New datacentre crucial to Tesco’s

online strategy

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Supermarket chain Tesco sees its future in bricks and clicks – the combination of digital technology, the internet and traditional supermarket stores.

It is developing technology that will allow customers to scan and pay for their groceries with mobile phones as they shop, or have a single item delivered to their door at the click of a mouse.

The retailer plans to deliver these innovations not just in the UK, which accounts for the lion’s share of its business, but in a growing number of Tesco outlets in the US, Asia, and Eastern Europe.

To support these ambitious plans, Tesco is investing £65m in a state-of-the-art datacentre that will provide the infrastructure to power its clicks-and-bricks strategy.

The high-efficiency datacentre on the outskirts of Watford will cost between 25% and 50% less to run than Tesco’s existing datacentres.

Streamlined datacentre will drive Tesco’s future

Retail giant’s clicks-and-bricks strategy will be made possible by a £65m datacentre in Watford, writes Bill Goodwin

Tesco has reserved up to 30,000ft2

of space in the Sentrum datacentre. Below: Coolers on the roof of the Watford datacentre

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It will allow the retailer to save millions of pounds per year in energy costs and management fees within three years – a welcome boost for Tesco, which reported its first drop in profits in 20 years in October 2012.

The datacentre will host the infrastructure for Tesco.com and the group’s management information systems and food replenishment systems, with more infrastructure to be added over time.

It will provide the flexible capacity to meet the needs of the business over the next 10 years, Tomas Kadlec, Tesco IT director for infrastructure and operations, told Computer Weekly.

“This is a major building block to deliver technology to our customers and colleagues, and to expand our dot com and banking business,” he says.

Tesco has secured a highly flexible, competitive deal with datacentre specialist Sentrum.

It will allow Tesco to scale its IT resources up and down, depending on business needs, while paying only for the space and energy it consumes.

Datacentre strategy

The project has its origins in 2010 when Tesco turned to management consultants, Deloitte, to help it develop a long-term datacentre strategy.

“The main problem was that we needed more space. The second problem was that we didn’t know how much space we needed. And the third problem was that it felt like we were paying too much for the space we had,” says Kadlec.

Deloitte worked with Tesco to create a map of 21 datacentres in the UK, US and Europe, charting how much Tesco was paying per volt of power in each.

The review revealed wide variations in the costs and the efficiency of each datacentre. It recommended consolidating to a smaller number of much more efficient buildings.

Tesco had traditionally built and managed many of its datacentres itself. They were often built next to existing depots and stores.

But it became clear that a third-party datacentre provider might be a better option. And Kadlec and his team were under pressure to put together a convincing business case to persuade the board.

“It was a major cultural change. It required a sign-off from our board because historically we are known not only as a good retailer but as a good property developer,” says Kadlec.

Procurement began in December 2011. Deloitte and Tesco sent requests for information to 22 suppliers and requests for proposals (RFPs) to eight.

“We put together a very thorough RFP, defining the scope, the design, the requirements of the datacentre,” says Michael Fitzgerald, operations lead for Tesco datacentres.

Tesco shortlisted two datacentre suppliers, before opting for Sentrum, a datacentre company that until now has focused on providing services to financial services companies and investment banks.

By the numbersCapacity• 5,000ft2, expandable to 30,000ft2.

Power• 1.2MW, expandable to 6MW.

Efficiency and cooling• Tier 3 rated.• 1.2 PUE, compared with 1.6 PUE to

2.0 PUE for older Tesco datacentres.• Cold aisle cooling.

IT infrastructure• 350kW of Teradata racks, running

the group reporting system.• Over 1,000 physical server blades,

85% virtualised, running the UK retail and dot com infrastructure.

• Bank infrastructure runs on HP Blades and IBM AS400 servers, running AIX and Open VMS.

• IBM 2196 mainframe, running Tesco’s food replenishment system.

• Over 6PB of disk storage.

WAN roll-out planned for 2013Tesco is tendering for a wide area network (WAN) that will allow it to supply data and voice services to its international businesses.

The project will allow Tesco to provide IT services through, what is in effect, a private cloud computing service.

The network has three components: a spine, which provides international connectivity; in-country networks, which link different stores together; and the in-store networks.

By Christmas 2012, Tesco will be able to offer IT services, such as merchan-dising and forecasting to its outlets in Europe and the US, from its data-centres in Letchworth and Watford.

And by 2013, says Kadlec, there will be a single network covering all 14 countries where Tesco operates.

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“Sentrum seemed to be a lot more flexible in the commercial environment. Its space was Tier 3 and of the right quality,” says John Winstanley, partner at Deloitte.

