associated with inducting a new joiner.
We’re also working on a Health and Safety app because we have a lot of machinery, a holiday booking app, and a timesheets app. And then there’s the rest of the backlog…
6. How does Ocado Technology keep innovation at the forefront?
We’re constantly pushing the limits of what technology can do. What many other companies would consider R&D, we consider business as usual innovation. From our e-commerce front-end, to forecasting and supply chain systems, to real-time control systems that drive our automated warehouses, to routing and last-mile systems — that’s just the day-to-day operations side. Beyond this, we have what we consider R&D streams in areas like robotics, vision systems and simulation. Then beyond those, we have our 10X or Advanced Research department that works on game-changing solutions. This is where we attempt to disrupt ourselves before anyone disrupts us!
We work hard at embedding invention and entrepreneurial spirit throughout the business. Luckily, there is no shortage of hard problems to solve, so we encourage people to move around between teams to promote learning and spread best practices and knowledge.
But in the end it comes down to continuing to recruit the smartest and most talented people we can get our hands on. You often find exceptional talent in the most unlikely places, so you need a culture that can accommodate that.
7. What’s next for Ocado Technology?
Our first challenge is that we have a UK grocery business that is growing fast (15% YOY sales increase for first quarter of 2014) whilst many UK bricks and mortar grocery retailers are seeing flat or negative YOY sales growth. Fuelling this growth means ongoing work for Ocado Technology across the board.
In January 2014 we put Morrisons grocery business online using our existing platform. The day after putting them live we embarked on an ambitious project to rewrite from scratch our complete end to end solution to run in the cloud. We are also creating a new modular and scalable hardware platform for building our automated warehouses, the first two of which are already under construction. The combination of these software and hardware platforms are what we call the Ocado Smart Platform, which we will be using to put grocery retailers around the world online using our disruptive business model.
This is a very unusual cloud migration project. The breadth and depth of the software technology estate that we are reincarnating in the cloud is generating a huge number of distinct use cases for cloud technologies. It’s very different from building an Uber or Snapchat that are much more monochromatic.
Looking further out we have a number of 10X initiatives underway. Although for obvious reasons I can’t talk about these in detail, the collision of technology tsunamis such as the Internet of Things, Smart Machines and Robotics are generating hugely exciting opportunities for us to make our systems even smarter, even more aware and even more automated.
Beyond our technical agendas, Ocado Technology is part of the wider transformation that Ocado is engaged in to become a platform business, just like Salesforce!
Learn more about Ocado’s journey at the Salesforce World Tour London.