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November 2, 2015updated 21 Oct 2016 5:24pm

Ocado: building a cloud platform for retail grocery giants

C-level briefing: Paul Clarke runs Ocado Technology and he is rebuilding everything for the cloud

By Sam

Ocado is best known as an online grocery retailer – and it has big UK supermarket chain Morrisons as a B2B online customer.

But Ocado Technology which develops everything that Ocado runs on is also a software and hardware development company which
is rebuilding its entire offering as a cloud platform.

As a technology platform company Ocado Technology prides itself on doing everything that is not in the playbook.
Paul Clarke, CTO, runs Ocado Technology says his engagement with Salesforce was not around selling CRM licences, because ‘I think we would have said at that time there was nothing they had that we wanted.’

That was in the middle of 2014.

Salesforce had become interested in Ocado, believes Clarke because "they saw themselves in us and saw some similarities in terms of innovation and disruption. That’s where we got talking and they were generous telling us a little bit about how innovation is done in Salesforce."

This led on to a conversation about the platform being built by Ocado and how the platform might fit.

The Ocado platform is called Ocado Smart Platform (OSP).

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OSP is about taking the existing Ocado end to end solution, software and hardware and rewriting all the software from scratch to run in the cloud.

"It’s a massive cloud project," says Clarke.

"It is very different from most cloud projects which is why AWS and Google are very involved and then it is also building a new kind of hardware to build out automated warehouses in a modular and scalable way. And the combination of software in the cloud and automated warehouses is what we’ll be using to put large retail grocers around the world online," he says.

Ocado Smart Platform is about building and running an automated supply chain for very large grocery retailers which can be built out to the broader food industry not just from factory or farm to warehouse to store to customer but covering everything from farm to fork.

This is being developed as a global system on which will run multinational grocery chains.

"And we’ve been talking to many of them for the last 9-12 months," says Clarke. Clarke says Ocado Technology has committed to signing its first OSP customer in calendar 2015.

Inside Ocado
There are three different bits to what Ocado does.
There is an external platform (OSP), internal apps for internal use on the Ocado system and another group of apps that will be built on

The history of Ocado Technology has been one of building things, especially applications. This is very counterintuitive and goes against everything the software and cloud market says will work.

"Our whole business is based around building our own technology. We don’t buy it. Our whole end to end solution is created in house, including a lot of stuff you just wouldn’t believe."

Some people would say ‘why the hell are you building a time sheet app, or an expenses app or an onboarding app for new joiners, just go and buy it.’

Clarke says: "Well, we could but we will the poorer for it we feel, because, lots of those things link together. Timesheets need to know about holidays. They need to know about projects, rotas and all this stuff. It is counter intuitive but we’re a disruptor, so hey, doing stuff they tell you can’t or shouldn’t be done is part of what we do."

"We have this tightly integrated end to end solution for our own needs. When it comes to building apps we didn’t want to have an individual app that did the thing it was designed for but then you found you couldn’t do that horizontal optimisation and integration that we take for granted on our the external platform," says Clarke.

Buying stuff in is not what we normally do. When it happens it says quite a lot about both our need and what we think we’re buying in."

The OSP platform being built is targeted at a relatively small number of very large retailers. There may be a few hundred in the world that would be interested.

With the OSP running the cloud it raises the issue of integration. But Ocado Technology is not going to do big integration projects.

"For the very modular micro service software side of OSP running in the cloud the APis will be published and we’re not going to build the integration apart possibly for common products such as Salesforce or SAP. That will be the responsibility of OSP customers who might for example need an integration layer to their own in-house systems which may be home brew. We’ll establish a number of partners who know our integration or OSP customers might have preferred partners."

Clarke likens Ocado to Amazon and AWS.

"Historically we’ve been a fusion of a retailer and a technology company. And the power of that is it lets does do something that is impossible if you are either of those alone."

He says if you are a retailer buying technology you have to hope it does what it says on the tin. And if you’re a tech firm building tools or apps for other people to use when you throw them over the fence and maybe you get it right, maybe you don’t.

"Many of us have been in the position of looking at tools and asking: ‘Did anybody ever use this for the purpose for which it was designed?’

He says that if you had you’d have found out its deficiencies. But by being both, Ocado drives the innovation on the customer requirement in the retail business and then builds them in the Ocado technology. Ocado builds it and then ‘puts it back into harm’s way in retail.’

This creates a virtuous circle of innovation and ‘dog fooding’ which goes around and around.

"And to drive that circle with grocery we added Morrisons (its big UK contract for online grocery delivery), soon we’ll add OSP customers."

The UK retail business remains fundamental because it pays for Ocado Technology development and because it keeps Ocado Technology ‘honest.’

Clarke says: "We are about delivering what real customers need and what works and being on the hook for that [In tech business terms]. It’s a bit like Google building its internal cloud technology, making it available externally and using it to build their internal apps. There are similarities to Amazon building its cloud and spinning it off in the form of AWS. So there are precedents in the tech sector but it isn’t that common."

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