Youthful and outspoken, Robin Dargue is one of the UK’s most well-known CIOs. Keen to provoke debate, and infectiously enthusiastic, he has in the past claimed that he ‘doesn’t do IT’ anymore, and that most modern IT dilemmas can be solved by common sense. But after a glittering few years as global CIO and business process director of drinks giant Diageo, he will soon be moving to another hugely challenging position, taking over from David Burden as CIO at the Royal Mail.
Given the business challenges facing The Royal Mail as it grapples with an open postal market, Dargue will need all the skills that he has been collecting.
His work at Diageo has made him one of the world’s experts on outsourcing, but he also championed IT as a core component for business growth across the company’s global markets, has implemented a standard SAP platform across all of Diageo’s diverse markets and geographies and is something of an evangelist on the social networking phenomena and its commercial uses.
Dargue’s blunt approach to outsourcing is both refreshing and inspiring, although he considers most of his outsourcing golden rules to be based on a reasoned approach. “You have to be really clear about your rationale,” he says.
“Time and time again the culture of an organisation, another party’s or your own can cause problems. It is not necessary for them to match, but that has to be the aspiration.” The suppliers that Diageo has used have different strengths, and combining them has worked well for the company. For example in governance Dargue says that the company needed to be more disciplined, but had originally thought that IBM was not that different from Diageo, and would be able to help. “We judged correctly in terms of the help we received from IBM, and could not have achieved what we did without it, but we were miles apart as cultures.”
He believes one of the most interesting phenomenon in IT is that having hired systems integrators like the big five to do a job, most organisations think they can then just take over. “It is extraordinary that we think once the system is in we can do it. How odd.”
This can mean changes and multiple partners. “The reason we retained an organisation before was because we had different skills from them, so why suddenly should we have those skills?”
None of the outsourcing partners operate truly globally, whatever they say, Dargue believes. “They pretend to, and some even think that they do. But the fact is that the profit and loss is in the country where the headquarters is, not globally,” he says. “Diageo has many global brands, but it operates very differently in say London compared to China. In outsourcing you need to recognise that, and then mitigate against it.” Great governance is also key. “It has to be key in any and every detail, and the organisational guys should consider this a tick box requirement.”
But be very clear that outsourcing suppliers are not cleverer than you, Dargue warns. “You are not an idiot. They need to add 20 per cent to cover their margins. But they must explain what assets they have which are better than yours – do they have a better datacentre, are their developers more cost-effective?”
The cost profile is of course important, but it isn’t everything, and if it is to your company then outsourcing may not work for your organisation, he believes. “The cost is important, but the assets and facilities in other places are what really count. If you know and trust the architect, then it is worth buying in,” Dargue says.
Unsurprisingly Dargue says it is good to be forthright in the choice of offshore and onshore mixture. “You have to be bold,” he says. “You are paying for all that account management, so make sure you are getting it, whether it is onshore or offshore.”
Get the right senior people on board, he advises. “You need senior people at your level, so that you can make sure that you are in control and have the power. If you are not dealing with equivalent people in the organisation you are in danger,” he says. Part of this puzzle is to make sure that that if you are offshoring, your partner’s senior people visit the facility there.
“Diageo offshores in Manila, Madrid and Bangalore, and I’ve been to most of the facilities. I make sure that our partners’ senior people visit there as well. Sometimes it is the first time their senior people have been to visit, and they arrive the day before me. But it is important, and very motivational for the staff there.” He believes that while it can be beneficial to keep some systems development close physically, very little else needs to be local. “We have just completed projects in Russia, where the work was done by an Accenture team working in Madrid. It is an interesting situation, but works equally as well as something done at the location.”
One of the recurring problems with outsourcing is clarity about provision. Dargue says: “Be clear about what you are procuring. Will it provide more agility, better value or reduce costs? If you have a sensible relationship with the supplier, you and they know what is being provided, and there is a common theme, everything should work well. If there is an issue, having clarity offers an opportunity to solve any problems that arise.”
He thinks one of the problems with outsourcing is that companies tend to forget what the situation was like before.
“Many people have a rose-coloured view of the past, and that can be very annoying,” he says.
“The outsourcing we have done has achieved what was agreed at the time. It hasn’t been particularly easy, but we couldn’t have achieved what we set out to do without our partners. “Diageo didn’t procure its outsourced resources for value, but for specific jobs. For example IBM got us compliant, which was much harder than we thought it would be, but we couldn’t have done it without them. Similarly, Diageo has a superb creative engine, but isn’t so good at delivery. That was where Accenture came in.”
Dargue believes very strongly that outsourcing has to be done with the full responsibility of and accountability to the IS function. “When I hear people in IS and the business blaming problems on the outsourcing supplier, well I have never heard such nonsense in my life,” he says. “IS is the foundation of it all. The ‘it’s nothing to do with us, it is the outsourcer’s fault’ is absolute nonsense, and an appalling dereliction of duty. It would be like marketing saying a bad advert is totally the fault its ad agency, and nothing to do with marketing.”
At the time CIO interviewed Dargue he was about to leave Diageo and in a contemplative mood about his IT team’s achievements, and how they had enabled the business to take commercial and competitive advantages. Dargue said that realising staff potential has been paramount. The IS team has seen improvements to the results of its annual values survey; progress on its people capability agenda through new courses like SAP awareness and project management training; and changes to the IT organisation itself had prepared it for the future corporate strategy.
He says that IT has delivered operational excellence, with reliable core systems and networks through reduced support costs, while at the same time protecting and enhancing Diageo’s reputation and assets through among other things, a very strong security team. “Without this incredible financial delivery Diageo would not be able to reinvest as much into IT enabled business change.”
It is hard knowing where to start when discussing delivering IT enabled business change, according to Dargue. “It has become a reality that we deliver every day and everywhere. We have made the difficult look so easy and we are asked to tackle the near impossible, because time after time we have proved we can do so,” he says.
Some of these changes include the continuing deployment of SAP across the country, as well as projects in Russia, China and within the sales division of Diageo and in marketing with the support for its cutting-edge digital-media agenda.
Web 2.0 is leading to the externalisation of enterprises, according to Dargue. “It is a new way of working, allowing a more effective high-performance company relationship with the consumer, suppliers and other stakeholders,” says Dargue. “It allows us to engage them on a journey of innovation, but first we have to demystify it, widen the eco system, connect more people, and then engage them.
He believes that using Web 2.0 applications internally can offer particular benefits, because the employee of the future is not a basic 9am to 5pm employee, but a much more flexible worker. “Global organisations work in different time zones, so the ability to offer a new way of working, which allows for this and fosters better relationships and logistics is fantastic. It allows us to connect to each other, rather than move to each other.”
What Dargue has achieved at Diageo is, he says modestly, due to his IS team. “I am tremendously proud of the team, which has done so much in the time I have been here,” he says. He may have had a good team at Diageo, but it usually takes an enthusiastic, inspiring and bold leader to get the best out of a team. The Royal Mail must be thrilled with their new arrival.
Robin Dargue became CIO at Diageo in 2003 aged 36, and has been the driving force behind a global SAP implementation. Before becoming CIO he was business process director at the company, and business services director and IS director at UDV, which became part of Guinness and then Diageo. Prior to that he was at Mars and at Logica Financial Systems.