Asda kisses Walmart goodbye with half a billion dollar tech breakup bill
Project including SAP upgrade beset by cost increases and delays
The UK's third-largest grocery retailer has spent £430 million ($544 million) on its IT separation from US giant Walmart.
Walmart sold Asda to Bellis Finco for £6.8 billion ($8.65 billion) in 2021, but continues to support most of its IT systems.
Asda, which has a turnover of £25.6 billion ($32.45 billion), has been building separate IT systems – including infrastructure, POS, ERP, HR, and payroll – for the last three years, but was forced to extend its support deal with Walmart to continue to run the old systems beyond a February 2024 deadline.
Its annual report [PDF] covering the period until the end of December 2023 shows Asda spent £241 million on "Project Future," the IT separation program from Walmart. The figure has risen from the £189 million recorded for the period from September 3, 2020, to December 31, 2021.
The latest annual report said the costs incurred related to this project included "research spend, design and build costs relating to IT infrastructure and software-as-a-service solutions which cannot be capitalised, consultancy costs incurred in relation to the management of the programme, run costs relating to standalone systems where equivalent legacy Walmart systems are still in use by the business."
The supermarket promises the separation program "will transition the Group to a standalone, leading-edge IT infrastructure which will enable it to improve operating efficiencies, make better use of data, improve the experience for customers and colleagues, and enable the business to be more agile in responding to customers' needs."
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Asda is in the process of moving much of its software to the cloud, based on infrastructure provided on the Microsoft Azure platform. The move also includes a major application upgrade and business transformation in the transition from Walmart's ERP system – based on the SAP's older generation ECC system – to the newer S/4HANA system, based on an in-memory database.
The retailer signed up for the German vendor's flagship RISE with SAP scheme, which is expected to include a pillar of business transformation and technology changes.
In January, news broke that Asda had been forced to extend its IT transition deal with Walmart – which was set to come to an end in February 2024 – with the move expected to complete by the end of 2024, although The Register understands the support deal covers some of next year.
Earlier this month, The Register revealed that 130 to 135 members of the IT team have entered the collective consultation to move to Indian outsourcing giant TCS, potentially disrupting the organization as it tries to plan for the critical transition to new systems. ®