Is your IT aligned to your Business needs? Getting it to Think Like the Business and understand the challenges faced by IT.
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Jean-Marc Chicco became the CIO of Lafarge after having a career managing businesses, giving him a fresh perspective on IT challenges. When he started, Lafarge had an inconsistent IT infrastructure with different versions of applications across its many sites. Chicco launched standardization initiatives and a project to consolidate 15 data centers in Europe into a single dual-site center in Paris. The consolidation will reduce costs by 25% and standardization will make applications cheaper and easier to use. However, large consolidation projects require extensive preparation and come with increased responsibility to ensure high service levels and robust disaster recovery.
Is your IT aligned to your Business needs? Getting it to Think Like the Business and understand the challenges faced by IT.
- 1. Jean-Marc Chicco, CIO, Lafarge Getting IT to “Think Like the Business” A career managing businesses provides a first-time CIO with a fresh view of IT challenges.
- 2. Jean-Marc Chicco jean-marc.chicco@lafarge.com Jean-Marc Chicco, CIO, Lafarge Getting IT to “Think Like the Business” A career managing businesses provides a first-time CIO with a fresh view of IT challenges. When I was asked to take over the CIO job at Lafarge, I said, “Guys, I’m not your man. I have spent my career managing companies, business functions, geographic regions. What do I know about managing IT?” (I didn’t say that I also had some apprehension about seeking support for IT initiatives from former colleagues on the business side. Would they tune me out just as I had tuned out IT people when I was heading up a business division?) The company had an answer to my misgivings: “You know Lafarge and the business, and that will make a big difference.” So I decided to test the water what seemed likely to be very cold water. Today, I’m having lots of fun. The IT function is little by little changing the operations at Lafarge. I believe it’s mostly because IT now thinks like the business does. The Seonyu “Footbridge of Peace,” Seoul, constructed using a lighter and stronger Lafarge building material called Ductal. Jean-Marc Chicco jean-marc.chicco@lafarge.com Position Chief Group ERP Program and Information Officer Company Lafarge SA Works from Paris Professional Background Before being named CIO of Lafarge, in 2010, Chicco spent nine years as the Chief Operating Officer of the company’s €1.6 billion roofing division and two years leading an initiative to reduce the company’s working capital. Before joining Lafarge, he served in various market- ing and general management roles at the auto parts manufacturer Valeo and at TRW Semiconductors. In 1983, he founded a company that specialized in the design, production, and distribution of power electronic systems. Education MBA, University of Texas at Austin Masters in Engineering, École Supérieure d'Électricité Personal Passions Trekking, philosophy, social change Straight Talking
- 3. Standardizing Applications Lafarge is the worldwide leader in building materials – number one in cement and number two in aggregates and concrete. The company operates in 78 countries and owns nearly 2,000 industrial sites. When I started as CIO, I realized that my experience managing a working capital initiative at Lafarge would help me demonstrate the value of a business perspective to the IT group. My assignment to lead that earlier initiative was as much of a surprise as being offered the CIO job. Traditionally, a Finance guy was responsible for managing working capital. But after seeing little headway in reducing working capital, senior manage- ment asked me to bring my business perspective to the task. As it turned out, we were able to free up €1 billion in cash; improving the management of spare parts was one avenue for achieving this. A cement plant is like a big machine, with a lot of equipment and lots and lots of spare parts. In early 2009, when I took over the program, we had about €650 million of spare parts in inventory. Working closely with the factories, we reduced that to about €400 million. So when I became CIO, I immediately said, “Let’s ask the factories how IT is helping them manage their spare parts.” I discovered that across the organization Lafarge had several ERP templates talking to about seven Maximo (IBM’s asset management software) templates and about 20 different types of application interfaces. Even worse, only half of the plants had Maximo. The other half was waiting for it. We launched a major program to upgrade and roll out a common standard for Maximo to more than 160 plants over the next three years. When the program is complete, those plants will all work with the same version of the application, driving further savings and efficiencies. The situation with Maximo was typical of the way we had been going about developing applications. Once we developed an application, we let anyone at Lafarge tweak it. The result was many different versions of the same application. Every time we upgraded an applica- tion, we spent a lot of unnecessary time and money on the effort. So we decided to mandate standardization for many key applications, including those for CRM and sales force effectiveness, HR, and e-purchasing, to mention a few. Getting Business to Think Like (Or, at Least, About) IT One of the big challenges facing a CIO is getting top managers to pay attention to — no, be curious about — IT. If they aren’t curious (just as I wasn’t three years or four years ago, when I was running Lafarge’s roofing business) then it’s very difficult to launch big programs that will