Andy Caddy's business change programme was not only delivered on time and on budget, but delivered efficiencies across the workforce and gave new members a better customer experience. Combined with a booking app that relieves the clubs of phone calls while also enhancing the member experience, it has won him huge credibility with the business. So much so that he has now been given command of a customer-facing product development programme.
Name and job title
Andy Caddy, group CIO, Virgin Active.
How are you influencing the products, experience and services your organisation offers to its customers?
The health and fitness industry is going through a massive change as technology-enabled products become the norm, and startups and apps disrupt the conventional consumer offerings. Our members expect to be able to access these new services and offerings, and we have a culture of providing innovative products to them. The digital journey we are now on means bringing together these different touchpoints into a single integrated experience that leads to them to derive better value from their membership and stay with us longer. My role is to shape the new digital experience for our prospects and members, and ensure that we provide the very best of our Virgin Active expertise direct to them in a relevant and engaging manner.
How as CIO have you driven cultural and behaviour change in your organisation, and to what extent?
As a mid-sized organisation with its roots firmly in growth and acquisition, our management of change was less structured in the past. By showing the value of some light-touch governance and agile project management I have managed to change the way that we carry out all change tasks. Projects have business cases and accountable owners on the hook for delivery; risks are managed and communicated; priorities are rolled up into a regular executive discussion on delivery.
We approach work based on delivering MVPs with measurable business value. As well as this, my role is to bring some sense and meaning into the boardroom over technology decision-making – what is possible, what is achievable and where we should place our bets. This is often a confusing area, with multiple inputs from suppliers, third parties, non-executives, competitors, etc, so I need to be the go-to person for digital and technology.
Define the key business outcomes that you have delivered over the past 12 months and their impact on your organisation's performance
In 2014 I began a business change programme that standardised our club processes, delivered efficiencies across our workforce, and gave a better customer experience for new members signing up by implementing a single ERP system (replacing three legacy systems). This was the single biggest change project the company had undertaken, and it was delivered on time and on budget completing in April 2015.
In 2015 we created the Virgin Active booking app, which allows our members to book into classes and relieves our clubs of calls while giving an enhanced experience to our members. We also created the first two 'connected clubs' in London, trialling a more connected, digital experience for our members.
In April 2016 our new cycle proposition launches – The Pack. I have been the sponsor for this project as it is a complex cross-territory piece of product development and has some technology inputs. I believe that it is the credibility that I have built in the business that has allowed me to lead a customer-facing product development programme.
Describe how you have used organisational and third-party information to provide insight that has benefited your organisation, its customers and products or services
Depending on the area of IT, this varies, but the principle of being insight-led is one I firmly agree with. For our digital development we have set up an insight panel managed by our head of CRM. This allows us to access a cross-section of our customer base to inform us on anything from web journeys to exercise habits. For our current drive towards a modern workplace, we are using case studies, our network and suppliers, and research information to provide insight into the art of the possible for a modern mobile workforce.
Describe how you organise and operate IT and how this aligns effectively with business strategy and operations
We have a simple demand-solution-support organisation that makes it easy to explain to our stakeholders and keeps the amounts of points of contact to a minimum. The demand function manages the funnel and the capital investment, and is the first port of call for the business. The solution function eithers buys or builds solutions to the problems and ensures our architecture is well managed, and the support organisation ensures the safe and secure operation of our systems.
By bringing together all of the demand in one place it allows me to replay to the operating board of the company all activity that is ongoing and all investments being made. This is particularly helpful for business prioritisation decisions and change impact conversations. We are also small enough for change projects to use staff from all three areas to create cross-functional implementation teams.
Describe your role in the development of digital strategy in your organisation
I own the overall digital strategy for the group, defining a roadmap and reporting this back up through our board. I then work with our two CMOs (on for Africa, one for Europe) to agree implementation and ownership of the various components. Most of the implementation is locally owned by the CMO and facilitated by IT.
Describe how you use and promote technology to redesign the processes, services and structures of your organisation to enable it to become more efficient and customer-focused
To start with I recruit and encourage business orientation in my teams. This attitude of thinking 'business first' ensures that we are always looking for ways in which we can enhance and improve the processes, systems and behaviours of our company. Whether it is the ERP system, Office 365 or our new business intelligence suite, we look at business change impact first and try to ensure success by managing change through the complete lifecycle, not just the system implementation part.
We have demonstrated over the last year that an IT function that leads with business change management is far more successful than one that focuses on technical change. As an example, removing paper sign-up for members is a result of the system that we implemented, but working with our staff to understand how they service customers, what sort of interaction they want, what the process would be led us to a more mobile solution using laptops and tablets that allowed removal of sales desks in some clubs. This was a far higher value piece of work than merely switching on some software.
