Arnott's CIO Michael Young wouldn't deign to tinker with the company's famous bickies recipes, but his recipe for IT success -- aligning with the business -- is getting rave reviews.
Arnott's gained the sympathy and admiration of the nation early last year when an extortionist delivered poisoned biscuits to company executives and the police. There was never a suggestion that Arnott's was in any way to blame, but the company voluntarily recalled all its products from supermarket shelves and turned them into land fill as a precaution to safeguard the public. Sympathy and admiration don't sell biscuits, though, and the episode cost Arnott's dearly. Yet it was such action and the company culture in general that Michael Young says attracted him to Arnott's. Young joined as group IT director, Asia Pacific, for Arnott's and Campbell's Soup in February this year. He recalls following the extortion crisis before coming on board. "To take all your stock off the shelves in every place it's sold and destroy it is a huge business risk in any sense," Young says. "I can still remember looking at the television and reading the papers and thinking 'what a fabulous company'. We've seen examples in the US where companies have put their consumers at risk because they haven't recalled products as soon as they could have, or have just done a piecemeal recall through pressure of public opinion. Arnott's, though, spat the bullet because it was willing to put the customer and consumer first and not compromise on that in any way."Arnott's, manufacturer of the popular Tim Tams and other biscuits, is wholly owned by Campbell's Soup, part of the global Campbell Corporation. Young's role is a new one for the company and at a new level. Previously, Arnott's and Campbell's each had their own IT manager in Australia. Young's mandate is to leverage the synergies between Campbell's and Arnott's in terms of both IT and business processes. Arnott's is a well established business which is looking at how it can enhance its current market and move into different markets.
Campbell's is still a green fields operation in the region -- small in revenues, but, Young says, with untapped potential. Young reports to Arnott's chief executive, Chris Roberts, and to Campbell's vice president of finance, Asia Pacific. He also reports indirectly to the CIO in the US for Campbell's Soup. In turn, there are some 35 IT staff throughout the region and Young has 12 direct reports in Australia. The MIS managers in Japan, Hong Kong and Malaysia report to the local business at an executive level and then indirectly report to Young as well.
However, regional responsibilities and dotted line matrix management are nothing new to Young. He was previously chief information officer for brewing group Lion Nathan, in charge of the overall IT strategy of the company across Australia, New Zealand and China. In a former role, he also had global, and primarily Asia Pacific, responsibility for IT with Nortel. "I've worked for some pretty good companies but Arnott's is very different from most," Young reflects. "The management structure is very flat and it's probably the least bureaucratic company I've known for getting decisions made and being open. "But although it has a relaxed feeling, it's not slack by any means. It's very driven and, in conjunction with Campbell's, is very focused on what it needs to do in the Australian marketplace. There's a huge emphasis on quality for all of us and this commitment to quality also flows through to other things that we do. I felt the culture would serve my style and allow me to drive forward some of the philosophies I have for IT."According to Young, the company had allowed IT to slip in recent times in terms of keeping pace with its customers and suppliers and adding value in the business such as leveraging technologies like electronic commerce and groupware. In addition, there was a lack of standardisation, with different areas of the business, all with different interests, tending to go their own way. So one of Young's first priorities on joining was to develop a strategic plan. Young and his team undertook this in conjunction with IBM. Big Blue was already a business partner of Arnott's in Australia and Campbell's globally and Young says he had a lot of confidence in what they could bring to the table.
"Technology-wise, there were a lot of places where we were behind, but we didn't know whether we actually should be ahead until we sat down and talked to the business," Young explains. Young and IBM representatives conducted one-on-one interviews with the leaders of all the business units and discussed their plans for the next 12 months. According to Young, all parties were banned from talking about technology; instead, the emphasis was on what the business units were looking for to help them in their decision-making. "In one instance we spoke to sales, and they started asking for handheld devices. We told them to forget about the devices and just tell us what information they would like when they were out visiting a customer; what can improve sales and customer service, and we'll see how we can accommodate that. That opened up a different line of thinking," Young says.
After talking to each of the business units and collating the information, Young and the IBM representatives noticed there was much commonality and concurrent themes, even though everyone was interviewed independently. The findings were put together into a strategy to take the business forward in using the desktop, groupware and knowledgeware with Lotus Notes as a corporate standard. Other aspects of the strategy include videoconferencing, data warehousing, executive information systems, providing the sales force with better information in the field, and improved supply chain management in dealing with customers such as Coles, Franklins and Woolworths. Young and IBM consultants validated their findings separately with the business units and then presented the strategy to the organisation collectively to invite feedback. In Young's words, the enthusiasm from around the organisation was extraordinary and the strategy received a big tick of approval. "We took it from the highest level -- which was to look at what the business issues were -- down to the lowest level -- which was to see how we could provide technology to address some of these issues," Young says. "We're not talking about big bang systems like SAP; we already have core systems in place.
"We're looking at adding value. What we roll out over the next year will pay for itself in improved efficiencies and revenue. Anyone who's implementing SAP and the like, who really thinks they're getting an advantage over a competitor are kidding themselves. Everyone's doing the same thing with little variation, so there's little value you can add. It's very rare these days to see a huge success in terms of a strategic system. "The emphasis over the next 12 months is to take a quantum leap without scaring the business. It's [the strategy] based on what the business needs. I hope that one of the things that I've been able to bring -- and now my group is bringing -- to Arnott's is a sense that we are only here because the business needs us, and that we're supplying solutions the business tells us it needs." Young's approach is bearing fruit. An internal survey done in February when he joined the company concluded that IT was relatively disconnected from the business. The report found that the IT group wasn't as focused as it could be and needed to be closer to the business in developing systems. While not an entirely black picture, according to Young, every IT person took the message on board. The new attitude worked; six months later another survey showed much had changed.