really change business performance. Having a CEO and execu- tive board who are curious about technology means that they will work with the CIO – not on all the details, of course, but on the CIO’s major programs. The more attention they pay to IT, the better they will understand how IT can help the overall business. One of my challenges has been to explain how a social collaboration platform can change the way we work together and share knowledge in the company. Today our platform, called Lafarge Online Village, is used by close to 5,000 managers, engineers, commercial staff, and even by the entire executive committee. Several hundred thematic groups, such as cement kiln best practices, fuel mix optimization, and new concrete usages, are active, fostering intensive lateral teamwork. Explaining the potential benefits of new technologies like enter- prise social media is not easy, yet it will make a step change in many companies’ culture effectiveness. Consolidating Data Centers But standardization, even when mandated from above, cannot really work well in a decentralized IT structure. This was one of the major reasons we embarked on a very large initiative to consolidate our European data centers. A limited number of data centers ensures that there will be a limited number of versions of a given application. Lafarge was founded in France in 1833, and it expanded first to other countries in Europe. In the Americas and Asia, we have centralized IT operations. But in Europe, there’s a long history of decentralized operations, and we have never made a concerted effort to upgrade and update the way we run IT. As a result, Lafarge has been operating 15 data centers across Europe. It’s difficult when you are spread out this way to have good governance and optimize costs. As of 2010, these
- 4. data centers were operating at a small portion of their capacity. Clearly we had to do better than that. The consolidation of these data centers will end up taking about three years. In 2011, we consolidated four of them: one in Spain, two in Paris, and one in Germany. We’re now in the process of consolidating an additional three or four. A few of the smallest of the existing 15 data centers will be excluded from this initiative – the economics of migration simply aren’t there for them. But by the end 2014, most countries in Europe, the Middle East, and Africa (the EMEA region) will be served from a dual-site data center in Paris (an active- active configuration of two data centers). Be Prepared Data-center consolidation is no small task, and I have some advice to anyone starting out on such an adven- ture: Do not underestimate the amount of comprehen- sive and detailed preparation required to succeed. Initially, we did not budget enough time for the prepara- tion phase and discovered when we were about to start the project that we were not ready. So we added six months of preparation time. During the preparation stage, it’s crucial to make sure that the business side – its concerns, work patterns, processes, anything that could impact the success of migration and consolidation – is taken into account. This also includes risk assessment, identifying the best time for migration, and understanding the applications used by the business, how old they are, and what problems could arise with each one at the time of migra- tion. Ultimately, you need to have a business model that will help you understand the implications of the ongo- ing changes to your infrastructure and adjust your plans accordingly. Your IT assets at the beginning of the project will not be the same six or twelve months later. As a result of the European data-center-consolidation initiative, we believe we will see a reduction of 25 percent in operating costs in about two years. It’s more difficult to quantify the gains from standardization, but it is obvious that this will make it a lot easier for the business and a lot cheaper for IT to use and manage key applications. Data-center consolidation is no small task, and I have some advice to anyone starting out on such an adventure: Do not underestimate the amount of comprehensive and detailed preparation required to succeed. Jean-Marc Chicco on. . . What IT People Already Know about Business We run a large program at Lafarge called Customer One, which aims to review and improve our customer relations. As part of this program, all IT employees spend a lot of time with customers, something they haven’t been used to doing. This experience helps IT people connect with the marketing and commercial teams and design better customer-reaching strategies. The business executives are often surprised how much the IT professionals know about our customers and what services they’d like. How IT People Can Become Even More Business Savvy A program like Customer One is great, but how do you institutionalize the IT function’s adoption of a more-sophisticated business perspective? One way is to create career bridges between IT and the rest of the business. We’re currently taking a couple of our most promising IT executives and moving them into business jobs. One of them, for example, has become a country general manager. When they return to IT, they’ll understand the business, like I did when I became CIO — not just strategy and operations, but the business executive’s mind-set and perspective. I’d like to see the successor of my successor be a young executive – say, 35 years old – who had already spent at least part of his career on the business side. I should add that it’s equally important for people on the business side to do a stint in IT so that they will be sophisticated consumers of IT services, with an awareness of technology’s potential to transform how business is done.
