ICT in transformation mode at multinational

Procter & Gamble is in the process of overhauling its technology operations

Supporting sprawling business operations seamlessly across 86 countries would challenge any ICT group, but Procter & Gamble, a company known for innovation, that’s not enough. Since the ICT organisation at the 169-year-old consumer products titan was melded into its shared-services business in 2005, CIO and global services officer Filippo Passerini has challenged the technology team to live up to the company’s reputation for creativity.

“We started with the mind-set of ‘What can we create that’s unique for the business?’” says Passerini. As he sees it, P&G’s ICT department should play a vital role in shaping the company’s future. But given P&G’s size and scope, he doesn’t expect “an overnight transformation”.

For the past two years, he and other top ICT executives have worked with business leaders from around the company to identify market trends, anticipate business needs and create programmes globally.

This includes honing P&G’s business intelligence to help the company’s consumer-focused businesses better anticipate market shifts. “What happened a week or a month ago [in the market] is no good,” says Passerini. “We have to predict what is coming.”

P&G is also investing in analytical software and predictive modelling tools to help its business leaders better understand the markets it serves.

The company’s scale complicates this effort, Passerini says. ICT must deliver highly customised analytic and data mining tools geared to support 300 product brands, each with unique geographic and competitive market needs, but the technologies also need to be standardised. “Our teams are developing a working marriage of these two critical demands,” says Passerini.

Douglas Christopher, an analyst at share broker Crowell, Weedon & Co, says BI and predictive modelling tools have helped P&G identify and react to market shifts more quickly, though he says it’s difficult to quantify how much their use has contributed to its businesses.

But BI is just one element of the ICT organisation’s speed-to-market strategy. P&G’s ICT group is also using home-grown and commercial software to help the company obtain and incorporate customer feedback and launch new products more quickly.

In the past, P&G created physical mock-ups of new products and showed them to customer focus groups early in the development cycle. Participants provided feedback on packaging, pricing and competitive products. Then the product team modified the products and retested with consumers a process that could take many weeks.

ICT has shortened this cycle using a digital workflow system that creates “a virtual mock-up”, says Passerini. “If consumers give you feedback, you can change [the product] on the fly”, saving weeks of development time.

P&G’s ICT team began developing those capabilities just over a year ago and has since applied the virtual approach to testing versions of products, including paper towels and potato chips. The concept has already delivered “big reductions” in development costs and time to market for some of P&G’s new products, says Passerini.

P&G’s ICT team has been able to focus on business innovation because Passerini has standardised much of the technology operation. That includes consolidating support for all global business activities onto a single instance of SAP’s ERP software.

“By standardising IT operations around the world, you scale for cost, flexibility and ease of use,” he says. “We’ve created a model that allows us to operate efficient, low-cost service centres.”

The efficiency model includes a ten-year, US$3 billion (NZ$4.5 billion) outsourcing deal with Hewlett-Packard that was signed in 2003. Under this agreement and later amendments, HP runs P&G’s global computing infrastructure, including its datacentre operations, desktops, networks and some application development and maintenance. About 1,850 P&G tech staff became HP employees under the original contract.

Passerini says that shifting support to HP makes P&G’s massive ICT cost structure considerably more flexible.

“If you can buy services like a utility then clearly you can flex up and down as you need to,” he says. “This is very, very different than if you were bound by a fixed cost structure.”

It also frees up the remaining ICT staffers to focus on innovation and value creation, he says.

The innovation continues. Currently, Passerini is overseeing a “cultural revolution” within ICT to ensure that the group is enmeshed in P&G’s business fabric. It includes new training and career development to provide ICT staffers with the skills necessary to “blend” ICT with P&G’s businesses, he says.

“We need to move to more of a culture of agility and responsiveness,” says Passerini. “It’s not about working harder, but how do we operate in a different way so that we can be more agile towards meeting emerging business needs.”

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