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In November 2014, Mads Madsbjerg Hansen was appointed CIO at global engineering company FLSmidth. His to-do list read: Get to know the company and its people; adjust the IT strategy where needed; change the IT organisation to fit the adjusted strategy.
“I began by travelling and speaking to key stakeholders around the globe, and I spent a lot of time with my employees. It is all about the people, not about technology. I have lots of smart people who are experts on technology, and the technology is the same everywhere – but people and cultures are not,” says Madsbjerg Hansen.
FLSmidth, which was founded in Denmark in 1882, now has 15,000 employees spread over 50 countries. “Earlier, FLSmidth wanted to integrate and standardise all IT. But when you are present in lots of different markets which work in different ways, you also need some flexibility,” says, Madsbjerg Hansen.
The people Madsbjerg Hansen met during his first months as CIO had different opinions as both standardisation and flexibility have pros and cons. “We decided on changing our standardisation ambitions somewhat: We no longer want to standardise everything, but instead standardise where it gives clear business benefits. That was the biggest strategic change – we did not have to change much of the rest of the IT strategy, since IT operations were running pretty well.”
Madsbjerg Hansen then changed the IT organisation to fit the adjusted strategy. “We have about 300 people in IT, of which 75% are located in India. Most of the rest are in Denmark, but there are others scattered around the globe,” he says.
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Outourced and cloud IT
FLSmidth has nearly all its IT in-house, and Madsbjerg Hansen does not see any reasons to change this. “Historically, it has been a bit of a religion not to outsource, but I do not really care if we do it in-house or not – I just want it as good and cheap as possible. And since I already have most of my IT staff in India, it is cheap and they are doing a really good job.”
Madsbjerg Hansen does use outsourcing to handle work load peaks and to get some expert help, however. “And we are using the cloud where it makes sense. For example, we are moving to Microsoft Office 365, since we had a business case for doing so. But cloud can be legally complicated when you are a global company, since different countries have different laws.”
Over the past 15 to 20 years, FLSmidth has acquired lots of companies, which means the IT applications across the company are very broad, according to Madsbjerg Hansen. “The challenge when moving people to the same IT platform is not technological – the big challenge is the fact that it means that they have to adopt the same way of doing their jobs,” he says.
Under the overhauled IT strategy, Madsbjerg Hansen only replaces an IT application when there is a strong business case for it. “IT should not push systems down people’s throats. We are working with pull instead, and the businesses will get new IT systems when they need them to meet a business objective.”
FLSmidth has also decided to move towards two global enterprise resource planning (ERP) systems, rather than a single one. “Earlier, the ambition was that the single ERP system would manage everything in every corner of the globe, and dictate how things should be done. But now we are respecting the fact that we have very different business needs, and that forcing everybody to work in exactly the same way would not be very efficient,” says Madsbjerg Hansen.
“IT should not push systems down people’s throats. We are working with pull instead, and the businesses will get new IT systems when they need them to meet a business objective”
Mads Madsbjerg Hansen, FLSmidth
In three to five years’ time, most of FLSmidth will be using one of the two global ERP systems, according to the CIO. “But there will always be some small systems left around the globe. If, for example, we have a small unit with 23 people who have a system that works for them, there might be no need for them to have a global solution.”
Part of the new IT strategy is also to work with lots of small projects instead of a few large ones. “Theoretically, this is less effective, but big projects always tend to get so complex and expensive that I believe this is the best strategy. And the world is dynamic, which means you end up building for the past if you embark on big projects – the business will have moved another way while you were working.”
Collaboration a key IT function
FLSmidth’s business is to supply the minerals and cement industries globally with advanced services, equipment and complete processing plants. “It would be wrong to say that IT is not important for the company, since many of our employees sit in front of their computers all day long. But in our industry, IT does not give us a strategic advantage. IT has to be there, and function, but I cannot make a new IT system that will increase our revenue dramatically. So IT is more an enabler of efficient collaboration across the company than a driver for us,” says Madsbjerg Hansen.
Therefore, FLSmidth’s most important IT systems are those that enable the employees to collaborate, he says. “Our engineers around the globe work together through our engineering tools, ERP systems, Lync and email.”
Nearly all of FLSmidth’s IT systems are off-the-shelf. “The things we put together for our customers are unique, but we can use best practices from other companies, and often it is cheaper to go for off-the-shelf solutions.”
One of Madsbjerg Hansen’s biggest challenges going forward is to try to make the engineers in the company content with IT solutions that are good enough, rather than perfect. “Our engineers have a high sense of quality and like very, very good solutions with lots of advanced functionality, and those kinds of solutions cost a lot of time and money. So one of the areas we are strengthening is soft change management. It is important to be open and honest in the discussions, and to not promise people things they will not get.”