Despite being a ubiquitous brand worldwide, food production giant HJ Heinz is gearing up to expand its international...
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presence further – and a huge technology modernisation programme encompassing 23 countries is expected to be a core part of that process.
The executive responsible for IT at Heinz is Leandro Balbinot, a veteran who had previously run technology at Renner, one of Brazil’s largest retail chains, and beverages company AmBev.
Following a five-month spell as a consultant at one of Heinz's owners, investment firm 3G Capital, he set out to re-energise the agenda of the company’s lean 190-strong global tech team.
After joining Heinz as global chief information officer (CIO) in June last year, Balbinot had the remit of “preparing the company to be more efficient and ready for global expansion”.
In practice, this meant accelerating projects that, according to the IT chief, were running at a “very low pace”, standardising platforms and innovating in areas “where it makes sense”.
Balbinot is a proponent of buying off the shelf and standardising, so the first and largest project to tackle was the global roll-out of the latest version of SAP’s enterprise resource planning (ERP) suite.
He says the SAP roll-out had been going on for years and had been completed in only a few countries, so the decision was made to change the plan completely and start a faster implementation of the system in the company’s biggest markets.
“At the time I joined, only 30% of company revenues were covered by the system,” says Balbinot. “We then decided to do a very fast implementation for SAP to the rest of the company and, during the last month, we have been rolling it out in the UK, to Russia and this month we will be implementing it in the US as well, so our three biggest markets.
“With that, we are going to be covering more than 80% of the revenues of the company – and that’s the main thing we have focused on, because with these systems, we believe we can really implement best practices and be more efficient in all the countries we operate in.”
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The SAP platform replaces myriad set-ups, including industry-specific ERP systems and older versions of SAP – which is the case in the UK, where version 4.2 had been running. Most of Heinz’s big markets will have the new ERP platform up and running this year, including China.
Another area where Heinz has chosen to remove bespoke and older systems and standardise is human resources (HR). Balbinot says Heinz had a “very different standard” for HR in every country and wanted to replace the previous portfolio – which included platforms such as PeopleSoft – with cloud-based application WorkDay.
“We are really looking seriously at cloud solutions for most of the things we’re implementing for now,” he says. “Workday is cloud-based, very dynamic and fast to implement.”
Another example of Heinz using cloud-based systems for core areas is the implementation of Salesforce.com across its FoodService operation in most countries. This is already in place in the UK and Canada and the company is in the process of introducing it to the US, China, and all Asia-Pacific operations, including Singapore and Australia.
‘Shopping mall of global solutions’
Heinz also uses the SAP-owned Ariba cloud-based procurement system, which allows streamlining of sourcing and the purchase of raw and indirect materials through networks of more than a million suppliers.
“We are working very hard to create what we call our ‘shopping mall of global solutions’,” says Balbinot. “So for the areas where we see a gap, we are bringing in solutions to be rolled out globally. We did that with Salesforce and SAP, so standard market solutions, and something working well in a country, we will consider that as a global solution as well.”
As well as driving standardisation across the large platforms Heinz uses, the CIO is simplifying the company’s hardware infrastructure.
“We want to create something that is efficient and doesn’t need administration,” he says. “We also want to be able to duplicate our infrastructure very quickly if we need it.”
The cloud computing approach seen in the current big roll-outs is an instrumental part of Balbinot’s plan to simplify infrastructure. This includes an upcoming global implementation of Microsoft Office 365, which will be ready in two months’ time.
Datacentre consolidation is also part of that exercise. The company has one such facility in Europe and two in North America, one in Brazil and one in India, as well as various other small, local datacentres dotted around the world.
According to Balbinot, the aim is to scale that down to three locations by the middle of this year. The sites will be managed by Xerox.
Dealing with business areas
Reflecting on the job of changing work processes by introducing such a vast array of new IT systems, Balbinot concedes that the main challenge relates to the fact that Heinz is spread across multiple regions, all of which had their own way of doing things.
“The main challenge when we talk to the different businesses in different countries is to adhere to single standard processes,” he says. “And we are doing pretty well by convincing the businesses that, for most processes in a company, being centred is the best way of doing it.
“We actually are very lucky at times that, because of this transformation, people are very open for change and they are accepting that in a much better way, maybe better than before. But it’s always tricky because people tend to be proud about their own processes instead of looking at the results and focusing on how a person can bring better results than today.
“Probably they are afraid because they are in a comfort zone of how they work, and they don’t know the new processes yet. So it’s a combination of things, as well as human nature, but so far we have been lucky because if you talk about the results and what you can achieve, people start to accept things.”
Of course we have to measure IT internally because that’s the way we measure the quality of our suppliers, but I believe much more in bringing IT to the reality of the business: reliability, disruption time, the quality of the services
Leandro Balbinot, HJ Heinz
In aiming to meet the expectations of the business and demonstrate the value of IT, Balbinot stresses that involving IT in the overall business strategy, as well as driving transparency, is key.
