By transforming the IS function and expanding the shared services operation, Brian Franz has delivered £49m in savings since 2013 and an average year-on-year productivity hike of around 12%. IS services have achieved top-quartile customer satisfaction while the shared services operation has helped the business deliver £100m of additional cash through better working capital management.
Name and job title
Brian J Franz, chief productivity officer, Diageo.
How are you influencing the products, experience and services your organisation offers to its customers?
Diageo's ambition is to be the best-performing, most trusted consumer products company in the world. Our focus is on understanding our consumers and customers to accelerate our growth and drive value for our shareholders. As chief productivity officer, my organisation has significant influence enabling Diageo's performance ambition in the following ways.
Creating the fuel for growth. We want to invest in growth for our business, our people and our brands. A key part of my remit is driving Diageo's productivity agenda. Diageo has set a £500m productivity goal over three years to fiscal year 2019. Two-thirds of this will be reinvested in growth. Our goal was identified through external benchmarking. Productivity is all about sustainable, continuous improvement, embedded into our ways of working and our culture. We are focused on five priority areas to deliver our productivity agenda: net revenue management, marketing (A&P effectiveness and procurement efficiency), zero-based budgeting, global supply, and organisation effectiveness.
Leveraging our shared services organisation – the global business services organisation, through which we provide a wide array of IS and financial services to Diageo businesses around the world –to drive value for our markets. These activities range from customer-facing services to HR employee services, to general accounting, financial planning and reporting. We have a global network of centres in Budapest, Bogota, Nairobi and Manila to ensure ongoing quality of services. Together with our global, single instance of SAP, we service businesses that contribute to around 90% of Diageo's net sales. Our goal is to expand further into shared service lines that drive value. We are now starting to provide invaluable analytics and business intelligence based on the global dataset we have created through SAP. IS provides our people with the technology and tools they need to do their jobs well, while delivering business solutions that empower our markets. We have been investing in assets to deliver commercial, digital marketing and supply chain capabilities that drive competitive advantage. Our IT operations support 28,000+ PCs/devices and 800+ applications across 360+ networked locations.
Transforming digital capability and focusing on our consumer journey. In partnership with our chief marketing officer, we are making a step-change in our digital marketing, building capabilities and services for our geographical markets, our global brand teams and our corporate functions. We will benefit from economies of scale and executional consistency. We will also provide access to world-class digital resources, a global technology platform, standards and development services, and data and analytics to drive digital innovation and growth.
How as CIO have you driven cultural and behaviour change in your organisation, and to what extent?
First, we leverage external benchmarking to create an outcome-focused organisation, changing culture to become more data-driven. A key part of our strategy is to deliver sustainable, year-on-year productivity to our cost base, by keeping our run costs low to reinvest in business growth. In line with our objective to deliver top-quartile service and cost performance, we benchmark both our IS and business services with external companies to compare ourselves to both world-best (top quartile across all industry sectors) and our TSR group. From benchmarking, we create measurable, multi-year targets to inform our overall strategy. This then forms a key part of our annual 'performance promise' or our 'annual objectives', to help achieve Diageo's ambition. This is then cascaded to every single member of my team, to ensure focus on delivering business outcomes that drive performance. With this focus on data-driven insights and measurable targets, we have created an outcome-driven organisation, focused on delivering value while thinking in a customer and consumer-centric way.
Second, we are changing our relationship with cost and ownership. We are changing our relationship with cost across Diageo through our productivity focus. We are developing a culture that identifies and eliminates waste, taking pride in driving operational excellence. A few months ago, we launched an internal competition called 'If it was my money', asking everyone in Diageo to 'act like an owner'. We encouraged employees to share ideas on ways to increase productivity and fuel our growth on Yammer, our global social media platform where employees collaborate. There was an overwhelming response in only two weeks, with over 300 ideas from 18 markets and nearly 3,000 posts, likes and comments on Yammer.