The group had moved up in all eight measurements: sales systems matching sales needs; help desk; network performance; professionalism and attitude of IT staff; manufacturing systems matching manufacturing needs; delivering to commitments; future developments in line with business needs; and IT strategies driven by the business. In some cases, Young says, the improvement was dramatic. "The challenge is to leverage the good quality IT staff we have throughout the region," he says. "We also need to keep challenging the business in its thinking about what IT can do for it and what we can bring to the table." When Young arrived there was also no formal IT steering committee. So he recommended to the board that one be established with an enterprisewide mandate to deploy IT resources against business needs. According to Young, the committee is representative of the whole business and is well accepted and supported. It comprises senior managers and proxies are not allowed. Although Young convenes it, he does not chair it. He considers himself the link between the executive and the steering committee with an equal vote and say to everyone else. Now, Young says, IT effectively doesn't do anything unless the steering committee agrees on the priority, resources and funding.
Young admits it's not always easy to keep business objectives and IT in sync, but points to success stories such as Johnson & Johnson. "You have to keep working on it and we're just starting out here. It's highly achievable as long as your company takes an enterprisewide view." Although the extortion crisis was before Young's time and well behind the company now, he believes positive things did come out of it. For one thing it bonded the company tighter together. It also forced the company to review the way it operated in order to regain market share, and it has consequently changed the way it does business.
As regards his own ambitions, Young says he wants to learn more about business and to better understand what drives business. "It really is 'career is over' for CIOs who don't possess business skills, because these are what allow you to operate effectively in the company. Technical skills will only take you to a certain point." The joy of working with committed and focused people in a company with a great heritage is also an end in itself for him. "I truly mean that," he claims. "Seeing Arnott's grow, move into different markets, and be as successful as it has been in the past is a huge motivator for me. This is the first company in recent memory I've worked for that's been a market leader and it creates a different focus. In my previous companies the focus was very much on a competitor and how to get ahead of it.
"I'm not saying we don't focus on our competitors in Arnott's, but they're less relevant. We concentrate more on how we can create a better product and satisfy the market better. We work with our customers along the way in areas like supply chain management. We know that if we do things right our competitors are always going to be where they are today, and we've won the game."Arnott's and Y2K Arnott's core system is BPCS. It also runs HOLOS for sales reporting and has developed a number of in-house systems over time, an approach it is now moving away from. According to Young, year 2000 gives Arnott's the opportunity to improve its systems while making them Y2K compliant. Arnott's program is part of Campbell's Soup global compliance program and the company is internally audited by Campbell's. "We receive great support from Campbell's in the US on how we roll out the Y2K program," Young says. "We have reviewed all of our systems and rectified 50 per cent at this stage. We're halfway through an upgrade of our internal systems, and our major systems will be 100 per cent compliant by November this year. Slowly and surely we're going through others, such as desktop systems. We're also reviewing the process control systems in our bakeries and soup plants throughout Asia. "It's [Y2K compliance] well in hand and we don't believe there are any major issues. It hasn't been easy, though, and there have been a lot of resources devoted to it. But Arnott's sensibly took the approach that if we're going to devote these resources to it, we might as well improve the processes and systems at the same time -- as long as it didn't delay us becoming Y2K compliant, which it hasn't.
"Y2K will come and go, but after 2000 there will be a number of businesses which won't have changed their processes and that will probably create as many issues for them as solving the millennium bug itself." Taking Care of Your Own Everyone bemoans the lack of skilled IT staff, but few seem prepared to train people themselves, preferring to wait for someone else to solve the problem.
That is one of the key findings of a joint study conducted by Global Knowledge Network and the Australian Graduate School of Management earlier this year, in which decision makers in public and private sector organisations in Australia were surveyed by questionnaire and personal interviews. IT training in the context of the report refers to the back office training of IT personnel and does not include desktop or end-user training. The study found that on average the budget for IT training had not increased over the past 12 months and 67 per cent of the organisations surveyed spend less than 5 per cent of their overall IT budget on training. "I take great satisfaction out of seeing people grow and develop and we're encouraged to take courses all the time," Young claims. "We make allowances in the staffing of our projects for training, in terms of both time and budget. And it's not an insignificant budget either. There's huge support for [training] from a personal efficiency viewpoint, a business viewpoint and from a technical viewpoint."The study also reports that an increasing number of organisations prefer not to train their own personnel but to hire skilled and qualified IT staff, often on a contract basis. The reasons given are twofold. First, IT is changing so rapidly that organisations perceive it to be difficult and cost-intensive to keep up to date with the technical training of their personnel. Second, organisations have an interest in their IT staff having less, rather than more, mobility, which comes from the additional skills they get. Young says he has never encountered this personally, but agrees there are a number of IT shops that are less than desirable in terms of staff satisfaction. "I believe you use training as a benefit to the business and a reward to the employee," he says.
"There will always be some attrition, but a high performing team will work day and night for you in a company that supports them and rewards them appropriately. Training is a component of that." Young is a strong believer in on-the-job training. However, as IT functions within user organisations decrease in size, he believes the organisations will rely more on external expertise in the form of contractors or consultants. Internal IT staff, he says, need to focus more on business skills and business processes. Then they'll have a job for life.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.