Getting IT to Think Like the Business

A career managing businesses provides a first-time CIO with a fresh

view of IT challenges.
Jean-Marc Chicco, CIO, Lafarge

Straight Talking

Getting IT to Think Like the Business

A career managing businesses provides a first-time CIO with a fresh view of IT challenges.

Jean-Marc Chicco, CIO, Lafarge

Jean-Marc Chicco
jean-marc.chicco@lafarge.com
Jean-Marc Chicco
jean-marc.chicco@lafarge.com
Position
Chief Group ERP Program and
Information Officer
Company
Lafarge SA
Works from
Paris
Professional Background
Before being named CIO of Lafarge,
in 2010, Chicco spent nine years as
the Chief Operating Officer of the
companys 1.6 billion roofing
division and two years leading an
initiative to reduce the companys
working capital. Before joining
Lafarge, he served in various marketing and general management roles at
the auto parts manufacturer Valeo
and at TRW Semiconductors. In
1983, he founded a company that
specialized in the design, production,
and distribution of power electronic
systems.
Education
MBA, University of Texas at Austin
Masters in Engineering,
cole Suprieure d'lectricit
Personal Passions
Trekking, philosophy, social change

When I was asked to take over the CIO job at Lafarge, I said,

Guys, Im not your man. I have spent my career managing

companies, business functions, geographic regions. What do I
know about managing IT?
(I didnt say that I also had some apprehension about seeking
support for IT initiatives from former colleagues on the
business side. Would they tune me out just as I had tuned out
IT people when I was heading up a business division?)
The company had an answer to my misgivings: You know
Lafarge and the business, and that will make a big
difference.
So I decided to test the water what seemed likely to be very
cold water. Today, Im having lots of fun. The IT function is
little by little changing the operations at Lafarge. I believe its
mostly because IT now thinks like the business does.

The Seonyu Footbridge of Peace, Seoul, constructed using a lighter and stronger Lafarge building material called Ductal.

Standardizing Applications
Lafarge is the worldwide leader in building materials
number one in cement and number two in aggregates
and concrete. The company operates in 78 countries and
owns nearly 2,000 industrial sites.
When I started as CIO, I realized that my experience
managing a working capital initiative at Lafarge would
help me demonstrate the value of a business perspective
to the IT group. My assignment to lead that earlier
initiative was as much of a surprise as being offered the
CIO job. Traditionally, a Finance guy was responsible
for managing working capital. But after seeing little
headway in reducing working capital, senior management asked me to bring my business perspective to the
task.
As it turned out, we were able to free up 1 billion in
cash; improving the management of spare parts was one
avenue for achieving this. A cement plant is like a big
machine, with a lot of equipment and lots and lots of
spare parts. In early 2009, when I took over the
program, we had about 650 million of spare parts in
inventory. Working closely with the factories, we
reduced that to about 400 million.
So when I became CIO, I immediately said, Lets ask
the factories how IT is helping them manage their spare
parts. I discovered that across the organization Lafarge
had several ERP templates talking to about seven
Maximo (IBMs asset management software) templates
and about 20 different types of application interfaces.
Even worse, only half of the plants had Maximo. The
other half was waiting for it.
We launched a major program to upgrade and roll out a
common standard for Maximo to more than 160 plants
over the next three years. When the program is
complete, those plants will all work with the same
version of the application, driving further savings and
efficiencies.
The situation with Maximo was typical of the way we
had been going about developing applications. Once we
developed an application, we let anyone at Lafarge
tweak it. The result was many different versions of the
same application. Every time we upgraded an application, we spent a lot of unnecessary time and money on
the effort.
So we decided to mandate standardization for many key
applications, including those for CRM and sales force
effectiveness, HR, and e-purchasing, to mention a few.

Getting Business to Think Like

(Or, at Least, About) IT
One of the big challenges facing a CIO is getting top
managers to pay attention to no, be curious
about IT. If they arent curious (just as I wasnt
three years or four years ago, when I was running
Lafarges roofing business) then its very difficult to
launch big programs that will really change
business performance. Having a CEO and executive board who are curious about technology means
that they will work with the CIO not on all the
details, of course, but on the CIOs major programs.
The more attention they pay to IT, the better they
will understand how IT can help the overall
business.
One of my challenges has been to explain how a
social collaboration platform can change the way
we work together and share knowledge in the
company. Today our platform, called Lafarge Online
Village, is used by close to 5,000 managers,
engineers, commercial staff, and even by the entire
executive committee. Several hundred thematic
groups, such as cement kiln best practices, fuel mix
optimization, and new concrete usages, are active,
fostering intensive lateral teamwork. Explaining the
potential benefits of new technologies like enterprise social media is not easy, yet it will make a step
change in many companies culture effectiveness.

Consolidating Data Centers

But standardization, even when mandated from above,
cannot really work well in a decentralized IT structure.
This was one of the major reasons we embarked on a
very large initiative to consolidate our European data
centers. A limited number of data centers ensures that
there will be a limited number of versions of a given
application.
Lafarge was founded in France in 1833, and it expanded
first to other countries in Europe. In the Americas and
Asia, we have centralized IT operations. But in Europe,
theres a long history of decentralized operations, and
we have never made a concerted effort to upgrade and
update the way we run IT. As a result, Lafarge has been
operating 15 data centers across Europe.
Its difficult when you are spread out this way to have
good governance and optimize costs. As of 2010, these

data centers were operating at a small portion of their

capacity. Clearly we had to do better than that.

