Campbell Arnott's CIO: Paul Williams

Announcer: Paul Williams, CIO of Campbell Arnott's, is faced with the task of bringing the operations of one of Australia's oldest popular food brands into the 21st century. We asked Paul to talk to us about some of the challenges he and his company are facing, and about how IT fits into the bigger picture.

Interviewer: Hello, we'd like to welcome Paul Williams, CIO of Campbell Arnott's, to the CIO Vision series. Thank you, Paul, for joining us today. What are the main technology areas you're excited about and will be investing in over the coming year?

Paul Williams: A key thing we're excited about is SAP. It's not new, but it's new to our business. We're implementing SAP globally. We've already implemented SAP in the order-to-cash component, the customer-facing order-management piece of our business, and we're rolling it out through the rest of our business units and through the region over the next two to three years.

Interviewer: In what areas do you find you are getting the most benefit from these moves?

Paul: SAP has sort of become the default standard for consumer packaged-good companies, so if you look at our peer group of companies that we compare ourselves to, global food companies, I think eight out of the top ten already use SAP. I think we'll be number nine.

For us, in the Asia Pac region, it's all about consolidating what were once disparate business units running on different ERP systems, all onto the one single transactional backbone. That is exciting from a cost and business enablement point of view. It obviously reduces our costs of running multiple systems, but more importantly, once we've got one system for all of our businesses, we have one view of all of our data, we know we mean the same thing across business units.

Then we get into that position where we can really start mining into that data and really understanding how we can improve sales opportunities, improve our performance and service levels, all those sorts of things. It makes a very uniform process across the whole company.

Interviewer: So you are in the midst of that change-over at the moment.

Paul: We've been doing a range of different transformational projects that really change the whole route to market, go-to-market strategy. The piece we've done today is the order-to-cash components of SAP, so the whole receiving orders, processing orders, sending invoices, doing the accounts receivable piece.

We're now going on to do the financial pieces, the GL and the charter of accounts and all those pieces, and then the make-to-ship pieces -- so the whole manufacturing through logistics pieces. So that will be the end-to-end ERP system. So we've done order-to-cash, and we're doing Australia, New Zealand, and the rest of Asia from next year over a two-to-three-year period.

Interviewer: How much do you plan to spend on IT in the coming year?

Paul: Well, I guess there's two ways of answering that. Firstly, on the investment side, on the capital side, obviously we're doing a large ERP project, so there's a fair bit of capital going in behind that.

That would be equal parts probably technology enablement and business transformation. Because obviously when you consolidate the business units and do other things around that, there's a fair bit of change going through. So, on that side, we're probably going through a reasonably healthy investment cycle.

On the operation, like running business as usual, we'll actually spend less in '07 than we will in '06. We've actually cut quite aggressively into our ongoing operational costs, and being able to reinvest that money in the new state.

Interviewer: Do you look at IT spending as a percentage of revenue, is that how it's evaluated?

Paul: It's year on year, but also, yeah, we do look at benchmarks around what the total IT costs are as a percentage of revenue, I guess garden or other sort of standard main for a CPG company. We're typically a little leaner than the average, but more meaningful. It's how much opportunity is there to take more costs out, year on year. At the moment we've got, as I said, quite a complex portfolio. We've actually got four different ERP systems and a host of other systems. And until we go to end-state SAP where we take four and close to one, our costs tend to be growing because of complexity. So we've had to work doubly hard to actually hold those costs down until we get to the end-state.

Interviewer: What are some of the other performance indicators, KPIs you use to judge performance as a CIO?

Paul: I think cost is obviously important, but it's only one aspect. Delivering the business transformational projects is the key thing. There have been quite a large number of changes with Campbell Arnott's in the region. And the IT projects have been at the core of them. There have been business projects, but they've had technology pieces to them. So being able to deliver those on time, to schedule, to budget, and to realize all the benefits has been a key thing.

So I guess there's the financial, there's strategic, which is there, there's the operational of course which is SLAs, uptime, meeting the business requirements, everything from provisioning end-user computing to making sure that systems are running 24/7. And then the last thing and probably increasingly important is the whole engagement within the workforce. Having an engaged IT team that are aligned to the values of the business, and being part of the whole business community and the agenda going forward, is increasingly important.

Interviewer: How many people make up your IT department?

Paul: If you take the entire region, it's up to about 50. So it's not a huge... most of them are based here in Australia, in Sydney.

Interviewer: Are there any areas where you are outsourcing operations?

Paul: Yeah, we're heavily outsourced in both the data center, so the infrastructure's outsourced, and application management services. So except for a few exceptions, all of the application management is outsourced, and our entire data center is outsourced.

