In an interview, Filippo Passerini spoke about the changes wrought by him at P&G and how he transformed P&G and the company transformed him.This story was published in the Dataquest Magazine.
One of our strategies has been to anticipate the future, to stay ahead of the change
In his 27 years at P&G, one thing has been constant for Filippo Passerini; his quench for thirst and his pursuit of excellence. And in these years, he has held a series of leadership positions the UK, Greece, Italy, the U.S., Latin America and Turkey before taking the leadership of P&G’s Global Business Services (GBS) organization.
GBS is responsible for providing key business support and solutions to 138,000 P&G employees working in over 80 countries worldwide. In addition to IT, the services provided include finance and accounting, employee services, strategic sourcing, facilities management and consumer relations.
Hailing from the ancient and wondrous city of Rome, Passerini has earned his Doctorate in Statistics & Operating Research. On being asked about his passion, pat he replies, “I am passionate about learning, as I believe you always can do better or do more. Lessons can be learned in every aspect of your life+. In my youth, I used to play competitive chess. This taught me that you can only think so long; at some point, you need to move. This lesson is extremely relevant to the work we do in GBS. In a world that is accelerating faster than ever before, we must be able to develop our strategies — and act — quickly.” Little wonder, till date, GBS already has saved the company more than $600 million through shared services alone.
Climbing his way through the corporate world, Passerini is an avid mountaineer in his real life as well. He has scaled three peaks higher than 15,000 feet. He lives with his family in the US, working in P&G’s Cincinnati headquarters. In an extensive interaction with Dataquest, Passerini talks about the various issues that are critical to success of a company that was founded way back in 1837 and currently has 23 brands that have more than $1 billion in net annual sales and another 18 have sales between $500 million and $1 billion. Excerpts.
How is IT used to string together a mammoth enterprise like P&G that spreads across over 80 countries and having an employee base of over 138,000?
When we set out on our journey we had a clear IT vision. We wanted to bring the back office to the boardroom – leveraging IT as a driver for business transformation and growth. The approach we took was global, holistic and founded on partnership. First, we looked beyond IT, positioning ourselves as the “go to” organization for all key business services. Today, our Global Business Services organization covers over 85 services in the areas of employee services, finance and accounting, strategic sourcing, facilities management and consumer relations too. Secondly, we decided early to globalize our operations. Just as an indicator we standardized 72 systems in 70 markets in just 3 years and focused work in 6 global service and data centers. Finally, we reached out to grow relationships with strategic partners who support us in our work. Our IT partnership with HP is a great example here. Together, we have not only achieved above-projection cost savings with better services, we have also been able to tap into HP’s innovation capabilities and become much more agile.
In this way, we have established ourselves as one of the four core pillars of P&G’s business supporting P&G employees around the globe.
What are the key learnings?
Let me highlight the three lessons that stand out the most:. First, it really helps to run as a business – from the outset we looked at ourselves not as a support service, but as a business. By talking, and operating, as a business we earned a seat at the business table. Second, you really do get what you measure – we have established indicators to measure service levels and cost across all of our service lines and everyone (including our partners) is accountable to a “Scorecard”… against which we track progress. This helped us drive accountability across the organization and focus our intent. Third, focus is priceless – the clarity of our vision at the outset combined with clear priorities and measures established year on year, has proved a powerful driver at each and every stage in our evolution. As we continue to evolve we continue to learn too. At the end of the day, it is that learning that drives innovation forward.
P&G has outsourced different functions, and infrastructure management contract with HP; a $400 million, 10-year deal with IBM and HR services; a five-year agreement with Jones Lang LaSalle to handle P&G’s facilities managements; a five-year deal with Sykes Enterprises to outsource customer care, CRM applications and global fulfillment services. What has been the vision behind outsourcing these functions?
In 2002, we recognized that, as well as cost savings, our Global Business Services model needed to grow in two significant ways; namely, to grow new business building capabilities to create new value creating services. And, to create greater agility within our organization structure putting even greater focus on upstream work. Flexibility and agility became key factors.
Our decision to outsource to partners offered us a strong foundation for this growth. As I see it, outsourcing adds value in a number of ways. It opens up opportunities to reduce costs further. It allows for improvements in overall service quality, as we share and grow expertise with our partners. And, at a more strategic level – which is what drove us – it offers flexibility and agility. Our work to integrate Gillette, following the merger in 2005 offers a great example. In collaboration with our IT partners, we put 700 people on the job of systems integration and had them up and running in two weeks. This kind of agility was what we were really reaching for and have now found.
To manage multiple vendors is a complex problem and you have set up a team of over 100 people to manage these relationships. How do you cope up with this complexity and how has been the evolution of the process that you started at P&G?
We have a strong governance model in place in which we work in close partnership with all of our strategic suppliers. Measurement plays an important role. Take the example of HP. We have established customer satisfaction measures and goals, and measure these in every business unit, in every market where P&G competes. By tracking progress against these measures every quarter, we know what our consumers are telling us – and we know when and where we have issues. This helps us all to stay focused on the indicators that really count.
The nature of our partnership is important too. We value our suppliers as real business partners and, at each level of the organization, P&G managers stay connected to their counterparts. We meet regularly and use the measures to chart our progress. It’s a collaborative model.
Over the past years, P&G has acquired and merged different companies, how are the disparate systems (namely IT ones) harmonized? Is there a standard procedure? What are the learnings that you would like to share with us?
