Ted Baker isn't doing too badly at all. Having started out with a small shop in Glasgow in 1987 selling specialist men's shirts (where it differentiated itself by offering a laundry service for every shirt purchased!), the retailer is now a true global player with stores across the United States, Asia Pacific and the Middle East. It's recent results reflected its growing success – pre-tax profits up 26.7 percent to £40 million, wholesale up 35 percent and website sales up 55.7 percent. Everything is heading in the right direction.
With founder of the group Ray Kelvin vowing to cement the group's “truly global” presence, the company has begun to take a good hard look at how it operates internally and make some decisions about how its systems and processes are going to support thisexpansion into new territories. Part of this is around Ted Baker's ERP platform. Back in October 2012, following opening up stores in six new countries in quick succession, it employed PricewaterhouseCoopers to carry out a business process review to assess how it operated across the globe and how it could invest to improve upon this.
I caught up with Ted Baker's head of finance, Charles Anderson, who has played a key role in the developments, about what is planned for the next two to three years. He said:
“As an organisation we had grown very quickly, we had been very successful and were focusing on growth. But we worried about whether we had the right infrastructure in place to support that growth - not that what we had was wrong, but looking ahead at the size of the business, the multi-channel arena, what's the right infrastructure for us?
“PwC looked at how we did things, how we operated across the world. It was quite clear that we would need to do something. Some of that was just streamlining things, but it was also about taking a leap to new systems that would give us functionality that we don't have at the moment and is more suited to being a global business. Different currencies, stock moving around the world etc.”
An ERP switch
Now it's not that often you hear about a big player switching ERP vendors – in fact I can't recall a time when I've spoken to a FTSE 250 company that was making such a jump. Switching ERP vendors is notoriously tricky and not something that should be underestimated, which highlights just how important this move is to Ted Baker. It is currently using an ERP system provided by Prologic, which has been in use for over ten years – but Anderson believes that it isn't a good fit for the next wave in Ted Baker's growth plans. He said:
“It has served us very well, but was it designed with e-commerce in mind? Multi-channel? It was these areas that that though we could do better now and were using a lot of manual processes to support. It's about us, we have grown up, we have moved on. We need to look at a tier 1 player and we need to make sure that we are efficient.”
Which brings us to Microsoft AX. Ted Baker selected Microsoft as its partner for the change in September last year and has justcome out of the 'analysis' stage of the migration, which looked at all of the retailer's requirements, mapping these out and then figuring out how the system would work. It is now moving on to the design stage, creating the blueprint for the system and 'bringing it to life'. Ted Baker is also in the final stages of signing a contract with an unnamed hosting partner in the UK, which will privately host the platform on behalf of the retailer – something it hasn't done before. Anderson explained that he expects to go live with a pilot in an overseas territory in early 2015 and then begin rolling out across the globe. He said:
“We are a fashion brand, does it make sense for us to have our own data centres here? We are in the final throws with a hosting provider to support us and provide our core ERP environment and disaster recovery solutions. Wanted to keep it in a private environment, because we wanted to keep control of when we do patches and upgrades. We are a 24/7 business and we want to decide when we are going to do those things.
“We will go live in overseas environment first – we want to do it in a controlled environment and do it somewhere slightly smaller. However much you put into this there are going to be challenges that come about, but if challenges arise we will deal with it and follow that up with a rollout into the UK, Europe and other territories.”
Anderson explained to me that he is fully aware that this is going to be a challenging project for Ted Baker and the decision to migrate away from Prologic wasn't taken lightly. To help ensure that it is a success he has more than 60 of the company's best people working on the project full time. However, it's not the system itself that is his main concern, but more the business change. He said:
“I'm worried about the training, the business change, all of that. I think that this is the part that's going to make it a success. We have got people working full time on that, we are making sure we are out into the business figuring out if our training strategy is really going to work. It's all about people and making sure that they know what's coming. We will involve more people in the next few months in the training and testing.”
What happens beyond 2016
Although Anderson said that the new AX platform will bring Ted Baker efficiencies and it has set out targets for these, he is also hoping that the new technology and the relationship with Microsoft will lead to other programmes to support the business' growth plans. The AX platform will be fully rolled out during 2016 and Anderson said that he expects to become more of a 'Microsoft house' going forward and that one of the real benefits of the new ERP system will be consolidating customer data into one single view for the future. He said:
“We felt with Microsoft it was a great partnership because they could help us with other things – we have alreadystarted about two or three discussions in other areas about how they could support us. We are currently doing a trial of the Nokia Windows phones and that's been very successful, so we are looking at how we can roll that out across the business. We are keen to see how we can use their tablets both in store and on the road.
“We do a lot already with customer data, we are trying to understand who our customer is and we are trying to be clever with things. The customer is always at the centre – we don't look at this in siloes and say that's the retail business, that's the wholesale business, or the e-commerce business, we have used this platform to say the customer is at the centre.
“How do we make that customer journey wherever they shop with us? How do we harness that information? One of the real benefits that AX will give us is linking all of that data together and then figuring out what we do with that data.”