“The challenge was the marriage of flexibility and good commercial cost. They were very good on both, not just one of those,” he says.

In March, Tesco’s board approved the £65m contract for a state-of-the-art datacentre offering up to 30,000ft2 of space to power up to 6MW of IT equipment.

Tesco was able to use the knowledge of its own datacentre to secure a highly competitive price. “Other suppliers might gulp if they knew the figures,” says. Winstanley.

“We had been looking at some of the datacentre space in Asia and we could not get anywhere near the price. In the UK, it is a very good price,” he says.

The deal is unique in the UK because of its scale, says Franek Sodzawiczny, founder and chief development officer at Sentrum. It is taking a huge area and a huge amount of computing power, he says.

The datacentre uses highly efficient state-of-the-art cold aisle cooling. It has a power usage effectiveness (PUE) rating of 1.2, substantially better than some of Tesco’s legacy datacentres, which are rated at 1.6 or 2.0 PUE.

Sentrum provides the datacentre services and buildings, while Tesco is responsible for supplying and installing the equipment. The retailer has a separate agreement with HP to manage the hardware.

Sentrum siteSecurity• CCTV monitoring every door,

power and air-conditioning unit• Double vehicle and pedestrian

gates• Fingerprint-operated secure

entrance doors• Bombproof data hall

Site power supply• Two independent 40MVA power

suppliers, each capable of supporting the site independently

• Back-up generators capable of providing power for 72 hours, or continuously if fuel tanks are refilled.

Fibre links• Fibre from multiple providers are fed

to the site from three independent channels.

Tesco’s datacentre uses state-of-the-art cold aisle cooling

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The dividing lines of responsibility in the contract are very clear, says Sodzawiczny.

“There are clear lines of communication and a clear understanding of who does what which makes for a healthy relationship,” he says.

Under the deal, Tesco only pays for the space it actually uses. That is important because business requirements might change significantly over the next 15 years, says Jeptha Allen, programme manager for Tesco.

“The flexibility within the deal that we have here, both in taking space and power was essential to us, and that is what really appealed to us. None of the other suppliers really came to us with that flexibility,” he says.

Delivering the goods ahead of schedule

Tesco had a tight time-window to commission the new datacentre.

In the event, Sentrum was able to deliver the site to Tesco ahead of schedule, said Sodzawiczny. “That comes down to the fact that it was a clear brief and we had a clear understanding of what was required,” he says

The new Watford-based datacentre will operate in parallel with Tesco’s existing 1.5MW datacentre in Letchworth. Working in tandem, they will provide Tesco with greater resilience and better recovery process, if equipment fails.

“Historically, the recovery process was application specific, and was built around restoring data from back-up. Now we are moving more and more into a real-time processing world, where we are replicating data across two different locations,” says Kadlec.

For a business running a retail bank and a fast expanding web retail business, that level of resilience is essential, says Kadlec. “A scheduled maintenance window on a Sunday afternoon on the mainframe was fairly regular in the past. It cannot operate this way in the future,” he says.

With the new datacentre in place, Tesco plans to rationalise its portfolio of 21 datacentres down to a much smaller number.

Letchworth and Watford will act as central hubs to provide IT services to Tesco’s operations worldwide, through what is in effect a private cloud.

There will still be a need for some regional datacentres to meet local data protection and privacy regulations, says Kadlec. The project will allow Tesco to reduce its IT infrastructure costs by a quarter – equivalent to several million a year – within three years.

The new datacentre will be between 25% and 50%, cheaper than Tesco’s older datacentres.

Reorganised teams

The consolidation project is providing an opportunity for Kadlec to reorganise the infrastructure teams.

“We had many people solving the same problems in different countries,” says Kadlec. “Now we only have to worry about each problem once.”

Developing a modular datacentre design

Faced with ever-growing demands for computing power, Tomas Kadlec, IT director for infrastructure and operations at Tesco, wanted to find a way of managing datacentres more efficiently.

“The exercise was how we can stop the ever-growing demand for more capacity in the datacentre, and how we can deploy our equipment in the datacentre in a more structured, methodical and smarter way,” he says.

The first step was a major refit of Tesco’s primary datacentre in Letchworth, Hertfordshire in 2010. That meant upgrading and replacing outdated equipment and virtualising its datacentre servers.

“I still had equipment from 1996. I had big tape silos, the type you seen in James Bond movies,” says Kadlec.

Kadlec introduced a simple standard modular design to the datacentre. It allows IT staff to expand computing capacity very quickly – in days rather than weeks.

This modular approach allowed Tesco to move quickly when it transferred its banking systems from its former partner, RBS, to its own IT systems.

