I just wrapped up this morning's last keynote at Forrester's IT Forum. Marta Foster discussed the transformation of Procter & Gamble's IT organization at her keynote entitled "Bringing IT from the Back Office to the Boardroom."
Procter & Gamble was founded in 1837 with headquarters in Cincinnati and $76.5 Billion annual sales. P&G has 23 billion-dollar brands.
During these 15 years, P&G expanded IT capabilities around the world, resulting in duplication and inefficiency. In 1999, P&G underwent a major re-organization to address some of the inefficiencies from the period of growth. P&G created global business units (e.g., Laundry) with global P&L, market development organizations, and Global Business Services.
At the time, most of the business leaders considered IT to be a cost, but the IT group wanted to become an innovation agent for the company. At a company level, P&G commits to 4%-6% annual growth to its shareholders. IT wanted to find ways to contribute to this top-line growth.
- Unite IT and core Business Services. Current Global Business Services consists of 8500 employees, of which 4000 are IT.
- Drive shared services across Business services.
- Shift thinking from “technologies” to “solutions.”
- Change the back office to become a business driver.
P&G organization: Global Business Units, Market Development Organization, Global Business Services, Corporate Functions. IT was renamed to Information & Decision Solutions (IDS) to reinforce the change in mission and vision.
Three structural drivers: global organization (3 data centers
Three core strategies for how they work
- Run as a business: changed approach from being a cost center (focused only on cost reduction) to (cost, service levels, value creation, service management, “total user experience”) aligned to P&G approach (P/L, market share, sales volume, brand management, consumer benefits).
- New IT strategy aligned to business needs: virtualization (replace physical product mock-ups with virtual reality applications), personalization, and real-time decision-making. (decision cockpits that can be personalized by employees – 20,000 cockpits now, growing to 35,000. Goal is for employee not in manufacturing to have their own cockpit – about 70,000 in total.). Virtual Solutions are now used on 79% of all P&G initiatives. Personalization: pampers.com began as support for one site. 49 countries, 26 million visitors/year.
- Measure for success. For every service, measure client satisfaction, service levels, user sensing, employee survey, scorecards, top-to-top connections with a 10-point scale for each category. Over past 3-4 years, $600M cost savings to date, 16% increase in user satisfaction, client sat at 8.7 (highest ever).
The IDS (IT) team has adopted a “Flow to Work” Design that attempts to breakdown traditional organizational "silos." People are encouraged to work across the organization and take a top-level business view on projects instead of focusing on their functional area or place on the org chart.
The acquisition of Gillette demonstrated some of the recent changes. P&G integrated Gillette and achieved all synergies in 15 months, whereas previous acquisitions of that size have taken 3 years.
- Maintain top-to-bottom focus on mission
- Top management support is essential.
- Communicate, communicate, communicate.
- Commercialization is critical. All new technologies must find a home/purpose in delivering a product to market.
- New models need new skills and capabilities.
P&G's green initiatives
- Reduction of daily paper printing, focus on reducing consumption in facilities.
- P&G has started measuring and reporting on carbon footprint for the company.
- P&G is also involved in green initiatives with key customers (Walmart, Target) with a focus on the reduction of product packaging.
- Reduction in travel: P&G is Cisco’s largest installation of tele-presence rooms. Global travel budgets reduced by 15%, IDS reduced travel by 40%, used a portion of the travel savings to fund video conferencing.