It is not an easy job being the CIO of DLG Group, the ninth largest company in Denmark and the second largest agricultural company in Europe.
“What makes it so challenging is that we are a conglomerate of more than 50 companies. Two-thirds of our business is in farming, but one-third contains all kinds of different activities,” says Mikael Ludvigsen (pictured), CIO and group vice-president at DLG Group.
This also makes the role very different from his previous job as CIO of bioscience company Chr. Hansen.
“In DLG Group all the companies have their own names, logos and brands – they just happen to be owned by us. In some cases we only own 50%,” he says.
The different companies in DLG Group have their own IT systems to a large extent, and before Ludvigsen was appointed as the first group-level CIO two years ago, all companies pretty much ran IT by themselves. One of Ludvigsen’s missions is to harmonise and internationalise the IT systems across the group.
“This is a big challenge. We are trying to organise the change in a way that respects both the group’s intentions and the different companies’ needs and histories. We do not have a one-size-fits-all approach,” he says.
IT systems are not ripped out just for the sake of consolidation – there has to be a strong business case, according to Ludvigsen. For example, DLG Group plans to replace some of the many different enterprise resource planning (ERP) systems.
“You have to be careful when you set up a business process. DLG Group is a very big business, with sales of more than DKK59bn last year,” he says.
Deciding the fate of siloed IT systems
Ludvigsen and the CEOs of the group companies have monthly meetings, and in a few cases they have made a group decision on which IT system should be used across the group.
“But these kinds of decisions are rare. So far, only a few systems, including group risk management and human resources, are affected. We do not want to take away the local ability to do what is best for customers,” he says.
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Ludvigsen says DLG Group’s IT systems will become more focused in the next three years. There will still be different systems in different companies, but not as many as there are presently.
“The reason is that the company as a whole also wants to be more focused. In 2013, we started acting and talking as a group, and this is a tremendous shift for DLG Group. It is quite a task to try to bring all the different companies together in this way.”
Change in business strategy
Another major shift is that DLG Group, for the first time, has started talking about selling off companies to focus on the core businesses, which are farm supply, pre-mix and nutrition, and service and energy.
“We have always done well financially, and it has been perceived as a buffer to have several different companies; if one area is not doing that well, other areas are. But we have changed our strategy,” says Ludvigsen.
DLG Group is already present in more than 20 countries, with its biggest market in Germany. It ventured into China in 2014. The group has about 100 IT staff, with seven located together with Ludvigsen in the Copenhagen-based headquarters and 25 in an IT office in western Denmark.
The rest are dispersed across the different companies, most of them in Germany. Some of the small companies do not have their own IT, and others outsource it. The group has also moved a lot of systems to the cloud.
IT optimisation and data analytics
A third major shift in DLG Group is that the business focus has shifted from turnover to profit, according to Ludvigsen.
“Earlier our goal was growth. Now we want to optimise the company and be more effective and prepare for future growth, and that goes for IT as well. We have small margins, so even a 1% cost-saving means a whole lot.”
We do not have a one-size-fits-all approach to IT
Mikael Ludvigsen, DLG Group
To accomplish this, Ludvigsen focuses on process optimisation, and on making better use of data.
“For example, we have a project in the trading department which buys commodities and sells them to farmers. We try to provide the traders with more real-time data to optimise their decisions, and to compile and report the data after. This is a source of opportunities we have not looked into until now,” he says.
The goal is to extract and analyse all kinds of data in DLG Group and combine it with external data to get a better understanding of the businesses and a better foundation for business decisions.
“The crazy thing is that you sometimes have so much data that you simply do not know how to slice it and dice it. We pick one area at a time, and try to understand what is missing and what we can do better,” says Ludvigsen.
Another big challenge ahead of Ludvigsen is digitisation of the businesses, mainly by building customer portals and internet services.
One example is making it possible for farmers to order grain and feeds on their smartphones.
“The list of possibilities and wishes is really long – there are so many services you can provide to a customer, and we have been a bit behind our competitors when it comes to this, to be honest.”
DLG Group has doubled the budget for customer portals and interaction in 2015, but has chosen to take a step-by-step approach to digitisation rather than addressing it across the whole group at the same time.
“We start in Denmark, then we share the knowledge with our colleagues in Germany and Sweden, and then in the other countries,” says Ludvigsen.
But not all new projects are kicked off in Denmark. “The group approach is not a Danish approach. The best knowledge can come from a company abroad as well. It is important for us to work as a group,” he says.