Chris Wright, global head of the office of the CIO at food and drink giant Nestlé, has helped take the company’s IT department on a three-year digital transformation program that’s included organizational, cultural and technological change. As part of that journey, 2020 has provided an unexpected assessment of whether the direction of travel is correct.
“Covid-19 came along and has been a huge stress-test of — not just our organization, not just our technology — but also our ways of working,” says Wright. “This challenge has helped us to affirm that we do believe we’re on the right path. And some of the things that we are progressing in the transformation are key to that.”
Solid tech foundations ensured Nestlé and its employees were able to work effectively during lockdown. Moving to the cloud, and embracing services like Office 365, meant the business could enable a remote workforce very quickly. In one weekend, the company added 180,000 new users to Teams.
Wright says the cloud played another key role in helping the company develop new capabilities quickly. As a food company, Nestlé has had to contend with significant fluctuations in demand. The company supported a huge channel shift during lockdown — Wright estimates e-commerce traffic increased by about 50% due to changes in consumer behavior.
|Chris Wright, head of the office of the CIO, Nestlé|
Luckily, the company was suitably prepared. Wright and his colleagues had spent the preceding three years honing the IT organization as part of a digital transformation program. That shift led to today’s tightly focused technology organization, which delivers measurable value to the business, rather than simply IT systems and services that meet operational targets.
“Our IT transformation roadmap provides both resilience and flexibility — and we’ve seen that during Covid,” says Wright. “There’s certainly more that we will do, going forward. The empowerment of IT can help bring agility and speed, and we want to be an agile and fast organization to support our business.”
Wright, who spoke at analyst Gartner’s recent virtual European IT Symposium, has worked at Nestlé for 25 years, originally starting in the UK and moving to the company’s Switzerland headquarters 16 years ago. He’s held a range of roles, from development through to analytics and data, but has more recently focused on group-wide digital transformation.
Nestlé’s 5,000-strong IT team supports 1.1 million transactions a day running across thousands of applications. While many of these applications are deployed globally, others are specific to local markets — the company operates in around 190 different countries selling well-known brands such as Nespresso, Häagen-Dazs, Cheerios and KitKat. “We certainly have a lot of scale, but we also need to be locally differentiated to support our markets and our businesses,” he says.
“Running IT the way we always have isn’t enough anymore. The food industry is changing, with many start-ups and an increasing focus on organic products and smaller players that are more locally relevant. As an IT organization, we need to understand how to help our business respond to that.”
Nestlé’s digital transformation strategy, known as Vision2Life, is key to this response. The strategy has four key priorities: bring value to the people who receive IT services; operate as one global IT team but with local expertise; interlock product management with business stakeholders; and make IT a technology differentiator rather than just a provider.
“We knew the outcomes we wanted to try and achieve,” says Wright, reflecting on these priorities. “We wanted to keep the reliability that we had, because we know every minute of disruption impacts our business. But we wanted to achieve that while providing speed and agility of change to meet new business needs.”
CIO research from Gartner suggests Wright’s emphasis is well-placed. More than two-thirds (69%) of C-suite directors want their organizations to accelerate their digital business initiatives. Buoyed by the benefits from rapid digital transformation this year, European IT spending is forecast to total $1.075 trillion in 2021, an increase of 2.8% on 2020.
Boards have seen the value IT can deliver in a crisis; now they want long-term value generation. Gartner says this focus on value creation is sponsoring a shift in performance measurement. Rather than being judged on IT metrics or service level agreements, CIOs will be measured on business key performance indicators, such as driving up revenue and profitability.
“Success in the future will be about digital business acceleration, innovation, it’s about winning differently, it’s about getting closer to customers, it’s about eliminating the drags internally and redirecting resources,” says Tomas Nielsen, research vice president at Gartner, who spoke with I-CxO at the analyst’s IT Symposium.
The good news for Wright is that his IT organization had already made that shift. The digital transformation program aims to make IT accountable for delivering business value, not just delivering systems. “We need to measure ourselves consistently and as one organization,” he says.
“Are we getting faster at serving our business? Are we improving the speed of our applications? Are we improving the end-user satisfaction with applications? We’re getting much more into the types of metrics that allow us to improve and reach outcomes, rather than focusing on being just an IT provider.” Wright says measuring the business value of IT at Nestlé covers a range of areas, from reliability to delivery, and on to financials and end-user satisfaction. The company also aims to measure how the IT department’s long-term digital transformation plan is evolving. Wright says this focus on measurable value has created benefits across the enterprise.
“Our local IT organizations are able to use this information to understand where there are challenges,” he says. “We can interlock much better because the performance management and the reporting we’ve established creates a level of transparency and ownership that we’ve never had with that level of detail before.”
A big focus during the past 18 months has been implementing cloud-based workflow software from ServiceNow. Nestlé previously used many systems to manage its IT processes. The siloed nature of those systems made it difficult to measure performance and optimize processes. ServiceNow provides key data across a range of areas, from incident management to financials, and on to the product catalog the IT team provides to the business.
The key focus at all times has been to ensure that the technology requirements of internal and external customers are being met by the valuable services that the tech team provides. Delivering to this target has involved an element of geographical re-organization, with human resources focused in new areas, and a cultural change program, which ensures the team works in an agile manner to meet fast-changing customer demands.
|Nestlé’s headquarters, Vevey, Switzerland|
The team also focuses on smarter vendor management — the IT department has 14 strategic vendors, 50 global partners and more than 10,000 suppliers across the globe. It’s a large supplier base. The aim is to move to a new vendor-operating model, which is based around DevOps and closely aligned to the products that the IT team delivers.
Wright says the IT department constantly re-evaluates which elements of IT provision should be insourced or outsourced. Data architecture, product management and business relationships always stay in-house, but outsourcing can bring access to new skills. The company has turned over more than 75% of its external IT spend in the past two years, renegotiating contracts and shifting partners.
Reflecting on progress made so far, Wright says: “We’ve been on this digital transformation journey for two and a half years now. We’re on the right path, but we need to keep up the momentum as it’s not a journey that ends. We’re evolving, and we will continue to get better as we head towards our vision.”
• Chris Wright was a speaker at Gartner’s virtual European IT Symposium.