Interviewer: So when you say 50 within the region, we're talking about the Asia-Pacific region?

Paul: Yeah, Asia Pacific.

Interviewer: Which for Arnott's includes...?

Paul: Includes Australia, New Zealand, Indonesia, Malaysia, and Japan, and Papua New Guinea, although unfortunately their business is not actually on the network.

Interviewer: Other than SAP and the project you mentioned earlier, are there other projects that Arnott's is looking to start, over the coming year?

Paul: There's a few. In fact, we're in the midst of preparing to go live on a pretty big program of work. It's around trade promotions management. We're implementing the Kaz tool, CP works, which is a TPM product, and we're also implementing or re-implementing Manugistics for our demand and supplier planning tool.

That's all part of a complete rework of really the whole process, from determining what our demand is from our customers, planning to influence that demand through doing events in the trade, like promotions and end-aisle displays and those sorts of things, and all the way through to actually fulfilling those orders and getting that product back on the shelves.

That process is about to go live through October-November, so we will have a single process across all the different categories we operate on, to manage our trade spin, to optimize all our events and all the different trade events that we do, and having that very well linked into the whole supply chain piece, so that we make the right products and have them there at the right time to suit the demand.

The CPG, it's the monkey on your back all the time. It's getting a good view of what that demand is going to be, how you can influence that demand, all the factors that influence that demand, and then being able to make to that and end up shipping to that. Obviously, any time you have an order and you don't have a product to ship, that's money coming straight off your bottom line.

Interviewer: To actually get the new project from the planning stage to real implementation, what do you feel is the most important way to get everyone onboard?

Paul: I guess we do a pretty similar process to most businesses. These are all economic business cases, so we have to build the costs and the benefits over the life of the project, and it has to reach a certain internal rate of return, and the ROI targets, etc. That's the formal part of it. The informal part of it is really recognizing the opportunity, getting people to realize that there is a need to change. So, you know, "Hey, guess what, what we do today isn't best practice or isn't optimal, " and there is some sort of burning platform so that people start feeling a little bit uncomfortable about where we sit today.

You can start creating a vision for what the future can be like, getting people signed up to that, so really by the time you get to your formal board proposal, if you like, with all that together in it, you've actually got the momentum already happening in the business. So people in the different departments are all thinking, "Yeah, we're behind this, we want to do it." Because of course that's the hard part, right? The technical part's the easy part.

Interviewer: Yes, that's the horror story we hear again and again, cases in which the I.T. department hasn't understood the business processes.

Paul: The classic thing is, it can't be my idea, and it can't be the consultant's idea, and it can't be anyone to do with the technical's idea. It has to be the business's idea. And that idea has to start right back at the seed of the idea. So that process, where it germinates, is where it starts. If it germinates in the right spot, the project will succeed. If it comes in from above or from the side or something, it's a much harder effort to get it done.

Interviewer: What are some of the biggest IT successes you can point to in your time at Campbell Arnott's?

Paul: We've had a pretty busy time, so I suppose order-to-cash, the SAP order-to-cash merger going live, coincided with a lot of other activity. But that would probably be the biggest one in the last year because we went from different systems, we were receiving a lot of orders manually; during that whole process we went to going to an ADI process with customers, and we changed over that whole process without any interruption at all to service levels to our customers. In fact, I think last year we were the supplier of the year for Woolworth's, which is a major customer. So to do that degree of transformation and to do SAP and achieve that in the same year is a real bonus, so we were very happy with that.

Interviewer: This might be a difficult one because nobody likes to talk about things that didn't go exactly to plan, but what's the biggest lesson you've learned in your role as CIO?

Paul: Same old list... you've got to know what you're doing, you have to be very clear on your scope, number one. You have to make sure that you've got the right business ownership and the key stakeholders behind it, number two.

Those two things done, clear scope, well-controlled, absolute ownership, you know who in the senior leadership owns it and you know all the people below that who are supporting it, and the rest is pretty straightforward. We're a food company, we don't tend to go out there and write software. We will select things that are already working in other places. So we're not taking technology risks, but we're taking business change risks all the time.

When I look at the projects that haven't gone so well, that have dragged on, it's been just simply because we either haven't had the sponsorship or the sponsors have left. It's been someone else's pet and they've gone and we're stuck with something halfway finished that we need to re-energize. Rarely these days you can say, "Oh, we ran up against a technical hitch." Shame on us if we do, but it's not that that tends to trip us up.

Interviewer: Paul Williams, thank you very much for your time today.

Paul: You're welcome.