How do you engage regularly with your organisation about your team and the role of technology in the organisation, and what impact is this having?
I talk regularly at internal team meetings and events (I talked to a thousand fitness professionals at the ExCel last summer!) as well as at a few selected external engagements. I have a public blog used for the global technology function (but accessible by anyone in the organisation), and I am regularly on Twitter. External talks that are filmed are republished through my blog.
I encourage interaction with all department heads and can be regularly found networking with business colleagues in the coffee houses of Clerkenwell. I promote feedback to my teams, recently completing a 360-degree feedback on the IT department as a whole from major stakeholders in the business, which I hope will become a regular event.
How do you use social networks to engage in conversations across the industry about the opportunities and challenges technology is creating?
I mainly use Twitter for cross-industry conversations, although I am also a member of a number of active LinkedIn groups. I also participate in email groups for CIOs in my industry. In reality, though, Twitter is a broadcast medium and is useful for tuning into the big thinkers in certain areas. It's useful to pick up themes and current discussion points, but proper conversations are fleeting and better carried out on a different medium.
How do you bring the organisation together to explore and discuss technology and its challenges and to develop stronger alignment of the technology function with the full business?
I chair our technology council in which all our country MDs participate and assist in shaping our technology agenda. I sit on the executive board of the company and organise quarterly sessions on our digital roadmap and strategy. Finally, I am a member of the European operating board, which is concerned with the day-to-day trading of Virgin Active's performance in Europe. This range of input keeps me close to what is going on and whether the IT direction is the right one.
Describe how you keep up to date with developments in technology and IT management
IT industry-focused events tend to be just there for networking, although even through that it's possible to learn a great deal from your peers. I have found Wired and CES particularly beneficial in the past 12 months – from exposing very different concepts in technology to stimulate thinking. I am pretty sure that the traditional technology conferences are going to disappear and be replaced with more vertically focused events. As technology itself is less and less interesting, the need to understand the use and effect of technology in whichever area is becoming much more of a focus. I also read a fair bit and enjoy strategy and management as a topic, and I listen to technology podcasts (mostly when I am out running).
Provide an example of how you have developed the diversity and improved the culture of your team
I am lucky in that Virgin Active has invested in management training in diversity, which has helped raise awareness across the company and gives a common currency for discussion. I have also encouraged people to read Flat White Economy, which talks about the reasons the startup culture is embedded in the EC1V postcode (just around the corner from my office) – one of the main ones being the diversity of the local talent in that area.
Culturally I try to promote self-development. I am a firm believer that individuals who are encouraged to take control of their own development similarly invest in the development of the team. I try to ensure that everyone has a personal development plan – not just a tickbox in an HR process, but a proper path to being a better person at the end of each year. I measure my managers on the quality of the appraisal process and the plans that they complete for their staff.
Describe how you collaborate and influence the organisation and its leadership team
I make myself available and encourage my management team to do the same. We have 'cheerleading' responsibilities to our clubs to ensure we get out to see the real business, and I always value any exposure for me and my team outside of the IT bubble. I like to think that I am very business-focused and try to think through business solutions rather than technical problems. This can lead to solutions that don't even need technology. As an approachable and transparent CIO I try to ensure that my business wants me or my team at the relevant conversations rather than working around us.
Tell us how you have developed your own management, leadership and personal skills, perhaps through mentoring, training or external activities
I have always taken a great interest in personal development and I think that there is something to learn from every situation. It doesn't always have to be traditional training which gets less relevant as you move up a management hierarchy. I have previously taken advice through a personal coach and I have found that very useful. When I first took up my post at Virgin Active I sought out help from other CIOs. More recently I have been helping startups and doing some 'reverse mentoring' where startups have been helping me stay relevant and engaged in a world being moulded by millennials. I also now mentor others which is very rewarding.
What new technologies are you investigating, tracking or experimenting with?
Health and fitness is one of the big proving grounds for wearables and IoT, so we are constantly looking at solutions and trialling concepts. Having successfully proved NFC bands as replacements for membership cards, we are now looking into the possibility of supplementing these with fitness tracker bands as more incentive to use/wear.
I constantly track against the various vendors in this space and meet with startups and big companies alike to understand the overall direction. Data analytics will become a very big deal for us just as it will for many other companies. The sheer range and scale of data that will start pouring in about our members is something that we are spending a lot of our time thinking about. Our business is very behavioural, so understanding why someone would subscribe – or leave – can be hugely enhanced by the quality of information about member behaviour, whether that is in club or on an app.
How do you decide where to apply the best technological approach?
I write and agree an IT strategy on a yearly basis to ensure that we are positioning ourselves at the right point to match the business aspirations. This involves how we organise ourselves, perform our work, choose technology and choose suppliers.