- 5. The Absolute City Centre development in Mississauga, Ontario, known colloquially as the "Marilyn Monroe Towers" for its sinuous curves, was constructed using Lafarge's highly fluid and flowable Agilia concrete. Keep in mind, though, that any medal has two sides, and with the benefits come increased responsibility for the organization in operating such a concentrated hub. So service level agreements, disaster recovery plans, and business continuity scenarios have to be drastically challenged and regularly tested.
- 6. Keep in mind, though, that any medal has two sides, and with the benefits come increased responsibility for the organization in operating such a concentrated hub. For example, several countries in several time zones (from the UK to Russia), each with many diverse applications (from order entry to ticketing at the weighbridge, or from plant maintenance inspection to spare parts reordering), are all dependent on the data center and its surrounding network. In our EMEA data center, we now have more than 1,000 concurrent users. So service level agreements, disaster recovery plans, and business continuity scenarios have to be drasti- cally challenged and regularly tested. The Trends Supporting Our Vision I think that a confluence of business and IT trends supports what we are trying to do at Lafarge. From a technology perspective, the advent of virtualization and commodity servers helps a lot with any consolida- tion effort. From the business point of view, globaliza- tion drives centralization and uncovers opportunities for consolidation, standardization, and large-scale cost efficiencies. The structure of the business makes a big difference in how the business and IT relate to each other. When I talk to CIOs at other large international and industrial companies, I find that some still work in a fully decentralized business structure. Each business unit does what it wants – and doesn’t want to be told what to do. It’s practically impossi- ble in this kind of environment to standardize and consolidate. At Lafarge, we made sure that the trade-offs between country ownership and group owner- ship were clear to everybody. Working with the business leaders, we got everybody to understand how the business units would continue to maintain important aspects of their autonomy while enjoying the benefits of standardization and consolidation. In about three years, we hope to operate only three data centers: one for the Americas, one for Asia, and one for EMEA. The only way to make this vision a reality is to get IT thinking like the business. The Takeaways • Even if standardization of key applications is mandated from above, it can’t work well in a decentralized IT structure. • In preparing to consolidate data centers, pay attention to the many issues on the business side that could make or break the effort. • With the benefits of consolidation comes the requirement of regularly testing your disaster recovery plans and business continuity scenarios.
- 7. Join the conversation on CIO Straight Talk Interactive is a LinkedIn community of more than 1,000 CIOs and other senior IT executives. The group, sponsored by HCL Technologies, offers community discussions, interactive webinars, and idea-driven articles and videos, which in turn provide practitioner insights on topics ranging from the adoption of emerging technologies to IT-driven business transformation to the reinvention of the CIO role. To join the community, scan the QR code or visit http://partner.linkedin.com/CIOStraighttalk intera tive This piece appeared in issue 3 of CIO Straight Talk magazine. Read the complete issue at http://magazine.straighttalkonline.com/issue3/