Meaningful metrics

Interview by Adam Burns

Consumer behaviours are changing, especially in the soft drink space. How do you balance the formal goal setting required by the business with the flexible nature and inherent agility required by modern business practice?

ES. Our strategy is primarily explained in a sense that we need to be creating enough resources to fund the growth related initiatives that differentiates us from our competitors. In other words, create resources through the efficiencies and productivity initiatives and fund your growth related activities that business is requiring.

The approach that we are taking related to the differentiating capabilities drives competitiveness for our business. We have tight integration with our business planning process, with our business units. The majority of our initiatives that are linked to our business units are funded by business units.

In other words, they put the necessary financial resources to be able to drive those capabilities. They could put those financial resources into something else as opposed to IT, but we work with them very closely to define the value proposition up front and then we allocate the resources accordingly with our business partners. There are some exceptions to that. We also, in the business of using technologies to drive resources, create resources, and drive productivities, as I said.

And those are the initiatives that we look from the enterprise corporate benefit perspective, and we have some resources that we are allocating by looking at the enterprise benefits because the enterprise corporate benefits doesn't match the business unit benefits every time. So you've got to balance those two carefully, and that's the model that we are applying today to our IT investments.

Engaging the business with us, defining the value, and then letting the business allocate those resources where they see the value. In the meantime, we look to enterprise benefits, corporate benefits, and then make the resource allocation decisions parallel together at the same time.

Platform as a service (PaaS) is very much considered the next big thing, and you're currently assessing infrastructure as a service. How do you, as a CIO, make the decisions on what to build and what to buy? What are meaningful metrics to you? How are you making those decisions? What are the signposts for success and failure?

ES. I think the way that we are looking at this is that our team actually have the expertise and knowledge. We've also tested the cloud services within the software as a service with Microsoft. We're now crawling, walking and running from the learning standpoint. We are seeing the thing that drives all those decisions is the customer. As I mentioned, the wow factors created by the software as a service in the communication collaboration space that we are working with Microsoft in the cloud as the software as a service created a kind of an eye opening for us.

We had eliminated certain orthodoxies that existed in our mental model. In the model that we are working, while we are buying the pre-developed capabilities like email software or instant messaging software, you don't make too much development on it. But on the other hand, on our SharePoint team sites and our employee portal space, you do make some development collectively within those platforms. But the amazing thing for me, and I think that's the exciting part of that, that development cycle that you are talking, especially when you are in the cloud, and using standard modular capabilities available for you is extremely shrunken. And that could potentially change the perception.

You've got to look scenario by scenario into this; there's no one size fits all answer to this. One thing that we are now looking into as a platform, as a service can be to rapidly develop capabilities and deploy with the wow factor that cloud provides with ease of use, adoption and accelerated beta deploy. Would that make sense in the development of some of the functionalities that might be residing in the traditional ways internally within our technology ecosystems? We are looking into that very seriously right now.

For you then what are the meaningful metrics and how do you tie those into genuine business outcomes?

ES. To give you an example, if you look into the collaboration space, there are several ways that you could actually get value out of better communication and collaboration, if you will. What I mean by that is if you have a transformation agenda in your business, I would not think any CEO or any sound business person could tell you: "I don't need a better communication or collaboration capabilities if I have a business transformation agenda."

In fact it's the opposite. What can I do that will engage my employee base into the change agenda that I have is the question. You need to look from the business requirements perspective. In our case we have a very significant transformation agenda in Coca-Cola Enterprises.

It was not much of a debate for us to decide to put more effort into better communication and collaboration capabilities. The question was how are going to do that. How fast we could get there. Obviously the funding, if the allocation of the resources comes into competition with other things, which in our case it did not really, that could be tricky. But this was a priority because it was enabling capability defined by our executive communication council.

All the decision making on the technology investment decisions related with that was driven from a communication and collaboration council that we created in our business. Along with our communications and public relations team we collectively led that effort and then tied that back into our transformation agenda and built it into our annual plan. Some of those corporate benefits and enterprise benefit initiatives have come from that and then some of them we self-funded by decommissioning those technologies that used to be operating internally.

So we created some resources, but we also added some additional funds to be able to get there. So in short answer to your question, the metrics you've got to put in are the value, but value sometimes doesn't necessarily need to be very quantitative. Sometimes, especially in big change agendas that you are driving, it is very intuitive to see what the value proposition is, but on the other hand, the majority of our initiatives are not like that.

We have to have a business case for us to put investment into the IT department. In every initiative we have, we have a value management process that we go through, a very rigorous process, and toll gates that we apply and then assure that the value proposition is going to be deliberate, if you will. The metrics are those differentiated new capability standpoints, there's a solid business case that we define and that we manage that through the toll gate process, whether we are materialising it or not.

On some of the corporate benefits, which communication collaboration is a space that we looked, was quite honestly a capability building. Rather than a business case requiring activity, it was more required foundation, if you will, that we need to be building. So that was the approach the we took in that case.

You've previously said that CIOs should take advantage of the buzz around green IT to upgrade their systems and drive cost reductions. Is it really that simple?

ES. I don't know why we need to make this more complicated than it is, quite honestly. As a CIO, the experience that I could relate to this is the Sarbanes Oxley rules that have been introduced. I think many smart CIOs took advantage of the buzz around this act to drive some of the simplification efforts that they would like to make in their IT back office, if you will.