This is a great question as it really touches on how IT can provide a strong foundation for business growth: enabling the business to scale up or down as necessary, driving synergies and supporting new business building capabilities.
Our acquisition of Gillette in 2005 offers an interesting case study. At the time, P&G saw synergy savings of $1.2bn per year, which translated to $100m per month, or $4m per day. Working with our partners we were able to complete the integration in just 15 months. This process would easily have taken three to four years under a more conventional set-up.
What we learnt was that having an organization that brought together all key business services proved a “structure for success”. Key areas like IT, employee services and facilities management were already together in the same organization and could easily connect. We didn’t need to get to know each other – we could move ahead and use our networks to make the integration happen.
The other thing we learnt was the power of our outsourcing partnerships. To achieve what we did would have required a headcount of 700 additional people. We didn’t have these resources in house and it would have been impossible to hire, train and effectively establish this number of people in a short timeframe. But, together with our service partners, we were able to put together a first class team within a matter of weeks.
This is what I see as vital in today’s model. The ability to be flexible, to augment or reduce as our organization requires. It’s an incredibly powerful tool.
How do you manage change at P&G, how strategic is IT to the change management process considering that the company has a history that goes back to the nineteenth century?
Change management is something that is embedded into our culture at P&G… after all we have been at it for 170 years. Through these years, change has been our constant and, if growth rates are a guide, we have managed pretty well.
In the IT area, one of our strategies has been to strive to anticipate the future – so that we stay ahead of the change. Concretely, this means tracking emerging business trends and working to manage them pro-actively. To take one example, when we first saw the trend for personalization, we asked ourselves how this would impact on knowledge management. This led us to build personalized decision tools that we have rolled out to executives across the company. So, both on the screen and on the handheld executives can get the business critical data they need @ their fingertips. This has cut down the production of over 20,000 individually made reports. In addition, we have increased accuracy as all data feeds off a consistent data set.
You have recently gone in for Cisco’s Telepresence Solution, what was the driving factor behind it? And what are the proposed gains by using the technology?
The driving factor behind our rollout of Cisco’s Telepresence technology was collaboration. We wanted to support the drive for stronger, faster, easier global collaboration. What this technology does is to take video conferencing to a whole new level, so you really can “be” with your colleagues on the other side of the globe, without ever having to leave home.
We are rolling out more than 40 studios in P&G offices around the globe. While we are just over halfway complete, the initial feedback has been excellent, far exceeding our expectations. People at all levels are using the studios to connect at the touch of a button – saving travel time, and getting connected easily and fast..
We have designed all our Telepresence studios in a similar way too so wherever you are in the world you get that “same room” feeling too.
How do you handle innovation at P&G? What is P&G’s innovation mantra?
Our innovation mantra, coined by our CEO, AG Lafley, is that “the consumer is boss”. We see innovation as the match between what the consumer wants and what is technologically possible.
This mantra applies to our approach to IT innovation too. It’s all about finding solutions for the needs of our business customers and consumers. This is one of the reasons why we renamed the function “Information Decision Solutions”. We want to make what’s needed happen.
P&G is also investing in analytical software and predictive modeling tools to help its business leaders better understand the markets it serves. What are the challenges in designing a robust BI solution? Are you going for an in-house or off-the-shelf solution?
Business analytics is an area where we have invested. Our vision is to use innovative technologies to help us work smarter, faster and more efficiently. Our approach tends to be a combined one… so we find the right technology and then we work with our IT partners to make it work for us.
The two key challenges we faced in the business analytics area have been data reliability and systems compatibility. We needed to ensure that the data from a variety of sources could be easily accessed and make sure that the data set at the base was really reliable. Together with our partners at BEA systems, we worked through these.
You have also used IT for shortening the product development lifecycle by using a digital workflow system that creates “a virtual mock-up.” How did the idea come across and what other innovations are being currently tested and tried at P&G?
The starting point for our work on virtualization was the business need to speed up the innovation process. Flowing from this, we looked at how we could bring modeling and virtualization technologies to enable the product development process. So we can test products sooner and innovate better and faster.
While I obviously cannot share too many details of what we are currently testing, what I can say is that every new idea has its genesis in a proven business need. Going back to our innovation mantra… our “business consumer is our boss”.
Are you a marketer as well, in the sense, selling the latest technology solutions to the company and convincing them to invest? How hard or easy is it for you to do this?
Communications is an important part of my job certainly. Like everyone in our organization, I need to be able to clearly explain the value of what we are bringing to the business table and justify it based on sound data and analysis. So yes, in this sense I am a marketer.
One of the interesting things that we have done at P&G is to use marketing skills to help explain the services we offer. We focus on communicating the benefits of what we are delivering. One good example was our “Get Back 30” campaign, which was all about encouraging people to make the most of the technology they already have on their workstation. We created tips cards, to offer people easy ways to save time. This may sound small, but the impact has been tremendous … as it raised awareness of existing tools to save time and grow personal productivity.
How do you think has the role of a CIO has evolved over the past many years?In the past, the tendency was to see the CIO role solely as a business support function. This perception has certainly changed. Today, the potential for IT to drive business value and growth is increasingly recognized. P&G is a good example. Today, our Global Business Service function is one of the four pillars of the company’s organization. It’s a good indicator that we have driven a transformation from the back office to the boardroom.