CIO50 2020 #18: Piers Shore, Fonterra Co-operative
Piers Shore says he joined Fonterra “during a time of rapid change”.
The new Fonterra Management Team had recently completed a full review of the dairy Co-op’s business strategy.
Shore started at the dairy Co-operative in January 2019, and by March had commissioned and overseen a current state review of the IT function. He then presented the results back to his peers on the CFO Senior Leadership Team.
The Fonterra Management Team saw IT “as slow, expensive and a roadblock to the business, rather than an enabler of business strategy,” he says, further supporting the outcome of the current state review.
The main problem was that Fonterra’s IT capabilities were “an inch deep and a mile wide”, according to Shore. He and his team recommended an urgent transformation programme, focusing on three key areas: Infrastructure and Operations, Business Partnership, and People and Diversity.
The senior leadership team endorsed the transformation programme and set a clear expectation that IT needed to meet ambitious transformation targets for its overall plan by December 2019.
“We started to work immediately,” he says. “We followed a disciplined approach, set a clear plan and drove relentless execution against that plan.”
Their initial steps included resetting the IT strategy and priorities and communicating these with the business units.
Shore and his team then designed an organisational structure and operating model to support the delivery of the strategy and priorities.
Shore believes strongly in working from an unbiased and data-based starting position. To enable this, he commissioned independent external parties such as A.T. Kearney to assess areas identified in the review.
The focus is on a culture of fact-based decision making throughout the digital business transformation programmes at Fonterra, he says.
“In each specific area, detailed analysis has been conducted, typically independently, to ensure decisions are supported by hard data and analysis,” he says. “These have been transparently shared with stakeholders across the organisation to ensure the continued building of trust.”
Meanwhile, as the transformation continues, substantial change has already been achieved across the following areas: operating model and structure, innovation and lean six sigma; and collaboration and engagement between IT and the business.
All this effort in the short time since Shore’s appointment means the IT operating model and organisational structure is already in place to help support the co-op’s critical objectives.
Lean Six Sigma and innovation
Within the IT Lead Team, we have a team of four senior business partnering roles, that mirror the Fonterra Management Team structure from a regional market perspective. They work closely with the business to identify innovation and digital delivery opportunities while rapidly prototyping these to establish feasibility, says Shore. “This team is already producing significant results.”
One of these is the use of optical recognition utilising scanners on their forklifts to check container numbers and connecting these to the core SAP system. Another is using machine learning to check the accuracy of text on documents around exports.
These applications are significant for Fonterra which is the world’s largest dairy exporter and sells its products to 140 markets across the globe.
Meanwhile, a technical innovation, continuous improvement (Lean Six Sigma) and mobility team was created to deliver innovative solutions through rapid proof of concept and prototyping and continuous improvement activities.
To establish Lean Six Sigma capabilities across Fonterra IT, we partnered with EY to initiate the Lean Six Sigma programme. We handpicked seven members of IT to participate in the programme, says Shore.
“We have already achieved some substantial results, not only absolute financial savings but time savings and significant productivity enhancement,” he states.
Projects pioneered through a Lean Six Sigma framework have resulted in Fonterra reducing the number of unallocated laptops in the warehouse by around 40 per cent and reducing the average time to approve project invoices by 70 per cent.
Communicating during change
Shore has held a raft of technology and digital roles across the globe, mainly in life sciences, prior to joining Fonterra.
Through all these, there is a lesson that has remained with him: the criticality of tailored change management to any transformation programme.
“To be successful, the transformation programme must understand individual needs and translate this into a bespoke personalised message of where the value is for them,” he says.
A programme in a previous organisation demonstrated this very clearly. When he was VP IT at Eli Lilly, he was assigned to lead the creation and deployment of an enterprise mobility strategy focused on improving employee productivity, efficiency and enhanced customer interactions through mobile technology.
This involved replacing laptops with iPads for the entire organisation’s more than 15,000 sales representatives and marketing teams within Eli Lilly.
“Like all programmes of this nature, user acceptance and adoption of the technology is one of the biggest barriers to success,” he notes. “People are always reluctant to change from what they know and the proven ways they do their job from day-to-day.”
“We recognised early on that the value of the programme must be communicated through the lens of each primary stakeholder and how it would help them in their work.”
