is your it aligned to your business needs? getting it to think like the business and understand the...

8/10/2019 Is your IT aligned to your Business needs? Getting it to Think Like the Business and understand the challenges fac

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Jean-Marc Chicco, CIO, Lafarge

Getting IT to Think Like the BusinessA career managing businesses provides a first-time CIO with a freshview of IT challenges.


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Jean-Marc [email protected]

Jean-Marc Chicco,CIO, Lafarge

Getting IT to Think Like the BusinessA 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, Im not your man. I have spent my career managingcompanies, business functions, geographic regions. What do Iknow about managing IT?(I didnt say that I also had some apprehension about seekingsupport for IT initiatives from former colleagues on thebusiness side. Would they tune me out just as I had tuned outIT people when I was heading up a business division?)

The company had an answer to my misgivings: You knowLafarge and the business, and that will make a bigdifference.So I decided to test the water what seemed likely to be verycold water. Today, Im having lots of fun. The IT function islittle by little changing the operations at Lafarge. I believe itsmostly because IT now thinks like the business does.

The Seonyu Footbridge of Peace, Seoul, constructed using a lighter and stronger Lafarge building material called

Jean-Marc [email protected]

Position

Chief Group ERP Program andInformation Officer

Company

Lafarge SA

Works from

Paris

Professional BackgroundBefore being named CIO of Lafarge,in 2010, Chicco spent nine years asthe Chief Operating Officer of thecompanys 1.6 billion roofingdivision and two years leading aninitiative to reduce the companysworking capital. Before joiningLafarge, he served in various market-ing and general management roles atthe auto parts manufacturer Valeoand at TRW Semiconductors. In

1983, he founded a company thatspecialized in the design, production,and distribution of power electronicsystems.

Education

MBA, University of Texas at AustinMasters in Engineering,cole Suprieure d'lectricit

Personal Passions

Trekking, philosophy, social change

Straight Talking


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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 incash; 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, Lets 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 (IBMs asset management software) templatesand 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 topmanagers to pay attention to no, be curiousabout IT. If they arent curious (just as I wasntthree years or four years ago, when I was runningLafarges roofing business) then its very difficult tolaunch big programs that will really changebusiness performance. Having a CEO and execu-tive board who are curious about technology meansthat they will work with the CIO not on all thedetails, of course, but on the CIOs major programs.The more attention they pay to IT, the better theywill understand how IT can help the overallbusiness.

One of my challenges has been to explain how asocial collaboration platform can change the waywe work together and share knowledge in thecompany. Today our platform, called Lafarge OnlineVillage, is used by close to 5,000 managers,engineers, commercial staff, and even by the entireexecutive committee. Several hundred thematicgroups, such as cement kiln best practices, fuel mixoptimization, and new concrete usages, are active,fostering intensive lateral teamwork. Explaining thepotential 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,

theres 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.

Its difficult when you are spread out this way to have

good governance and optimize costs. As of 2010, these


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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.

Were 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 arent 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, its 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. Its more

difficult to quantify the gains from standardization, butit 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 toanyone starting out on such an adventure: Do not underestimate the amount ofcomprehensive and detailed preparation required to succeed.

Jean-Marc Chicco on. . .

What IT People Already Knowabout Business

We run a large program at Lafarge calledCustomer One, which aims to review andimprove our customer relations. As part of thisprogram, all IT employees spend a lot of timewith customers, something they havent beenused to doing. This experience helps IT peopleconnect with the marketing and commercialteams and design better customer-reachingstrategies. The business executives are oftensurprised how much the IT professionals knowabout our customers and what services theydlike.

How IT People Can BecomeEven More Business Savvy

A program like Customer One is great, but howdo you institutionalize the IT functionsadoption of a more-sophisticated businessperspective? One way is to create careerbridges between IT and the rest of thebusiness. Were currently taking a couple ofour most promising IT executives and movingthem into business jobs. One of them, forexample, has become a country general

manager. When they return to IT, theyllunderstand the business, like I did when Ibecame CIO not just strategy andoperations, but the business executivesmind-set and perspective. Id like to see thesuccessor of my successor be a youngexecutive say, 35 years old who hadalready spent at least part of his career on thebusiness side. I should add that its equallyimportant for people on the business side todo a stint in IT so that they will besophisticated consumers of IT services, withan awareness of technologys potential to

transform how business is done.


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The Absolute City Centre development in Mississauga, Ontario, known colloquially as the "Marilyn MonroeTowers" 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 benefitscome increased responsibility for the organization in operating such aconcentrated hub. So service level agreements, disaster recovery plans,and business continuity scenarios have to be drastically challengedand regularly tested.


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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 atechnology 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 doesnt want to be told

what to do. Its 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 businessunits 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.

e Takeaways

Even if standardization of key applicationsis mandated from above, it cant work well in a

decentralized IT structure.

In preparing to consolidate data centers, payattention to the many issues on the business side that

could make or break the effort.

With the benets of consolidation comes therequirement of regularly testing your disaster

recovery plans and business continuityscenarios.


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This piece appeared in issue 3 ofCIO Straight Talkmagazine.

Read the complete issue athttp://magazine.straighttalkonline.com/issue3/

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