Jean-Marc Chicco on. . .

The consolidation of these data centers will end up

taking about three years. In 2011, we consolidated four
of them: one in Spain, two in Paris, and one in Germany.
Were now in the process of consolidating an additional
three or four. A few of the smallest of the existing 15
data centers will be excluded from this initiative the
economics of migration simply arent there for them.
But by the end 2014, most countries in Europe, the
Middle East, and Africa (the EMEA region) will be
served from a dual-site data center in Paris (an activeactive configuration of two data centers).

What IT People Already Know

about Business

Be Prepared
Data-center consolidation is no small task, and I have
some advice to anyone starting out on such an adventure: Do not underestimate the amount of comprehensive and detailed preparation required to succeed.
Initially, we did not budget enough time for the preparation phase and discovered when we were about to start
the project that we were not ready. So we added six
months of preparation time.
During the preparation stage, its crucial to make sure
that the business side its concerns, work patterns,
processes, anything that could impact the success of
migration and consolidation is taken into account.
This also includes risk assessment, identifying the best
time for migration, and understanding the applications
used by the business, how old they are, and what
problems could arise with each one at the time of migration. Ultimately, you need to have a business model that
will help you understand the implications of the ongoing changes to your infrastructure and adjust your plans
accordingly. Your IT assets at the beginning of the
project will not be the same six or twelve months later.
As a result of the European data-center-consolidation
initiative, we believe we will see a reduction of 25
percent in operating costs in about two years. Its more
difficult to quantify the gains from standardization, but
it is obvious that this will make it a lot easier for the
business and a lot cheaper for IT to use and manage key
applications.

We run a large program at Lafarge called

Customer One, which aims to review and
improve our customer relations. As part of this
program, all IT employees spend a lot of time
with customers, something they havent been
used to doing. This experience helps IT people
connect with the marketing and commercial
teams and design better customer-reaching
strategies. The business executives are often
surprised how much the IT professionals know
about our customers and what services theyd
like.

How IT People Can Become

Even More Business Savvy
A program like Customer One is great, but how
do you institutionalize the IT functions
adoption of a more-sophisticated business
perspective? One way is to create career
bridges between IT and the rest of the
business. Were currently taking a couple of
our most promising IT executives and moving
them into business jobs. One of them, for
example, has become a country general
manager. When they return to IT, theyll
understand the business, like I did when I
became CIO not just strategy and
operations, but the business executives
mind-set and perspective. Id like to see the
successor of my successor be a young
executive say, 35 years old who had
already spent at least part of his career on the
business side. I should add that its equally
important for people on the business side to
do a stint in IT so that they will be
sophisticated consumers of IT services, with
an awareness of technologys potential to
transform how business is done.

Data-center consolidation is no small task, and I have some advice to

anyone starting out on such an adventure: Do not underestimate the amount of
comprehensive and detailed preparation required to succeed.

Keep in mind, though, that any medal has two sides, and with the benefits
come increased responsibility for the organization in operating such a
concentrated hub. So service level agreements, disaster recovery plans,
and business continuity scenarios have to be drastically challenged
and regularly tested.

The Absolute City Centre development in Mississauga, Ontario, known colloquially as the "Marilyn Monroe
Towers" for its sinuous curves, was constructed using Lafarge's highly fluid and flowable Agilia concrete.

Keep in mind, though, that any medal has two sides,

and with the benefits come increased responsibility for
the organization in operating such a concentrated hub.
For example, several countries in several time zones
(from the UK to Russia), each with many diverse
applications (from order entry to ticketing at the
weighbridge, or from plant maintenance inspection to
spare parts reordering), are all dependent on the data
center and its surrounding network. In our EMEA data
center, we now have more than 1,000 concurrent users.
So service level agreements, disaster recovery plans,
and business continuity scenarios have to be drastically challenged and regularly tested.

The Trends Supporting Our Vision

I think that a confluence of business and IT trends
supports what we are trying to do at Lafarge. From a
technology perspective, the advent of virtualization
and commodity servers helps a lot with any consolidation effort. From the business point of view, globalization drives centralization and uncovers opportunities
for consolidation, standardization, and large-scale cost
efficiencies.
The structure of the business makes a big difference in
how the business and IT relate to each other. When I
talk to CIOs at other large international and
industrial companies, I find that some still
work in a fully decentralized business
structure. Each business unit does what
it wants and doesnt want to be told
what to do. Its practically impossi Even if standardization of key applications
ble in this kind of environment to
is mandated f rom above, it cant work well in a
standardize and consolidate.

The Takeaways

At Lafarge, we made sure that

the trade-offs between country
ownership and group ownership were clear to everybody.
Working with the business
leaders, we got everybody to
understand how the business
units would continue to maintain
important aspects of their
autonomy while enjoying the
benefits of standardization and
consolidation.

decentralized IT structure.

In preparing to consolidate data centers, pay

attention to the many issues on the business side that
could make or break the eort.
With the benefits of consolidation comes the
requirement of regularly testing your disaster
recovery plans and business continuity
scenarios.

In about three years, we hope to operate

only three data centers: one for the Americas,
one for Asia, and one for EMEA. The only way to
make this vision a reality is to get IT thinking like the
business.

This piece appeared in issue 3 of

CIO Straight Talk magazine.
Read the complete issue at
http://magazine.straighttalkonline.com/issue3/

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