The scale of cultural change under Ed Hutt has been enormous. When he began his digital transformation, staff would wander in when it suited them, beach shorts and flip-flops were the norm, and working practices were lax. Twelve months later, there is a whole new level of professionalism. His leadership, strategy, know-how and experience has transform a highly traditional organisation into one at the leading edge of digital self-service delivery within its sector. The numbers in IT have dropped by 80% over a year while the service quality, service speed and degree of proactive innovation has increased significantly. This has driven a substantive cost reduction, which has funded much of the modernisation effort.
Name and job title
Ed Hutt, Group Chief Information Officer, Fitness First.
How are you influencing the products, experience and services your organisation offers to its customers?
Introduction of digital services: Replacing traditional bricks and mortar services and older e-business services. These have included a new digital join online service (surprisingly, online sign-up is not a big channel in the global gym industry), digital gym services (so members and non-members do not need to be physically on the premises to complete exercises, which increases the potential catchment of the brand and the service significantly), digital solutions to reduce hours in store for the existing staff and allow a focus on customer value-driving time and services rather than administration, which reduces cost and increases customer lifetime value.
Introduction of new ideas: Within the organisation, I have introduced a Dragons' Den-type approach to innovation. Existing and new suppliers now have a free opportunity to bring ideas to the business (within a controlled framework). Where the innovations are good, then we work with that organisation on an exclusive basis to develop the business proposition. Where the idea is rejected, the supplier cannot keep coming back and pestering people to buy their stuff. Only genuine innovation is accepted. Anything that is just product sale or continuous improvement on an existing product is rejected.
Leading by example: Within IT, we have led by example in cost reduction, innovation management, service change and service improvement, structural change and internal transformation, and then challenged the business to follow. The process of influencing products and experience is based on a transformational change management approach which has identified potential areas for change. Direct and indirect levers can be used to introduce transformational change and ways of ensuring the sustainability of the change to prevent regression to the old ways of working. This combined three-part transformational approach is the biggest way in which IT has influenced the way in which the business has operated over the past two years.
How as CIO have you driven cultural and behaviour change in your organisation, and to what extent?
Principally through the approach to transformational change within the organisation. The organisation was very set in its ways as a company, and people did things a certain way because that was the accepted approach. By challenging what was done, how it was done and offering alternative viable solutions as used by other organisations (and taking people to see those organisations), I have driven transformational change very hard and very fast in order to deliver the business benefits that the wider organisation said it wanted.
The scale of cultural change has been great. At the start of the process people wandered in when it suited them. Beach shorts and flip-flops were the norm, and people would communicate between teams without the permission and presence of their manager (at best). At the end of 12 months the level of professionalism was clear in terms of dress code, style of working, hours of working and the way people worked together to deliver outcomes for the business. In terms of transformational change, especially in cultural and ways of working categories, this is one of the most extreme I have ever led because of the need to change the organisation very quickly to prevent business-inhibiting activity from continuing.
Define the key business outcomes that you have delivered over the past 12 months and their impact on your organisation's performance
- Cost reduction in IT.
- Move to digital and self-service.
- Modernisation of systems and IT-enabled processes.
- Security and compliance.
These objective streams release capital to allow modernisation and change within IT while remaining cost-neutral, and also release working capital and free cashflow back to the business to invest in industry-specific initiatives.
Describe how you have used organisational and third-party information to provide insight that has benefited your organisation, its customers and products or services
Part of this strategy has involved the start of a move from an SAP-based Business Objects MIS to a simpler and more interactive Microsoft-based Power BI solution. This provides more dashboard-based information immediately and is user-buildable, which increases the digital skill sets of the business rather than concentrating all IT and digital knowledge in IT.
We have sought out ideas and concept information from third parties through our innovation programme. This has also been a two-way street in terms of partners, suppliers and third parties seeking out ideas and innovations from us. It creates a form of innovation marketplace, with exchanges going on for the benefit of all parties (as we do not compete).
Information is also becoming increasingly marketable, and during the past year we have collected more physical fitness and health information on our existing customers (and in 2016 on non-members who use our digital tools), which is usable internally to understand customer motivation better and to drive retention, while also providing a basis to upsell and cross-sell services, so increasing ARPU.
Describe how you organise and operate IT and how this aligns effectively with business strategy and operations
As a part of the transformation process IT has been totally reorganised and operates in a transformed way. The first and most noticeable aspect of this is scale. The numbers in IT have dropped by 80% (100 to 20) over the course of 12 months while the service quality, service speed and degree of proactive innovation has increased significantly. This has driven a substantive cost reduction and is the source of funds for much of the modernisation effort in IT technology in the year. Essentially, it is a second machine age, moving away from old, ancient forms of IT hardware, software and operating methods to a new, automated approach which reduces human interaction on basic actions, automates processes and reduces the scale of IT by consumerising technology.
