Whirlpool, the household appliance manufacturer, has grown in the past decade from a $10bn organisation to one...
valued at $18bn. The increase in size has meant its IT was unsuitable as the company expands into emerging markets such as China and India. Cliff Saran reports on how the company is transforming IT from a technology provider to a business strategist role.
Addressing delegates at the Forrester IT Forum Emea in Barcelona, Kevin Summers, global CIO at Whirlpool, said IT needs to innovate.
Kevin Summers heads up the Whirlpool Global Information Systems (GIS) division, which has 350 staff and outsources non-core activities. The group supports 67,000 employees globally, 55,000 networked devices, 28,000 office phones, 7,800 mobile devices and 600 IT systems, as well as SAP.
"IT is an enabler to business," he said. Appliances are generally sold through the retail channel, but that does not mean Whirlpool can ignore the web. "To win online you need to understand how to market, cross-sell and upsell to consumers who do their research on the web." A strong web presence, empowered by IT, can sway consumers' purchasing decision, even if they end up going to the local electrical retailer in the high street to make their purchase.
IT is essential in building a presence in emerging markets. In India and China, as the economy grows, per capita income also grows. "There are more consumers who can buy our products," Summers explains. But an IT infrastructure for a mature market is perhaps overkill in a region that is growing from a small base. "How do you support someone in a growth market that will grow from $500m to $1bn in two years?" For Summers, the answer is mobility and software-as-a-service, to keep operational costs down. "Use mobility rather than deploy a network," he added.
Similarly, in mature markets, the business is beginning to recognise people simply do not update their washing machines as frequently as they used to. The five-year lifespan is now more like 10. So Whirlpool will need to support appliances with a far longer lifetime and IT is set to play an increasingly important role.
Take, for instance, the Smart Grid initiative, to make devices in the home intelligently manage their power consumption. "Appliances use 30% of home energy consumption. If you put a chip in the appliance, it can monitor energy usage and detect parts failures." Without the expertise IT can offer, businesses would find it hard to manage appliances on the Smart Grid. But, as Summers explains, "When you put a chip in an appliance it becomes just like a PC or a mainframe." In other words, it can be managed centrally. "Once the business understood this, they realised we in IT have a role to play," he said.
There are also instances where Summers' IT strategy is driven directly by users. "When people go to work they expect access to wireless networks, smart devices and tablets, driven by the consumer. IT is not in the driving seat."
Now innovation such as systems management on the Smart Grid is all very well, but most IT departments spend their time managing existing systems. Summers is running a multi-year programme to transform IT at Whirlpool.
Summers has been focusing on the return on investment to decide what projects and strategies are worth continuing. He says, "When you start focusing on ROI it is surprising how many good ideas are not great ideas."
Four years, ago GIS managed 500 IT suppliers and a decentralised business, Now there are six strategic suppliers: IBM, Accenture, Cisco, SAP, AT&T and Microsoft. He says modernising IT is a three-phase process. From 2007 to 2010, GIS has been working to get the infrastructure right. So far this has saved $50 million. "From 2011 through to 2015 we will be looking at the value chain to ensure we have the technology to deliver a consistent level of service." Beyond this, Summers plans to evolve the IT function into a global business services function, on par with the likes of Proctor & Gamble, Coca Cola, ExxonMobile and Merck, which often top the benchmark tables for best in class IT service delivery.
Whirlpool has set its strategic suppliers four levels of maturity, which define increasing levels of sophistication, beginning with the execution stage, where the supplier proves it can implement and deploy as per the terms and conditions of the contract. Beyond this, Summers says suppliers move up to the extend phase, then are encouraged to work on business strategy and finally offer innovation. Progress does not occur in a linear fashion. "I expect our key suppliers to work across all four areas, which means projects will be at different levels of maturity in terms of the relationship Whirlpool has with the supplier.
Beyond strategic supplier management and consolidation of suppliers, Summers is starting to take control over software as a service sprawl. Saas is cheap, so business managers can easily circumvent IT. An outage put the spotlight on this practice, which Summers is now addressing. "We had over 100 Saas applications. Someone released a Saas application into production and it went wrong. IT had to take responsibility for the failure." From that experience, he says GIS is now putting in place policies to manage Saas environments.
Whirlpool is also seeing the benefits of a virtualisation strategy, says Summers. "We began virtualising our servers, then applications. Now we can provide secure access to applications from anywhere." This means most of Whirlpool's 30,000 desktop PCs will be moved to a virtual desktop infrastructure over the next five years. Moreover, staff can work on their device of choice, such as an iPad.
Whirlpool is on a journey to mature its IT department and the way it delivers IT to the business, to take on a consultative-like, strategic role within the business. IT is integral to the business strategy - whether it concerns providing a flexible way to enable people to use devices like iPads in a secure way, or supporting intelligence within white goods products. For IT to support such initiatives, it is paramount to move away from day-to-day operational IT. By focusing on a few key suppliers and having a clear end-game, Whirlpool shows how it may be possible to make IT a strategic partner to the business.