Green IT is maybe not quite the same, but has a similar kind of a buzz at the moment. It's created rightly so. I think we could use that as an opportunity to define, especially for companies like Coca-Cola Enterprises, where corporate responsibility and sustainability is an integral part of the operating framework that we have.

We take this very seriously, but on the other hand if you're look into the IT space and then drive some of the upgrade processes, like virtualisation and data centre consolidation that reduces your carbon footprint and energy consumption, it's not a bad idea. Using green IT as a buzz word to drive the print consolidation, fax consolidation and reduce paper use is not a bad idea. And to use that buzz as a tool to drive some of those efficiency related activities really makes sense.

Clearly IT is viewed widely as a place in which costs can be reduced, but you have to prove your value otherwise you will be forever cast as the place that sucks costs out, but isn't adding to the top and bottom lines. How do you balance that drive towards cost reduction with the absolute need for innovation?

ES. We have defined IT's value proposition in Coca-Cola Enterprises in two ways. It's a balancing act, if you will. One side is to create resources for the purpose of funding the growth related initiatives, so what that means is you've got to be creating enough productivity from your business, meaning if nothing innovative or differentiated comes through you've got to be better at running what you have year after year.

You have to be creating enough productivity. Doing the same thing again and again you're going to get better at it, so think from that perspective. You have to find a way to drive the productivity in your maintenance of business, either operational expense or capital, and spend that comes into that and then put that reimbursement back into the growth related initiatives. We have a list of different initiatives to drive to create the resources, such as virtualisation, consolidation, simplification of applications and infrastructure.

Then, of course, you can talk about the outsourcing, offshoring, shared services centres. You could talk about the cloud, but that brings to you as an efficiency, cloud computing capabilities. You could talk about the whole green IT things that basically drives that and also from the standpoint of the vendor management and then really focusing into the strategic vendors as opposed to spreading yourself thin into variety of places. So leverage your volume and investment capacity to drive some of the cost up.

These are all the things that can create resources for you to invest back in on your maintenance or business space to invest back into your growth related initiatives. Now, the funding of growth related initiatives should be shared within business and IT, which has to drive those productivity initiatives. The funding that's required by the business should also match that so you could be able to drive the growth related initiatives.

We also look into innovation. We don't want to innovate for the sake of innovation. We would like to put those innovative capabilities if it differentiates us from any of our competitors, so innovation means having differentiated capabilities to us. Those capabilities would be in revenue growth management, either in the selling and customer services or either in the supply chain, which are the world-class capabilities that Coca-Cola Enterprises is constantly building.

And do you think that this sort of drive for innovation is perhaps a more modern way of understanding that IT requires different skill sets from IT staff?

ES. It does. It requires different competencies that you need to build into your IT organisation. You need to be very specific around where you are differentiating and where you are going to be focusing, so that requires a different dialogue with your business partners. You have to really be engaged with your business to understand where the differentiation is gonna come from. To do that you have to have very business savvy IT people that need to be dialoguing with business to extract where the differentiation points are, and that requires a lot of different competencies, like consolidative skills, that you need to be building within your IT organisation.

Then you need to be looking into emerging technologies and the current strategic technology base that you have and how you are going to find the shortest, fastest and best way to deliver that differentiated capability. It requires architectural expertise, if you will, because every company has their own technology ecosystems that are - especially in the recent evolution of the technologies - pretty complex. So therefore, to understand how you define the differentiation and then develop the capability and deploy it in a fast way in whatever the enterprise wide that you are in, requires a different skill set.

And from the development and deployment perspective it requires some innovative thinking, like the cloud development platform as a service and software as a service and other maybe strategic platforms. How that's going to get together requires some really good architectural knowledge, if you will, in your IT organisation. But if your IT organisation is occupied with maintenance of business, you can't build so therefore, your focus needs to shift from maintenance of business into differentiated solution development and with the speed and pace deployment of that.

Absolutely. And how are Coca-Cola Enterprises attracting and retaining those more business savvy IT staff?

ES. We are absolutely looking into the skill sets in development, deployment areas and governance areas today; and we define our core competencies in each of the development, deployment, support and governance areas in IT. We have clearly articulated core competencies for all of those specific areas. We are bringing skill sets from the outside in and refreshing our talent where it makes sense, but we have also a very focused internal people development programme in place today. And the amount of investment we are making into our people has never been the level that we had at this state, and the return of that is 10-fold.

I am now able to bring those differentiated solutions faster than I used to be able with the external resources coming in because the internal institutional knowledge married with those core competencies added on top of those strategic technologies that we have is the winning formula at the moment. Bringing external resources in, who doesn't have your institutional knowledge and keeping your internal IT people focused into the maintenance of business; therefore, they can't engage into that does not provide any growth for them.

All those things are going to be disappearing when you start to focus into your internal organisation shifting from maintenance of business to differentiated solution development. Every dollar you put, you have a 10-fold return because the external spent is going to be reduced significantly for you especially from the capability development standpoint.

FAST FACTS

• Atlanta-based Coca-Cola Enterprises (CCE) is the biggest marketer, producer and distributor of Cola-Cola products in the world, serving 419 million consumers
• CCE boasts 72,000 staff across 430 facilities
• There are 3300 beverages in the Coca-Cola portfolio, CCE distributes 200 of them
• Coca-Cola beverages are sold in over 200 countries
• CCE recorded revenues of €14 billion in 2008