Describe your role in the development of digital strategy in your organisation
The development of the true digital strategy has lain within IT, which has provided the leadership, strategy, know-how and experience to transform a highly traditional organisation into one which is at the leading edge of digital delivery within sector. In the fitness industry digital is about self-service and the use of common, standard and where possible off-the-shelf components to deliver an agile service, very fast and with a high degree of delivery quality, but allowing failure to occur with a back out/fix forward approach where this does occur so there is minimal impact at a business level. This has been a 'win back' on digital strategy (in commercial terms) but an important one given the money wasted in the area previously by other business areas, which clearly had no idea how to address this new technology development in real and value terms.
Describe how you use and promote technology to redesign the processes, services and organisational structures of your organisation to enable it to become more efficient and customer-focused
This has been focused on the use of standard systems and consumer products. Where a system category exists (ie sales), then it is unlikely that somebody is going to be able to design/build/test/implement such a system faster from scratch. Key rules have been applied to this type of situation – ie configuration only, no customisation. Product first; build only if it creates defined competitive advantage.
Structurally, all service areas are managed by a service manager, who is accountable for all of the internal and external inputs to this area and the suppliers who deliver external services. The overarching strategy for applications, software, technology and systems guides decision-making around new technology and how a digital-ready technology can be used first and above any other solutions to create value for the organisation.
Customer types have been defined as a part of this process. Type I are the real customers (members and non-members using digital products), type II are internal business customers, and type III other IT areas. This focuses attention on the correct areas and prioritises service first as an internal culture.
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?
A new 'second hat' role of BRM (business relationship manager) was introduced at the end of 2014. The problem with a full-time BRM role is either the person spends all their time defending IT against the business or they go native and spend all of their time fighting IT for the business. A second-hat role means nobody ever has time for either evil and so can only focus on their core role of understanding what the business is trying to do, advising on what could be done using digital and modern approaches, and making it happen against their objectives, which drives their bonus payment for the year end. This means every manager in IT (16) has a bonused and object-driven role which says "you will work with and understand the needs of the business" before they start on their 'day job' of needing to work with and assist other areas of the business outside of their BRM core but within their functional core.
This approach fundamentally changed the role of IT with the business while not adding a penny of added and unnecessary cost. Each project manager also engages with all of the business leadership necessary to get their project over the line without any restriction on who talks to whom and when it is done. This creates the most customer-centric and business-focused approach to IT possible, and also creates an overall team sense of responsibility for delivery against business objectives. Truly a high-performance team environment.
How do you use social networks to engage in conversations across the industry about the opportunities and challenges technology is creating?
This is an area where we are increasing our focus on the back of the digitisation of other services and processes. Social engagement and social listening is currently being backed into our sales channel systems so that we can respond to positive or adverse comment, react to opportunity or threat, and use social channels as the principal means of connecting with members and non-members going forward. These are focused on opportunity and challenge in the sector rather than technology-focused.
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?
This is based around:
- The BRM second-hat role.
- Innovation dens, where we seek to introduce new technology to the business.
- Established transformation projects where we bring a digital-first approach.
As a result we are constantly modernising the organisation and introducing digital-ready solutions to increase the value of the business and the net utility to the member/non-member base.
Describe how you keep up to date with developments in technology and IT management
Personally I use Gartner a lot – both the CIO subscription and analyst calls (of which I am an upper-decile user) and the events to network and gain new ideas which can be shaped to meet the needs of the business. I also use other trade events and trusted suppliers a lot to get a view on what is happening in the industry and what other people are doing. I have a very wide support network and can get a view from various angles at very short notice in exchange for the same to other colleagues in other companies.
Provide an example of how you have developed the diversity and improved the culture of your team
When restructuring the team in 2014, I measured carefully who was being appointed to all roles. There was no positive discrimination policy and all appointments were made on the basis of competence, capability and potential (which has been fulfilled). The outcome was that the IT leadership team was 50:50 gender-balanced and with a higher proportion of female IT executives in post than before, although this was based entirely on competence, capability and potential, all of which have been demonstrated a year on in the annual review cycle.
Describe how you collaborate and influence the organisation and its leadership team
Personally, I take on few tasks, but have a hinterland of executives accountable for the delivery of everything. As a result I can remain free to address the strategic priority or the service issue of the day and so satisfy the business. This same approach is then replicated in objectives to each layer of IT management, ensuring that as much as possible is pushed as low as possible as fast as possible, and that the reaction to the business is as fast and as resolute as possible as soon as possible.
I do as much as possible face to face rather than by email or phone. Where I can, I go and see the person concerned – sometimes very fast indeed. This creates a certain expectation in terms of response but where one is set up to do this this it is essentially possible. This makes the CIO a form of super-BRM for the higher echelons of the organisation, available at no notice to do anything, and with a massive hinterland of staff and suppliers ready to respond to the situations as they arise. I also use external parties to assist with this influencing where appropriate, and can generate a panel of experts at very little notice to advise the CEO whenever he or she wishes.