Kadlec says he was, in effect, able to take the datacentre infrastructure developed for the retail business and deploy it again for banking.

“If you walk through the datacentre today, you see the retail environment and the bank environment are virtually identical.

“The only difference between them is an ugly green cage because of Financial Services Authority regulation,” he says.

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This central approach will allow Tesco to introduce a common set of standards and services right across the organisation. As a result, Tesco has been able to move to a shared services model much faster than most other organisations, says Deloitte’s Winstanley.

“It has a common management and operating model. Globally it has have got the same team managing all the different companies, in the same way, with the same common set of standards,” he says.

So far, Kadlec has merged the bank and the dot com teams. This year, he plans to reorganise the infrastructure team in Asia.

Kadlec is clear that the consolidation exercise will not mean fewer IT staff. “I am not under pressure to deliver a head count. I am under pressure to deliver more,” he says.

The size of the infrastructure team will be more or less the same, he says. “But it will be full of people jumping up and down with new ideas, rather than reinventing the same projects.

“It’s about making sure we do the architecture, design and first-build once, and then deploy it many times. So I need to completely change the DNA of the people,” he says.

There will be three sets of teams under the new structure – an architect, design and first-build team; a second team responsible for engineering services and operations; and separate in-country teams that will be responsible for deployment.

And with the new teams comes a new IT blueprint, which Kadlec calls the three Vs. “Value – how can we make it cheaper and better. Velocity – how can we get it faster. And no variation – whatever we deliver is the same across all the countries,” he says.

Building Tesco’s datacentre universe

Tesco worked with suppliers EC Harris and Red Engineering to provision the Sentrum datacentre, install the cabling and complete the design work.

Tesco’s Letchworth datacentre will act as the primary site for banking and retail. It will also host the infrastructure for the international dot com business, and half of the dot com business for the UK. A total of 1.5MW of IT infrastructure.

Sentrum will provide the infrastructure for the online retail business and any new business activities. The dot com infrastructure is being rolled out first.

It includes one of Tesco’s dual IBM z196 mainframes, used for ordering and forecasting; UK payroll and HR; and credit card authorisation and settlement. The second will act as a back-up on a disaster recovery site.

“We have delivered all the infrastructure that is required to decommission the first datacentre. We are now in the process of migrating the applications,” says Kadlec.

By the end of the year, Tesco expects to have a total of 1.2MW of equipment installed. “There are other services at we would like to relocate before the Christmas IT freeze,” says Jeptha Allen.

“Having said that, I don’t particularly want to run before we can walk. I want to make sure we transition services in an orderly manner.”

Tesco’s digital futureIntelligent screens that can recognise and interact with people as they walk by may be the stuff of science fiction films, but actually we are not that far away from that technology, according to Tesco’s CIO Mike McNamara.

He sees a future when a shopper will sit down on a digital table, order a coffee and be able to view recipes based on his or her shopping list, or watch movie trailers from Tesco’s streaming video service.

The retailer is developing a micro-delivery service for people who realise that they are out of a vital ingredient.

“Our customer who is baking a cake, forgets the flour. A couple of clicks later, the flour is delivered to her home,” he says.

Today, you can use our mobile phone app to scan a product and add it to your online shopping list. Tomorrow you will simply take a photo of it, he says.

In the future, smartphones will act as a clubcard and a shopping list, and will be used by shoppers to pay for their groceries.

“When you come into our store, you will connect with the Wi-Fi and may even get a personalised greeting informing you that your click and collect order is waiting for you at the till when you leave,” he says.

“And maybe even a personalised promotion exclusive to you.”

Video: Implenting the plan

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The next stage will be migrating the infrastructure for Tesco’s international business across to Sentrum.

Kadlec plans to transfer Tesco’s global supply chain management system to the new datacentre and the group management information system.

But it is still business as usual for IT, he says. “We are not saying no new business just because we are moving from one datacentre to another. We are actively supporting business initiatives and we are preparing for Christmas trade.”

The new datacentre will provide a future proof platform for new IT projects, says Kadlec. One of his favourites is a project to provide free internet access in all Tesco stores. Another is an improved ordering and forecasting system for general merchandising.

Kadlec’s next task is to sell Sentrum’s IT services to Tesco’s overseas business units. “I already had the first off-site meeting with our CIO from Asia and I am starting to actively promote this centre as the platform to build our international business. Sentrum is starting to become the centre of our datacentre universe,” he says. n

Deloitte’s advice to Tesco• Moving to fewer larger datacentres

would significantly reduce the cost Tesco was paying to run its infrastructure.

