After a long succession of acquisitions in the past decades, Heineken today is not only a quintessentially Dutch family business but also a complex international company. Heineken is the world’s most international brewer, number one in Europe and number three in the world. The company has more than 160 breweries spread across 70 countries and more than 250 beer and cider brands. Thanks to all the acquisitions, Heineken has built up the necessary experience in successfully integrating local companies. Instead of trying to replace all the IT systems as fast as possible, the secret was to win over the hearts and minds of the companies that it acquired, said former CFO René Hooft Graafland in an interview in Management Scope (fall 20131). The different OpCos (operating companies) often have strong local ties and sensibilities. That also goes for the local IT environment, and the trick is to find the right balance between corporate IT and local business.
Local versus Central
There is no way around it for Heineken either: IT needs to be made simpler and easier to control and costs need to be cut. Heineken therefore wants to work towards IT consolidation, but with end user satisfaction as one of the main drivers. After all, the users in the business are the ones who say whether IT works well and whether systems and services are simple and easy to use. Ron Broeren: “We have more than 4,000 applications worldwide. There are more than 100 variations of SAP production systems in our financial systems, for example, and we have 84 different CRM systems. Even if the IT runs well after a local acquisition, it still all needs to be maintained and linked to the rest of the systems. In the past years, we at corporate IT often thought about things from the angle of the complexity that we created ourselves. The result is a lot of customized IT work, specially developed for Heineken. But Heineken is just a beer producer; we need to be able to purchase IT systems off the shelf where possible. Such as Office365, which has replaced our own e-mail system, for instance, that used to run in our own data centers and for which we had our own in-house specialists. But standard solutions work fine these days. Users even get free storage with them. How simple is that? Because of the switch to Microsoft DynamicsCRM, which of course works seamlessly with Office365, the personnel has gained a lot of time; for example also because our sales people use a tablet computer with our sales app on it. That works much better than one of those old GUIs for SAP that no one really liked. IT can be used to make the end user happier and more productive. More complex exceptions naturally remain on the corporate level, but in general things can be simplified.”
Simplify with Policy
The challenge is to find the right balance. Because of the corporate IT policy, there’s no getting around a certain degree of consolidation for the OpCos. But HEINEKEN also wants to prevent central orders from being issued that the OpCos cannot handle or that end users cannot do their job. “We have the necessary standards in the IT department, but our culture and the local portfolios and market situations determine the degree to which the standards work,” says Broeren. “The guiding principle for consolidation is that the OpCos will gradually move to freedom within a framework.” If Heineken loses the balance in IT, the end users will be the first to suffer. So the solution is to put the end users first. Working towards end user satisfaction and consolidation are two changes that together really shake up the entire provision of IT services. IT needs to and can be better and simpler. One of the best-known quotes by Leonardo da Vinci is “Simplicity is the ultimate sophistication.” That’s why one of the larger consolidation projects was given the name Da Vinci.
‘We wanted a different dialog with end users, in order to give the business added value.’
End User Experience as Starting Point
Change starts with the end user. “The traditional way of outsourcing produces complex spreadsheets about often meaningless KPIs. The end user is the one left holding the baby. IT is now mainly busy with the plumbing and sees the world from the inside out; we never really considered the IT end user a ‘customer’,” says Broeren. “That’s why we wanted a different dialog with end users, in order to give the business added value. End users are also different from five years ago. They have become much more tech savvy, take care of their own IT at home and take their own devices with them to work. So should we just slam shut the company-issued laptops? We want to get away from saying no to everything. We need to find the right balance. Where security is concerned, we’re not a bank; not everyone goes for Bring Your Own, and we must not burden end users with the complexity of our back-end IT.
Many OpCos have their own help desk and we of course already had all kinds of reports, but Heineken lacked an objective source of information about end user satisfaction up to now. In addition, Heineken is a true marketing company with the usual emotion and passion – that’s just part of our culture. It’s important to our people to be able to give feedback. That feedback is also a condition to understanding the extent to which end users in the OpCos benefit, or suffer, from the IT consolidation. We want global IT, with user intimacy.”