Each stakeholder in a pan-enterprise change programme has different lenses in terms of how value is articulated.
For example, The CFO and the finance teams saw the value of the lower total cost of operations. The sales representatives saw their time freed up and the benefits of carrying a smaller device, as well as the ability to convey complex scientific data via a multimedia device.
The Eli Lilly marketing teams saw the device gave them instant access to interactive marketing tools and on-demand videos. The legal team saw value in ensuring that version control was maintained by a focus on digital materials. This allowed all technical and medical information provided to customers and clients was the latest.
“This recognition of the need to articulate to everyone a customised personal message of value ensured high levels of adoption and user satisfaction,” says Shore.
“Ultimately this was the difference between a good or mediocre change programme and user experience and a great one.”
Building trust through delivery
The deep industry experience Shore has flows through to a passion for delivery and execution this is a message he reinforces with his team.
To this end, Shore has increased the focus on digital delivery within his Fonterra IT leadership team following a review of IT-related activity across business units.
The aim is to identify inefficient spend that would be more efficient if centralised to IT. This has provided a centralised development capability for digital initiatives across the organisation.
It also helped cement IT as a strategic partner to the business, with an added benefit of beginning to reduce double ups (‘Shadow IT’) without removing the business’ ability to rapidly innovate.
He is a firm believer in building deep, long-lasting relationships with key suppliers and strategic partners. To this end, he has recently overseen a process to review and consolidate vendors across his Infrastructure, End User Compute, Security, and Service Delivery services into a single, long-term strategic partnership with HCL.
This initiative will deliver significant savings across a five-year contract, alongside establishing a partnership that allows significant investment from HCL back into Fonterra. This investment will allow Fonterra to deploy a next-generation set of IT solutions (End User Compute, Mobility, and many others), in a cost-constrained environment.
There are a range of other initiatives underway as part of the transformation programme that IT supports, including:
Smarter pricing, using price guidance, control and risk management tools across the Fonterra’s ingredient business NZMP. The captured benefit to date has already exceeded business case expectations.
Digital front door is a business to business portal, which targets a large global customer base for New Zealand Milk Products (~1,200 buyers). The aim is to transform our ‘customer engagement strategy’ to reduce the workload on sales representatives and allow more customers to self-serve. It will allow our sales teams to focus on higher-value tasks for our customers and new customer acquisition.
Partnership with the business as a cornerstone for IT
Piers believes strongly that deep, long term engagement at all levels between IT and the business is key to ensuring that IT can deliver value. He champions and personally engages with all levels of his business stakeholders and drives his leadership team to do the same.
“The purpose of this engagement is to ensure IT remains aligned to the changes in the business, and that the business remains front and centre as one prime IT stakeholder.”
Early in his time at Fonterra, Shore commissioned a company-wide survey, open to all Fonterra employees to establish a baseline for IT and its services, as well as to understand better how the relationship between IT and the Business was functioning.
Information from this has been used to inform the transformation initiatives, he says. The survey will be held annually and used as a tangible measure by which IT can demonstrate positive progress.
During the strategic reviews for the IT transformation programme, Shore and his team ensured that inputs were taken from a wide range of stakeholders outside the technology function. These inputs were central to the recommendations that they presented to the management team.
Shore says they also created an IT portal that serves as a one-stop-shop for all things IT across Fonterra, going far beyond a typical service portal.
Employees can get everything from personalised updates on service requests through to overview information on IT and the initiatives it is working on, which helps to further build trust between the business and IT, through openness, transparency, and delivery.
He has also worked closely with the business to reshape Fonterra’s data and analytics journey. As a heavily data-driven business, Fonterra has been radically modernising its data estate. He has taken this to the next evolution, with the initiation of a programme of work to substantially improve the Fonterra Data Lake, and to drive deeper, richer partnership with the business. This has led to an operating environment where collaboration on data initiatives is common and positions Fonterra well for an exciting, data-driven journey over the next 12 months.
In summary, Shore says “I am extremely excited about the role IT can play in helping to support the new Fonterra strategy. We are part of the business and we wish to leverage technology to drive great value to our farmer shareholders, stakeholders and Fonterra customers around the world.”