Since my business is not real-time, nor operationally dependent on our systems, I have instigated a cloud strategy that will see 70% of our applications and services in AWS and Azure over the next 18 months. This provides agile and scalable resource at lower cost and shifts the thinking of my team and my business into the value-added areas of IT. This turns a negative of my role – that technology hasn't been important in the past – into a positive in that we can now advance quickly to take advantages of the many rapid developments in our industry.
Development hasn't been a big area for us in the past but as we find selective areas that give us advantage we will choose to manage these ourselves. Mobile in particular will be a big win for our members in 2016 and ongoing, so I have insourced and kept this close to the business stakeholders.
Do you give yourself and your team time each month to assess or learn about technology vendors outside of the established providers?
I take my team out of the office once a month for our management meeting away-day. This is an important reset in our diaries, a chance to take a step back and make sure that we are still operating well as a team and achieving our goal. We try to split the time 50:50 between organisational and personal development and more IT-focused matters. These meetings take place away from our head office, typically in our suppliers' and partners' facilities, anywhere from our design agency to our capacity management company. We try to ensure they have an hour in the day to give us their view of the world with strictly no sales talk.
Describe your sourcing strategy and your strategic suppliers
We are too small to be of importance to the very large vendors, so we choose mid-tier providers who value relationships and the Virgin brand. Given my relatively small team, it is important that we get vendors to work as partners providing value above and beyond an individual piece of software or infrastructure.
Microsoft provides our core technology, which ensures that we can find the right skills and work with proven technology, but also opens up a large pool of resource to help us in different areas – fitness, IoT, VR, etc.
Vodafone is our network partner and working to change our outdated network to a set of modern services based around the needs of a mobile workforce and mobile customers. Samsung is our partner for in-club display. We didn't have a 'relationship' with them when I started, but they are a good company and have helped with content management systems and mobility.
Technogym is our fitness partner and provides most of the in-club equipment, which is increasingly internet-connected and packed with sensors.
Working closely with the R&D team in Italy on new products is essential in understanding how we will need to bring solutions to our members
Describe the technology innovations that you have introduced in the past year and what they have enabled
We have removed paper from the gyms and replaced outdated notice boards with digital signage. This gives us a content-managed solution into our 96 locations, providing member information along with marketing content. In the connected clubs (Cannon Street and Paddington), we have touchscreen access to timetable and class information. We also have NFC bands for members to allow them access to the club and its different zones, as well as operating their lockers and logging them on and off the equipment.
The arrival of 'The Pack' for cycle will see the first technology use in our cycle classes. Bikes pumping out data connect together to give a team experience like no other while a music playlisting system and lighting management providing a brilliant atmosphere. Launching this in the UK and then around the globe in 2016 shows how well IT and business areas can work together to provide a fantastic product.
What strategic technology deals have been struck and with whom? What uniquely do they bring?
Vodafone was a network supplier that wasn't providing anything more than basic WAN connectivity, but by educating them in our vision and getting some senior sponsorship within Vodafone we have recontracted with the company to fundamentally change our networking strategy. Our need for more flexible services provided in-club to fee-paying members can be met with innovative solutions and far better management tools. We have shifted the relationship from nuts and bolt supplier to innovation partner, and I am looking forward to how much more value we can drive from that relationship.
The partnership with Samsung has been harder, but having a devices partner who can potentially understand mobile solutions, smartwatches, screens and devices is very compelling.
With all our suppliers I believe in sharing as much information as possible, so at the end of last year we had a supplier day at one of our London clubs to tour them around and then run through our strategy with them. I'm not sure how many of them had watched a presentation while sitting on a spin bike before.
Rate how important your sources of innovative technology suppliers are
- Often use: CIO peers, media.
- Occasionally use: consultants, industry body.
- Of little importance: analyst houses.
Has your organisation detected a cyber intrusion in the last 12 months?
How is cyber-security led and discussed by senior management?
While we do not have a dedicated cyber security manager I assigned the responsibility regionally last year. In Europe my head of service delivery is acting IT security officer and has objectives and a budget to allow him to implement an appropriate IT security programme. I report IT security adherence back to our board and shareholders on a quarterly basis.
When did you start your current role?
What is your reporting line?
Are you a member of the board of directors?
What is the annual IT budget?
In Europe £13m.
How much of your IT budget is capital and how much revenue?
In Europe £7m opex, £6m capex.
What is your budget's operational/development split?
What number of users does your department supply services to?
Are you finding it difficult to recruit the talent you need to drive transformation?
Has recruitment and retention risen up your agenda as a CIO?
Does your IT organisation operate an apprenticeship scheme?
How many employees are there in your IT team?
Are you increasing your headcount to bring skills and the ability to react to needs in-house?
What is the split between in-house/outsourced staff?