Tell us how you have developed your own management, leadership and personal skills
My personal skills come to a greater extent from my 'first base' training at consultants Coopers and Lybrand (now partly PwC and partly IBM). This was an organisation par excellence, and the style, approach and personal focus on leadership from the people who led the company remains with me to this day as a role model for how to lead and transform.
Along the way, I have learned lessons and gained new ideas from other mentors I have worked with, some quite ruthless and others highly humane. Nobody has a monopoly on correctness and everybody can learn something from everybody they interact with. Ben Wishart, who I worked for as group CIO at Morrisons, remains a leader in this realm, and I often look back in situations to 'how would Ben have done this?' I also make use of my current supplier base and the way they work. There are so many external benchmarks that can be used to compare ideas and approaches to.
What new technologies are you investigating, tracking or experimenting with?
We are interested in IoT and wearables especially as they link back to a core of a strategy around 'the device', which is how we can track, monitor and interact with our customers. Data management is another key area based on the volumes of date we collect on members/non-members.
How do you decide where to apply the best technological approach?
It's a financial calculation based within our IT strategy constraints. We have two datacentre models (one cloud and one non-owned hosted private cloud) and a general desire to use subscription-based SaaS where possible because of the financial constraints on the organisation. Certainly development and training environments will be cloud-based (Black II model) because they are transitory. The financial thinking behind this is more advanced than most organisations and meets the Gartner measures of effectiveness because the decision is not driven dogmatically, but rationally from a business case point of view.
Do you give yourself and your team time each month to assess or learn about technology vendors outside of the established providers?
Yes, I allocated all managers in IT time for attending external events during the year, and then providing feedback to everybody else. We also run a quarterly vendor and innovation cycle which everybody is encouraged to take part in.
Describe your sourcing strategy and your strategic suppliers
The sourcing and procurement of IT products and services was totally overhauled in 2014 with a view to achieving 70% under full category management by late 2015. This was achieved, along with a significant consolidation in suppliers, giving those remaining a bigger slice of the smaller pie, so making it commercially attractive for us and them. Many of the previous suppliers who took the biggest share of the revenue in IT have been replaced altogether. For those that remain, we demand a lot but the commercial rewards are more attractive than before. We are a better customer and they are better suppliers than previously. This approach has been commented on by many of the remaining suppliers as among the best they see in their customer base.
We actively manage suppliers to ensure business goals are achieved. This means helping them through the difficult times and making sure we manage the risk profiles that we see on projects and related work areas. Where we have a supplier we ensure we have relationships at the most senior levels, so if we do occasionally have to call a favour or fix a problem, we can do so easily.
Describe the technology innovations that you have introduced in the last year and what they have enabled
Digitisation of the workplace. In particular, the Black I and Black II datacentre concepts, with convergence technology from Nutanix in Black I and Microsoft Azure in Black II giving the best performance per pound depending on situation; the Office 365 environment of the end user 'Red' environment, based on SaaS to unload the datacentres and provide flexible resources to meet growth or divestment scenarios; the service management environment of Blue based on ServiceNow and self-service ticketing and resolution; the delivery framework of Project Green and outsourcing of application management and application development to give industry expertise for each project; the digitisation of sales via Project Brown and the use of Microsoft-based SaaS sales solutions and associated add-ons to self-service at the customer level and reduce unnecessary interventions in the sale cycle. The entire technology base of the organisation has been overhauled, digitised and made more efficient for a lower cost.
What strategic technology deals have been struck and with whom? What uniquely do they bring?
- Black I: Convergence technology from Nutanix to give a low-cost, high-performance long-term operating environment.
- Black II: From Microsoft Azure for short term (under 2.6 years) flexibility.
- Brown: Microsoft SaaS sales system to allow quick rollout to sales staff globally and the associated Power BI environment for sales reporting.
- Red: Office 365. Operational efficiency at a low cost.
- Violet: Extended use of Power BI to give MIS view of all data in SQL databases and user-written dashboards.
We are also a launch partner for Microsoft PowerApps to give user-written app power to the business. In each case we have sought to use simple, consumer-focused technology recognisable to all of our staff globally without complexity training, to enable them to do their job better, faster and to focus on the customer rather than spending their time posting tickets for system failures. Which is where IT should be in its ninth decade of operation.
Rank in order of importance your sources for innovative technology suppliers
1 Industry body. 2 Media. 3 Consultants.
Has your organisation detected a cyber intrusion in the last 12 months?
Is cyber security led and discussed by senior management?
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?
How much of your IT budget is capital and how much revenue?
Financial year 2015 75% opex, revenue 25% capex.
What is your budget's operational/development split?
Financial year 60% innovation, 40% BAU.
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?
Christmas 2015; 19 plus four contractors (prior year 86 plus 14 contractors).
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?