“We normally don’t have targets, such as ‘we have to implement the product by this date’ in our area,” he says. “Instead, we have to achieve the results that this project is bringing and that helps IT to be more connected and more interested about what the business wants to do.
“I think sharing targets with the business is very important, so you’re going to see very few targets here in IT that are specifically intended for IT. For instance, we created a KPI [key performance indicator] called IT reliability, which basically measures how many days in a month we have with no disruption at all in the business.
“It doesn’t matter if it’s a five-minute or a month’s disruption, it’s considered as a disruption, so we want to have a smooth delivery from IT and it’s a KPI that the business understands very well – we don’t need to be sharing measures they never understand.”
The same approach goes for charging models. Contrary to many of his peers, Balbinot believes charging back to the business unit in a service fashion is not is a good thing to do because it creates a burden that can be hard to manage.
“I don’t believe in charging every cost to the business, like a services company would do,” he says. “I do believe in visibility – being able to track and share [expenditure] with every area of the business in every country, so how much they are making IT work for them, how much IT is investing for them and what’s the result of that.
“So I think that visibility is key, and that is what we are implementing here. Of course, we have to measure IT internally because that’s the way we measure the quality of our suppliers, but I believe much more in bringing IT to the reality of the business: reliability, disruption time, quality of services. For me, this is more important than just the servicing levels that might be agreed on.
“Normally, it is difficult for the business to understand what service levels are about and how they are linked to the services they are receiving. We do have a lot of targets and measurements to guarantee we are delivering according to business needs, but I present all that in a way the business understands. “
Visibility is key, and that is what we are implementing here
Leandro Balbinot, HJ Heinz
The CIO is equally pragmatic about the emergence of shadow IT and business areas procuring their own IT systems. Having a centralised budget also helps to mitigate that issue, says Balbinot, because IT needs to approve every technology-related purchase and that helps his team to understand whether someone is looking at technology solutions in isolation and also to ensure that no one creates a shadow IT unit.
“Of course, I understand everyone wants to contribute [to IT decisions], especially now that technology is so easily available in the market, and that’s fine – so long as we are involved in the process and that we agree,” he says. “But normally, [business units] bring ideas to us to understand if it makes sense or not, before buying anything.
“That’s another good thing about having standard solutions. Because we are implementing SAP worldwide, this system ensures that every IT acquisition pushed through the system goes through us for approval. If we didn’t have the appropriate system, it would be very complex to do so.”
The innovation job
Balbinot intends to finish the transformation sooner rather than later, but it is a big job. With so many key projects on the go, does the company’s tech team still have bandwidth to focus on IT innovation?
“Our focus is very much on the job to be done and how can we innovate on the job is part of it,” he says. “An example is [the roll-out of ] Office 365. Of course we are doing it to be more efficient and reduce cost, but also to bring a lot of innovation to our business around collaboration and integration. People can start working via our telepresence rooms and drive so much more productivity.
“Innovation is not only about innovation in the marketplace, but about driving it internally. We focus a lot on the way we do things and not necessarily looking at what’s brand new in the market in terms of IT. We don’t like to necessarily be an early adopter.”
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Another example of that focus on driving innovation internally is the company’s efforts around big data. Balbinot says Heinz is looking seriously at advanced analytics, “not because it is hot in the market, just because it makes sense from a business perspective”.
He adds: “We are talking to the companies that are established in the field and some niche businesses as well, to understand how we can, for instance, integrate the data we have on sales and link that to the market share information we have and social feedback from our ads and integrate that in a way that enables us to get even more market insight, such as why we are over-selling in certain areas, is our advertising better than expected or is it because the price is very competitive, and so on.”
The big data project at Heinz was initiated by the technology team and is being delivered in parts, but not yet at a global level.
“We started with a project at the beginning of the year to create a foundation that ensures access to the data from the internet, as well as other sources, bring that in, consolidate it and create ‘cubes’,” says Balbinot.
“With these cubes, now we’re really going to start providing the data dimensions that the business needs but focusing on aggregating the data, consolidating it, cleaning it and not necessarily looking at how the interface will be and how nice the reports or dashboards look like – that’s secondary for us. The most important thing is to have access to the data and that’s what we are focusing on right now.”
Looking back at what has been delivered so far, Balbinot can say the results of the IT transformation he is leading at Heinz build on experience – the company’s as well as his own.
“There is much more leverage on things that we know – for instance, we know that SAP can be very dangerous if it’s not well implemented,” he says. “We are also in a moment of transforming and getting ready to grow and to be scalable. So, personally, it helps a lot to do things much faster than I have done in the past. And the movement of the company also helps a lot.”
Improving IT is a continuous process, says Balbinot, but the important processes and systems at Heinz should be standardised by the end of 2015. By that time, all the company’s main markets will be SAP-ready, with Salesforce available in most countries.
However, the transformation programme should be complete by the end of 2018. So how does Balbinot plan to keep his team motivated after all that work is finished?
“If they are connected to the business targets, they will always be excited about what project we have next,” he says. “Growing as we’re going to grow, this will surely help us keep people motivated because there will always be interesting work around growth.”