Throughout December, UK confectionery giant Cadbury has been seeking to rebuff the attempts by US firm Kraft to take over its business and the latest tactic has involved a promise to drastically reduce the amount it spends on IT each year.
Cadbury currently spends over £70 million annually on supporting its IT infrastructure and developing its administration capabilities, but it will seek to reduce this outlay in order to shore up its defences against the Kraft bid. Cadbury’s chairman Roger Carr has treated the bid by Kraft as almost insulting, claiming that it significantly undervalues the business and would be of no benefit to either party.
The main budget cuts will come in the IT purchasing and procurement schemes which are currently employed by Cadbury and it will instead be focusing on creating a scalable, infrastructure which can be used by its international branches.
Cadbury’s chief of finance indicated that at this time it was believed that 66 per cent of the IT budget was being used ineffectively, blaming the local sourcing of its IT services.
Cadbury currently relies heavily on software and systems operated by German firm SAP, but after a business and resource management platform suffered serious setbacks three years ago and costs of £12 million were incurred as a result, a shake-up of its current IT model was always going to be on the cards.
According to a spokesperson for Cadbury, the company will now focus on creating an international platform which will be procured and paid for centrally, rather than seeking local solutions and paying regionally varying prices for data management and IT services.
Industry observers have commented that the news of Cadbury’s IT shake-up will be troubling for its current IT vendors as it could mean a vast majority will fail to have their contracts renewed, losing a very lucrative client in the process.
Cadbury is one of the many businesses that are realising the benefits of switching away from in-house IT solutions, or relying on solutions of limited scalability which have been superseded by virtualisation and cloud computing alternatives.
