Ocado CTO on technology partnerships and in-house development

Online grocer Ocado has a select group of tech suppliers it chooses to work alongside, typically preferring to develop various back-end systems in-house and build its own technology team of developers and engineers.

Paul Clarke, CTO of Ocado, says the retailer he has worked for over the last decade regularly "annoys" software companies, saying the business likes to build things itself "because there's no template for what we do".

Speaking at a recent breakfast briefing, hosted by Salesforce and attended by Essential Retail, Clarke said when Ocado does decide to work with technology companies, they are often partnerships driven by synergetic innovation journeys.

The CTO gave an insight into some of those partnerships, saying: "The relationships we have with technology companies such as Salesforce, Google, Amazon Web Services, Samsung, Panasonic and Apple are not about how much we buy.

"Of course that matters [but] I think those companies are buying into our disruptive vision and what they can learn from our use of their technology. It only works if it is a two-way street."

He added: "It really helps us punch above our weight.

"What we give to those companies is a lot of very unusual user case studies they wouldn't find elsewhere and what we get is access to technology and the ability to influence their platforms. Certainly that happens with a number of those businesses."

Attitudes to technology and innovation, as well as synergies around culture and people, are all deemed important by Ocado when looking for a tech partner. Clarke commented: "We are in a David and Goliath battle with some bigger competitors.

"You have to be utterly determined and you have to punch above your weight. It's where relationships with companies such as Salesforce come into this."

Clarke offered up a few soundbites to describe how Ocado runs its business, stating "to stay disruptive we need to actively disrupt ourselves" and adding that the company is "in the time travel business" by giving people back time. Automated services and customer-facing eCommerce tools such as Instant Order and Ocado Reserve have been created with this mantra in mind.

Reference to time travel seems apt, though, when analysing the science fiction-esque processes Ocado operates behind the scenes, where artificial intelligence in the warehouse learns and adapts as it goes. But as we know, there are many instances of science fiction becoming reality – and the robot picking, controlled by a system built in house alongside Cambridge Consultants, is a central part of the operation.

Automated technology – working in conjunction with people – looks to overcome what Clarke describes as "a massive traffic scheduling challenge" in the warehouse. There are, he says, "an astronomical level of routes these boxes can take" and the software needs to organise this on a daily basis. The CTO also said the tech needs to have the capacity to understand when conveyors are broken and learn how to manoeuvre around such situations, and ultimately learn how long it takes an engineer to fix these problems.

He described how the robotics and AI in the warehouse effectively offer "4D optimisation", with systems choosing which boxes to pick and how to replace them. He described the 4D element as "time" because the system is required to look ahead at the order profile which is changing continually as online orders are taken.

Much of this technology will come to life in the soon-to-open Erith and Andover warehouses, and Ocado Technology has been on a significant recruitment drive to find the latest developer talent to make this happen. The solutions they create will be available to third-party grocery companies, which Ocado is targeting to use its Ocado Smart Platform (OSP) which will allow the online grocer to provide the backbone to their eCommerce operations.

At present, it is only Morrisons signed up to this partnership, but Clarke is confident others will follow.

"We're going to keep going and we will be successful at it," he said.

"We can offer companies the same shortcut [to eCommerce as Morrisons] and not take 15 years to learn the knitting we've done. There are people who will eat their lunch if they don't manage to win online quickly. It is really important and I think we're uniquely placed to offer them that shortcut."

Clarke added: "The advent of cloud-based machine learning services is going to be so transformative in terms of shifting the baseline for smartness.

"If you're still writing relatively stupid rule engines that you have to train manually, or worse still you're expecting your customers to fill that gap, then good luck because the game has now changed. If you're not using it you'll not be world class."

This is the second article detailing Clarke's views on the wider retail technology evolution. Read part one below, where he details Ocado's approach to IoT and why he things it will have a bigger business impact than the mobile revolution:

Ocado CTO: IoT revolution to dwarf mobile's impact on business