The McCue Interview: Rob Fraser, IT director, Boots

Boots has also recently restructured and reduced the scope of some of its outsourcing arrangements now that much of the transformation programme is complete. Before outsourcing to IBM and Xansa back in 2002, Boots' in-house IT department was staffed by 650 people. That's now about 150, with the rest of the work handled by Boots' three key IT services suppliers: IBM, Tata Consultancy Services and Xansa.

Boots' current total annual IT budget is around £130m - split between £100m of 'keeping the lights on' run costs and £30m new investment. That compares to a pre-transformation total yearly IT budget of just £75m.

Fraser predicts the run figure will come down to about £70m to £80m per year in line with general retail sector IT spend - a sector with one of the lowest IT budget figures as a percentage of company turnover.

"We're slightly above retail sector average because of transformation. Our annual IT budget is going down year-on-year because as we assimilate some of the transformation spend, as we decommission systems that we no longer need, and as we just sharpen up our act, actually... we are - net - saving money," he says.

One of the key areas where IT has made a definite positive impact is with the Boots Advantage Card customer loyalty scheme, which Fraser says is more flexible than other retail loyalty schemes such as the Tesco Club card. Boots cardholders, on average, spend twice as much as non-cardholders in basket terms.

"When we originally set up the Advantage Card scheme we had the choice of magnetic stripe or chip and we went for chip because we can hold so much more data we can make the scheme flexible and portable. So the Advantage Card scheme sits in your pocket. You don't have to wait for a quarterly mailing to get value from it. Once you've earned your points, five minutes later you can go and redeem those points," he says.

The operational side of the scheme, which holds the account records and deals with the day-to-day transactions, is an in-house web-based application sitting on an IBM DB2 database. That was recently redeveloped with Xansa and is now largely managed offshore in India.

But the real brain is a separate customer insight system, run for Boots by IBM, which is a large-scale bespoke data-mining application sitting on DB2.

"That's the one we use to drive all the customer analytics that will lead to changes in the offers or one-to-one marketing," says Fraser.

Linked to the Advantage Card are in-store kiosks that give customers tailored promotions and coupons to redeem those offers at the till every time they go into a store and insert their card. The kiosks also allow customers to download points onto their card earned from shopping online at Boots.com - a clever way of encouraging footfall into the store.

Not surprisingly, all this keeps Fraser busy and he says he spends about a third of his time on exec matters, a third on the post-'Alliance Unichem' merger integration plans, and a third on the IT function. "It is quite a time-consuming job," he admits.

When he's not working or acting as a taxi driver for his two teenage daughters Fraser has a passion for fine wines - although he's quick to state that doesn't necessarily mean expensive ones.

"The problem with going for a £100 bottle of wine is you get to the point where you just don't appreciate it anymore. I'm a big fan of southern Rhone wines. The thing about southern Rhone, which is a little known fact about French wines, is they have some of the best wine scores above Burgundy and Bordeaux," he explains. "And the fantastic thing about them is if you spend £10 on a bottle of wine from Rhone you get a great bottle of wine."

But Fraser is likely to be kept busy for the foreseeable future as the private equity bidding for Boots reaches its climax right now - with the £11.1bn offer by Kohlberg Kravis Roberts and Boots' deputy boss Stefano Pessina favourite to fend off the rival Terra Firma-led consortium - and that will no doubt mean another vintage year for both Fraser and Boots.