• Larger datacentres would provide Tesco with the expansion room it needed to support the development of the business.

• A datacentre consolidation programme would allow Tesco to deliver IT in a standard way across the business.

I stand in the rain for an eternity before the security guard appears. Can I see some photo ID?

“You look a lot younger in the photo,” he says, as he leads me through two sets of security gates to the blue and white building behind the perimeter fence.

This is Sentrum, an 80,000 data centre on an industrial estate in Watford. It holds the IT equipment that powers some of largest financial services companies. Its latest resident is Tesco, which is busily installing the IT systems that will power its web retailing and banking business over the next 15 years.

I was met by Jeptha Allen, Tesco’s datacentre programme manager, and Michael Fitzgerald, Tesco’s operations lead for datacentres. They took me to a large empty hall, part of the 30,000ft2 space reserved for Tesco IT systems.

The room is bombproof, a relic from a previous resident. Tesco plans to make good use of it, using it to house the servers that will hold Tesco Bank’s sensitive customer data.

Tesco has five halls of dedicated space in the building. Most are empty, but it has a secured a deal with Sentrum, to only pay for the space as it is used.

The plan is to expand in units of 5,000ft2, says Allen. Gradually the centre will provide the IT services to Tesco’s web operations and in its growing pool of stores worldwide.

One room is set aside for storage. “A dedicated storeroom

might sound dull, but it is essential,” says Fitzgerald. Most datacentres do not have enough storage space and that means spare parts have to be stored in corridors, he says.

Another room is for unpacking and building equipment. No packaging materials can be taken into the datacentre itself. “If you are removing tape from a cardboard box, fibres could get into the environment,” says Fitzgerald.

Security is everywhere – from a network operations centre (NOC) fitted with bulletproof glass, to CCTV cameras monitoring every aisle and doorway. There is a secure entrance which weighs people as they leave and enter.

Tesco has spent upfront to fit out the datacentre with optical fibre and copper cabling. That means new equipment can be installed very quickly. “It’s a 15-minute job to connect a new server, rather than half a day,” says Fitzgerald.

Behind the scenes of the Sentrum datacentreby Bill Goodwin

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The fibre converges into distribution points around the datacentre, which allow engineers to patch in new equipment almost instantly. “It’s a legacy datacentre so we would have to run cable under the floor. It might take half a day to install and commission. We have done the hard work upfront. It takes longer to walk into the room than it does to patch,” he says.

The fibre cable, supplied by Corning, is highly flexible. You could wrap it around a biro with very little light loss, says Allen. The fibres are laid out with smooth curves, but when space is tight, that flexibility can be very helpful.Tesco has opted for a modular design. Each set of server cabinets have their own dedicated power supplies – power distribution units (PDUs) - for instance. The arrangement makes it easier to schedule maintenance.

“If I make changes to a PDU, it’s only going to affect one set of cabinets. I know what is in them and I can talk to the business and agree a window for the work,” says Fitzgerald.

Every device and cable in the datacentre is colour coded, making it easy to see at a glance what is there, says Allen. “I can look at a server and see very quickly that it has got resilient power coming from two resilient PDUs,” he says. “That’s important because in our early datacentres, auditing is a lot of work.

The datacentre uses efficient cold aisle cooling all the way through. The data racks are held in sealed containers, accessible by doors at either end. Cold air is pumped under the floor and enters through vents to ensure that the temperature is never greater than 26ºC.

The hall contains nine pairs of air-conditioning units, each with its own chiller on either side of the server cabinets. The units run in staggered pairs to ensure that each area still receives some cooling if a pair fails. “If we lose half of the air conditioning, the cooling is staggered so we have a lot of time to fix them,” says Fitzgerald.

Tesco houses servers in medium density cabinets, which consume 6kW each. And there is a high-density area containing 25kW cabinets, enclosed in its own cooled room. Each high density cabinet can hold 64 blade servers – four times the computing density of a traditional datacentre.

The modular design makes expanding the space simple. Fitzgerald says he can simply phone Tesco’s suppliers and ask for a standard Tesco block. “From the point of picking up the phone and placing the order, I can have 200kW of datacentre environment installed in 10 days,” he says.

Previously, by the time the cabinets were designed, and orders were placed for cabling, power and cooling equipment, the process would take at least four weeks.

Allen hopes to have the dot com services installed by the end of October – just before the Christmas freeze, when all IT work is suspended. Then it’s a matter of consolidating some of the 21 datacentres Tescos has in the US and Europe and moving their IT equipment into Watford.

“The whole deal was about flexibility. We don’t necessarily know where technology is leading us,” says Allen.