Define the key business outcomes that you have delivered over the past 12 months and their impact on your organisation's performance
We have been able to achieve double-digit productivity from transforming our IS function and the expansion of our shared services operation. Our function has delivered £49m in savings since 2013, achieving an average year-on-year productivity of around 12%. We successfully finished a programme last year that transformed our IS services. We transitioned to a new infrastructure and service desk vendor that required global coordination to ensure we achieved our full savings commitment with minimal service interruption. We achieved top-quartile customer satisfaction with our IS services, as benchmarked through net promoter score with our IS services. We created a strategy to accelerate digital capabilities at Diageo in partnership with our CMO. Through our shared services operation, we enabled our business to deliver £100m of additional cash through a focused drive on working capital management.
Describe how you have used organisational and third-party information to provide insight that has benefited your organisation, its customers and products or services
As I mentioned before, we routinely benchmark IS and business services to calibrate performance and identify cost opportunity. We have also recently benchmarked our digital and cyber capability – key outcomes that are driving our strategy and implementation roadmap.
We are actively focused on embedding a 'sell-out' culture, driving outstanding execution at the point of sale or consumption. This means being obsessed with execution standards, understanding how our brands need to be distributed and served to the right commercial standards. Our function is enabling this by helping to drive visibility of data down to the customer level, helping us to gain insight around our performance and promotional effectiveness.
Global data reference model
Our enviable back-office foundation lends itself to productivity gains. We have one global SAP instance, covering 90% of our business – most CPG companies have multiple instances. This single underlying infrastructure along with clear data definitions and new ways of working give us information that makes the performance of our business much more transparent than it has been in the past.
Describe how you organise and operate IT and how this aligns effectively with business strategy and operations
Diageo operates as 21 geographically based markets around the world and we are structured to support those markets across the following service areas: business relationship management, business services, IS services.
Business relationship management teams act as the dedicated liaison/point of accountability into all GDBS services, from business services to IS Services. They work closely with market teams, ensuring that GDBS has a good understanding of markets' business strategies and outcomes in order to develop new solutions that deliver on business priorities, such as best-practice commercial capabilities for our sales force, the local business shared services roadmap and delivery of front-line IS services.
These teams play a major role in ensuring customer satisfaction with our services. Our business services teams play a vital part in delivering Diageo's performance ambition. They free up our markets to focus on selling by creating a backbone of general and commercial processes, and drive Diageo's performance through enhanced decision-making capabilities.
Our centres are based in Budapest, Hungary, in Nairobi, Kenya (for Africa), Bogota, Colombia (for Latin America and Caribbean), and in Manila, Philippines (for Asia Pacific). Our business services teams provide a wide range of back-office services from general accounting and financial controllership to specialist areas such as tax and treasury.
IS services teams provide our people with the technology and tools they need to do their jobs well. This involves maintaining, protecting and enhancing a flexible platform of technology that supports our ever-changing businesses in a cost-effective manner, while providing a holistic approach to our information services architecture, business solutions, data, analytics and the underpinning technology infrastructure.
Describe your role in the development of digital strategy in your organisation
I am co-leading our digital transformation with our CMO to accelerate Diageo's digital marketing capabilities. We have defined an ambition and a strategic framework to build our brands while linking digital marketing activities to our consumer journey. Our goal is to enhance and strengthen our global capabilities and excellence on in digital, and ingrain it into the fabric of what we do. As mentioned, we are building digital capabilities and services for our markets and brand teams.
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
Technology plays a key role in integrating and empowering our business. Our goal is to provide our markets with business solutions that drive competitive advantage. We provide our commercial teams with the tools and processes that enable effective planning, execution and evaluation of all aspects of their commercial programmes in support of sales priorities and embedding a 'sell-out' culture. We have been providing our workforce with innovative technologies to enhance productivity and improve overall business efficiency. We have increased external collaboration with customers, suppliers and distributors through customer portals.
We have deployed Workday globally to deliver employee self-service for HR. Mosaic (Microsoft Sharepoint) and Yammer help our employees easily collaborate on content and share information using social capabilities such as micro-blogging, community sites and more.