Overhauling the Sourcing Policy
The second part of the IT transformation is to update the sourcing policy. In 2012, corporate IT hammered out its new sourcing strategy: a drastic reduction in the number of suppliers and setting up a new ecosystem where the main service providers would be jointly responsibility for the services provided to the end users. “We went from more than a hundred to four main IT service providers. IBM provides the infrastructure in the USA and worldwide application management; T-Systems provides the infrastructure in Europe. The global network is provided by Orange. Workplace management in Europe is centralized at Genpact, which works with ServiceNow.”
“Until now, we mainly used technical IT service management KPIs that ultimately don’t give us much to work with. Those will soon be history. In the new KPIs, a prominent role is reserved for end user satisfaction. That’s new for Orange, IBM, T-Systems and Genpact, which will soon be jointly responsible for that. The existing SLAs will be replaced by an MSA (Master Service Agreement), where end user satisfaction comes first.” But before we’ve reached that point, a baseline assessment will be made of the current satisfaction at the OpCos in Europe. That assessment will soon serve as the starting point for all kinds of policies or penalties; it’s separate from the existing contracts.
On top of that, the user satisfaction assessment will be made with ITsat, a Giarte tool for detailed assessment and reporting. “The majority of the countries are already on board, so now we can track end users per OpCo. The local IT managers naturally wondered why corporate IT wanted to enter into dialog with ‘their’ local end users. ITsat is indeed relentless in making the quality of IT services transparent. That also means overcoming some resistance, so a consistent and constant dialog is necessary where you continually show that it’s a conviction, not a game. Everyone understands that the goal is to make the service providers accountable ultimately.”
Support over Control
The baseline and follow-up assessments do not immediately lead to a minimum required performance score for T-Systems and Genpact in the transition. That would only put them on the defensive about the score; the main thing is the context of performance and what can be learned to make targeted improvements. “The second guiding principle is therefore support over control. We held workshops (see text box below ‘XLA workshop’ where we took a good look at the movements in these assessments: there is almost always a drop in satisfaction after a migration. No problem; it’s a learning curve, which should eventually be passed. It needs to be followed by recovery and improvement compared with the baseline. If a local service desk has gone to Genpact, we eventually want to see an improvement in end user satisfaction. OpCos can also benefit from this information. It’s also an early warning system: we don’t want our suppliers to pare down their services. Satisfaction is leading.”
New Playing Field for IT
The necessary time was taken to get the OpCos and the service providers on board in the IT transformation process. Broeren: “It’s the decision of corporate IT to change how things are done, which makes you as the senior management accountable to the OpCos. It’s not as if the managing directors of the OpCos ordered the consolidation of the IT landscape.” There’s a new playing field for the IT function, says Broeren: “We need to outsource the plumbing and focus on helping the business. If corporate IT fails to make this digital transformation a success, our right to exist will come into question. That would make us not much more than a service provider that sells commodities at the lowest cost possible.”
XLA Workshop: All for One Goal
It takes more than an extra KPI to make user satisfaction leading. Heineken wanted T-Systems and Genpact to be intrinsically motivated as well. At two XLA workshops (Xperience Level Agreement), not only was it decided how to assess and report before, during and after transition to the future mode of operation, but they also decided how Heineken would gauge the achievement of results. The agreement was that an upward trend is more important than the absolute target value; the assessment data forms the input for continuous service improvement (part of ITIL). Penalties have also been done away with. Determining the cause of dissatisfaction and improving the service process is the guiding principle: openness is the condition for constant progression. To Heineken, XLA is the same as an MSA (Master Service Agreement). For Europe, a geographic scorecard is in the making that can zoom right in on OpCos, sites and even the feedback from individual users at a site. Static scorecards are not used.