Walgreens Boots Alliance Inc. said it has moved 122 customized applications used for corporate management and planning to the cloud—the culmination of the drugstore chain’s yearslong move to a new enterprise resource-planning system.
The rollout, which moved in fits and starts during the pandemic, consolidates apps previously hosted on computers spread among thousands of stores and data centers into a single platform on Microsoft Corp.’s Azure, said Walgreens’ Global Chief Information Officer Francesco Tinto.
“That means better performance and faster speeds in our management of inventory, many completion of transactions, submission of invoices to accounts payable and more,” he said.
Completed in May, the effort across around 9,000 U.S. stores was part of a five-year IT overhaul grouping applications for retail, merchandising, inventory management and finance, among others, on a platform built on S/4HANA, enterprise-resource planning software from Germany-based SAP SE. The SAP system is tied to retail operations, and isn’t used for the company’s pharmacy operations.
Enterprise resource-planning systems are a mainstay of IT operations at large firms, and house accounting, supply-chain and other core business functions. S/4HANA software integrates processes and data into a single system and can be used on-premises or in the cloud.
Mr. Tinto joined Walgreens in September 2019 from Kraft Heinz Co. where he was also CIO. When he came over, Walgreens’ new ERP system was in the pilot-program stage at around 1,000 stores. He began migrating the system to Microsoft’s cloud in January last year.
At its peak pace of migration, the ERP system was being rolled out at more than 350 stores a week. But it was paused from March to June 2020 when the coronavirus overwhelmed the stores, supply chain and staffing, Mr. Tinto said.
“That was quite chaotic,” he said.
Setting up a server to run an app in the cloud can now be done in a few hours, Walgreens said; with its old infrastructure, that could take about a week.
Francesco Tinto, global chief information officer at Walgreens Boots Alliance.
Photo: Walgreens Boots Alliance Inc.
Jerry Sheldon, an analyst at retail research firm IHL Group, said the efficiency of cloud-enabled ERP systems give companies more flexibility. “In an on-premise world, you might get a major update once a year,” he said.
With the new system, Walgreens employees can now check store inventory via handhelds that connect directly to a system in the cloud, a company spokesman said. During the pandemic, the system gave Walgreens better real-time insights on customer demand for personal-protective equipment, masks and sanitizers, the company said.
Worldwide public cloud spending this year is expected to reach $385.3 billion, up from $312.4 billion in 2020, according to researcher International Data Corp.
Moving core business applications into the cloud helps retailers modernize and scale up ordering, distribution and shopping platforms more efficiently and faster than if they had to do it manually on their own servers, said Leslie Hand, vice president at research firm International Data Corp.
“With SAP cloud-based offerings, it’s all about becoming more agile and reducing that overhead,” she said. “Retailers are motivated to really double up on investments and find the money, or figure out a way to finance these things to accelerate their resiliency,” she added.
More companies are accelerating a shift to the cloud to modernize IT infrastructures. Home Depot Inc. in July extended a multiyear cloud-services deal with Alphabet Inc.’s Google Cloud. Capital One Financial Corp. said it is looking to hire more than 3,000 technologists by year-end as it migrates systems to Amazon.com Inc.’s cloud.
Write to Agam Shah at [email protected]
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