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Internalization of IT: Myth of reality?
June 25, 2020

Nowadays internal IT teams can be considered as rare species in the environment of large, global corporations. Outsourcing -and offshoring- of technology teams has been presented during longtime like the way to go for CIOs, an straightforward recipe to boost flexibility and gain expertise. And of course, if we keep these very few “strategic” competencies in-house… all will go well! . But… is there an alternative scenario of “radical internalization”?  Is it possible to live without outsourcing? 

Atacadao, the cash&carry powerhouse of the Carrefour Group in Brazil, shows that this is not only doable, but that such an approach could bring significant benefits. We are very proud of having an (almost) 100% internal IT workforce.

What is the secret ingredient? What explains that we were able to do it while many other companies fail? To answer these questions, you need to take into consideration different factors such as the current business model, the organizational structure and the strategic goals. 

But there is one factor that really stands out among the others, and it is the culture of Atacadao.

Our best asset is our people. We encourage commitment, ability to speak up and drive. We strive to develop our talents.

We really believe in simplicity. Our business model is transparent, no frills and humble. We strive to delight our customers every day.

Atacadao has a unique business model, based on leveraging our strong negotiation power to create a better commercial proposition. We strive to develop our business every day.

All these values make Atacadao’s employees proud to belong to our company. In fact, many of us tend to think of Atacadao as a second family.

These global values are perfectly present in our IT team, and expanded by the feeling of accomplishment of having created our own information system, complete, robust and extremely efficient, and rapidly evolving to adapt to the needs of the digital era.

What has been the experience of Atacadao applying such a model? Are customers satisfied? Let me share with you the main advantages of our internal IT team.

1. Speed

Organization enables faster decision-making. Of course, our CIO knows everyone of our employees personally -they are part of the family!- and it takes a matter of minutes to chat with any of them about anything. There are no “taboos”: Communication is transparent and direct.

And we are in a better position to create a sustainable model where leaders can really care for people, and coach teams to help them grow. All this is possible since you know them really well. All this enhances quality of service and, as a result, leads to a higher degree of satisfaction of our business counterparts and customers with the service.

In fact, we welcome and embrace this agility, it is part of our DNA. Let  me give you an example: In Brazil, fiscal rules change almost daily. However, we manage to update our store applications to implement the new business rules (without breaking anything in the process ^^). 

2. Cheaper

I will not be long developing this point, since it is pretty straightforward: An internal IT structure helps us to keep a very healthy cost structure.

In fact, our IT cost / sales is radically lower when compared to other retailers, and amazingly stable over years despite transformational efforts and expansion.

3. Continuous process improvement  

The close relationship between board members and employees (again, we are all Atacadao, thus part of the family!) as well as the satisfaction of improving things for our company are key.

In Atacadao, we do not have the luxury of time to wait for external analysis or audits to define priorities and then identify how our processes should evolve. On the contrary, we encourage our highly motivated employees to work together -business and IT- to continuously analyze and enhance our processes in full autonomy. Of course, we make extensive use of metrics that help us to take fast decisions in this process, always driven by efficiency and customer satisfaction.

Once they see the impact of improvements, our employees are delighted too, creating a virtuous cycle! Generally-speaking, when results are there, matching expectations, people are glad to contribute to the common project, even if in some cases it requires an important personal investment. In Atacadao, we always keep in mind the following: “Sales never stop”.

A clear example is the recent modernization of our logistics processes with a new Warehouse Management System (WMS). Results were there, business colleagues were happy, IT team was happy!

4. Business-IT partnership

Internalization really helps when it comes to business and IT teams to discuss: Communication is direct and honest, low profile and always putting the interest of the company and the customers first. There are no intermediaries, no “business analysts”, no consultants. This leads to clearer, co-owned action plans. 

Our talented “IT system coordinators” are considered as real business partners (kind of “product owners” in the modern jargon) acting as a single point of contact for the business area. These guys really know their stuff when it comes to the detail of business processes, be it merchandising, store I operations, logistics or finance!

I have seen IT systems coordinators in action, navigating through the aisles of an Atacadao store and explaining how everything works as if they were the store manager. It is really impressive!

5. A positive working environment

It is extremely  important to keep a proper balance between a healthy lifestyle and working hard.

Thanks to our model of internalization and the values of simplicity already described, the members of our  IT team employees are more performant and efficient. We do not need to overcomplicate things: We often say: “Let’s not reinvent the wheel”.

We actively encourage Atacadao’s IT colleagues to re-invest the time they gain in them, spending time with their families and friends, developing personal hobbies and dreaming to pursue innovation. We believe that all this, in turn, makes them happier, more confident and more productive.

Taking your mind off work from time to time actually yields the best results. Maybe, during a nice walk at night, a great idea can emerge.

In conclusion, the internalization of IT has been highly beneficial for Atacadao, its employees and its customers. In our experience, the key to succeeding in such a setup is an exceptional culture and a conscious effort to make it happen.

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About the Author

Head of IT Governance at Atacadao (Brazil) Flavio has over 18 years of IT management experience and holds a MBA in IT Strategic management by FGV in Brazil. He loves working out and playing tennis to reconnect with himself!

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