We have provided mobile versions of important applications, such as Concur for travel and expenses. We look at our processes end-to-end to increase efficiency and effectiveness. Our process boards drive innovation across our core processes, enabling us to drive out cost while improving service performance. Looking forward, we will deliver efficient procurement processes through guided buying.
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?
We regularly engage our organisation across a number of different channels to discuss our strategy, key technologies and much more. As a member of the Diageo executive committee, I engage our senior leadership on a monthly basis around our productivity agenda. In addition, I provide annual updates on our strategy to our executive committee and board. On a quarterly basis, we engage with our CFO on the performance of our function, in addition to gaining alignment around our strategy.
We regularly leverage both our global intranet (MS Sharepoint) and Yammer, our corporate social networking/collaboration tool to feature and blog about strategic priorities for Diageo. This takes place at both a global and local level.
We issue a fortnightly e-newsletter to all our GDBS organisation – readership continues to grow – with increased participation and engagement demonstrated through a 40% increase in likes and a 68% rise in comments. We hold 'Yam jams' or global discussion forums where senior leaders hold a live online Q&A session, open to employees throughout the company and hosted within our Yammer network. A few months ago, we held a Yam jam about the importance of cyber security to help raise awareness on safeguarding corporate and personal information. In only two 90-minute sessions, we generated 630 messages, 71 posts and 841 likes. According to Microsoft, Diageo is the seventh most active community on Yammer.
How do you use social networks to engage in conversations across the industry about the opportunities and challenges technology is creating?
I regularly use our social networking platform to collaborate across our employee population, such as the #ifitwasmymoney idea generation campaign through Yammer. From blogging to online Q&A sessions, we discuss and debate about emerging technologies, key emerging priorities such as cyber security and much more. Last year we held a technology hackathon focused on finding solutions to tackle irresponsible drinking, and to generate ideas to build products in less than 30 hours. Ideas were wide-ranging, and we will be looking to implement two of the projects to drive responsible drinking. We have also created an online competition to recruit new talent to our Budapest location.
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?
From a functional perspective, we bring an extended group of senior IS and BS leaders together virtually on a quarterly basis to engage in the key areas of our strategy. This equips a very influential team with the knowledge required to partner with their stakeholders in the business. Our business relationship managers across our markets engage on a quarterly basis with senior stakeholders to gain alignment around GDBS strategies that support their market. We use these sessions to create a common understanding of our strategy, how it fuels Diageo's ambition, and key technology investments we are making during the year, in addition to reviewing IT and business services performance and gain alignment around our service recharge.
Describe how you keep up to date with developments in technology and IT management
We leverage our partners and look at key external opportunities and trends to determine the space where we should be playing. Through external benchmarking, we gain actionable insight to increase automation levels across our organisation. We attend and participate in best practice in addition to participating in roundtable events. We actively encourage leaders to maintain external radar/networks.
Provide an example of how you have developed the diversity and improved the culture of your team
We recognise the importance of diversity, and want to ensure that each employee feels empowered at work to drive value for our business. We believe that gender diversity gives us competitive advantage. We are proud that 40% of our board members and executive committee and more than 25% of senior leadership roles are held by women.
We also provide a flexible working environment for our employees to support work life balance. We embrace flexible working, from reduced hours to varying start or finish times to provide employees with the flexibility to balance the demands of our business with their personal lives.
As a global organisation, we also leverage different time zones to our advantage to meet business needs. We conduct an annual values survey to provide employees with the opportunity to provide feedback about working at Diageo. The survey tells us how well we are living the values in Diageo, our commitment to the performance ambition, our behaviours and our purpose of celebrating life, every day, everywhere. The results provide insight into our strengths and priorities for improvement.
Describe how you collaborate and influence the organisation and its leadership team
There are a number of ways that we engage with our broader organisation. We use our internal social networks to collaborate and find solutions to business problems, in addition to micro-blogging, monthly senior leadership calls, town halls and much more.
