The UK's third-largest supermarket has seen the expected costs of its tech divorce from former US owner Walmart rise to nearly £1 billion ($1.3 billion) after news broke that the project is now expected to run into calendar Q3 of year four, overshooting its original three-year timeline.
Meanwhile, Asda cut 200 IT staff, most of whom were working on the technology separation project...
Last week, Asda told lenders that it expects to spend £175 million ($226 million) on the project to create separate store and back-end enterprise IT systems this year before completion, according to a report in The Times. At a meeting last year, the company projected total costs of £800 million ($1 billion). Asda said its annual costs were expected to halve in 2025 compared to the previous year.
An Asda spokesperson told The Register: "As per our regular reporting cycle, we recently confirmed to investors that Project Future costs would reduce significantly as the program concludes this year."
Last month, internal communications seen by The Reg showed that systems critical to the joint operations of both retailers will not be retired until the second half of the year.
"There is no immediate urgency to decommission the SysProxy, as the Divestiture is not likely to complete until Q3," the communication said.
Meanwhile, Asda cut 200 IT staff, most of whom were working on the technology separation project.
In February 2021, Walmart sold Asda for £6.8 billion ($8.8 billion) to retail entrepreneurs Mohsin and Zuber Issa and private equity firm TDR Capital, after which they struck a "transitional services agreement" with Walmart to guarantee support for Asda's IT systems for an initial period of three years. Asda then kicked off Project Future to provide everything from ERP and HR systems to security and store operations, with an initial budget of £189 million ($244 million).
Asda later extended its support arrangement with Walmart and said it was on track to complete the separation project by the end of 2024. Last year, around 135 IT staff were transferred to outsourcer TCS, while digital transformation chief Mark Simpson left the business after 28 years of service.
According to Asda, it moved off Walmart's SAP ERP system to a new instance of S/4HANA hosted in Microsoft Azure in January 2024. In July, an annual report revealed the total cost of Project Future climbed to £430 million ($556 million) for the period ending December 31, 2023.
In September last year, Asda delayed plans to convert stores during the busy Christmas period. It said it was "prioritizing the conversion" of IT at around 850 retail sites, including smaller supermarkets and Asda Express convenience stores, during the remainder of 2024. "The conversion of our larger superstores and complex depots will accelerate from early January onwards following the peak trading period," it said.
A spokesperson said most operations had moved to new systems and that Asda was on course to finish the project this year. ®