Internally, we hold quarterly extended leadership team sessions across a global team of our senior leaders in GDBS. Through our sessions, we create a common understanding of our strategy, key priorities and challenges we are facing as a function. We ask each of our leaders to bring back their expertise and knowledge of our business to drive innovation and deliver creative solutions, with an aim to improve and increase efficiencies in our process and systems, and contribute to driving growth for Diageo.
Tell us how you have developed your own management, leadership and personal skills
My breadth of experience includes 14 years at GE, where I gained my lean six sigma expertise. I have leveraged this to drive process and data transformation in the CPG industry, for companies including Pepsi and Diageo. From my background in private equity, I keep an entrepreneurial spirit required to drive productivity in a dynamic business.
What new technologies are you investigating, tracking or experimenting with?
Data analytics is a strategic priority for our function. As an example, we are creating visibility of our 'sell-out' achievement, customer profitability, cost to serve and trade investment through our analytics platform to drive actionable insight for our markets.
We recently introduced a pilot of a 'smart or connected bottle' for Johnnie Walker Blue Label, using electronic sensors to detect if a bottle has been opened, and where it is in the supply chain. Taking consumers' engagement to the next level, these sensors allow Diageo to send personalised information to consumers, who scan the bottle with their smartphone, such as promotional offers in the store through cocktail recipes at home.
How do you decide where to apply the best technological approach?
Our enterprise architecture team ensures we are looking at the latest technology innovations. We govern the use of technology through our architecture review board, which helps us control technology variations across our markets. We actively work with market teams to develop solutions and ensure we can search and spin ideas across multiple markets/functions. We want to partner with the most innovative technology companies and pioneering entrepreneurs around the world to deliver breakthrough innovation for both our business and our industry. For this reason we have created Diageo Technology Ventures, a programme specifically designed to solve some of our existing business challenges and unlock new opportunities for future growth by working with emerging technology companies.
Do you give yourself and your team time each month to assess or learn about technology vendors outside of the established providers?
Yes, I encourage my leadership team to actively research and deploy fit-for-purpose and best-in-class technologies across our planning processes, and commercial applications. We leverage a market archetype approach when deploying technology.
Describe your sourcing strategy and your strategic suppliers
We outsource non-core IT activities to our strategic partners, including networks, infrastructure, helpdesk support and application development. As part of our recent IS transformation, we reviewed deals to increasingly leverage Tier 2 vendors and competitively tender our contracts.
Describe the technology innovations that you have introduced in the past year and what they have enabled
Employee collaboration tools such as Yammer to enable sharing of ideas across our 33,000 employees. Self-service tools such as Workday for employee lifecycle management. Sales force automation/distributor management tools for our markets, in addition to net revenue management tools. Data and analytics dashboards/reporting to create visibility of sell-out/depletions. Mobile applications for collaboration, mobile analytics, T&E, and much more.
What strategic technology deals have been struck and with whom? What uniquely do they bring?
Verizon for networks, TCS for infrastructure and helpdesk, Infosys for application development, and HP for equipment.
Rate how important your sources of innovative technology suppliers are
- Always referred to: analyst houses, media.
- Often use: consultants, CIO peers.
- Never use: industry body
Has your organisation detected a cyber intrusion in the last 12 months?
How is cyber security led and discussed by senior management?
We provide an annual update to our audit committee, which includes key members of our exec and our board to discuss latest trends in cyber security. I also co-chair a quarterly, cross-functional information security committee, including members of our legal leadership team, to make key decisions about cyber security.
When did you start your current role?
What is your reporting line?
Are you a member of the board of directors?
How many 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?
Around 1,800 employees across our integrated shared services operation.
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?
Our contracts are outcome-based. We do not monitor in-house/outsourced split but manage third-party arrangements through a focus on meeting and exceeding service levels agreed for our organisation. We conduct benchmarking to ensure market competitive rates with our vendors.