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The biggest challenge ahead of Torben Høeg Bonde, CIO of Danish wind energy company Vestas, is to turn an enterprise focused on manufacturing and selling hardware into a software business.
The rationale for the proposed change is that Vestas’s customers are demanding more offerings based on IT services, according to Høeg Bonde. He says customers want information that enables them to predict how much electricity they can sell, for example.
“We manufacture, sell, install and service wind turbines, and our customers want added value on top,” he says.
The first problem Høeg Bonde faces on his mission to turn Vestas into a software company is how to create consensus in the firm.
“I have to be a champion for the shift and get people to realise it is a good thing. Then we have to change the whole setup of the company and recruit people who think differently,” he says.
To facilitate the transformation, it is also necessary to integrate IT into Vestas’s different departments, according to Høeg Bonde. To aid this, he has re-organised the IT department into four business-centred verticals.
He says these are: “Supply, which encompasses manufacturing, sourcing, transport, and planning; demand, which looks after e-products and IT offerings; enabling functions, for example finance; and finally a generic area – handling PCs, telephony and other things used across the value chains.”
The structure has transformed how IT works, says Høeg Bonde. “It has meant outsourcing, hiring and moving people around. All governance and processes have to reflect the new way of working. It has required a lot of communication to get people to understand the new processes and how they create value.”
A responsive IT split
Splitting IT into four areas makes it easier to be responsive to business needs, according to Høeg Bonde.
“We will be more aligned with the strategy of the different areas, and we will be able to go out to our customers with more robust offers based on IT,” he says.
This is not the first big change Høeg Bonde has made at the IT department.
“I have worked with continuous transformations throughout my 16 years at Vestas. First we built up capacity to meet the demands of the market when we went from being a small Danish business to a global company, and then we started to outsource and offshore IT,” says Høeg Bonde.
The IT department had 850 employees when it was at its largest in 2010. Today it has less than 300 people.
“Outsourcing gives us the ability to better adjust to changing market demands”
Torben Høeg Bonde, Vestas
“Most of us are located in Denmark, since we have to be close to the business leadership. Application development, management and support are outsourced, as well as datacentres and communications. So our IT department is mostly orchestrating IT,” says Høeg Bonde.
There were several reasons behind the decision to outsource, but the main one was to create value, according to Høeg Bonde.
“If you have service deployment in your own organisation, you focus a lot on that. For example, recently we had an incident when some services were down in the datacentres.
“Before we outsourced, we were required to fix the problem, but now we can concentrate on communications and business impact, while our supplier runs around trying to get the services up again,” he says.
Outsourcing increases flexibility
Another important benefit Høeg Bonde sees with outsourcing is the increased flexibility. “There are a lot of fluctuations in our market, and outsourcing gives us the ability to better adjust to changing market demands.”
Cost is not a major reason why the company outsourced, according to Høeg Bonde. “If it can help us save money, it is just a bonus.”
The outsourcing process also provided lessons for Høeg Bonde, the most important being not to move too fast.
“When you have signed the contracts, it is hard to make changes. We outsourced tasks and then it turned out our people had done more than our contracted outsourcing partners,” he says.
Høeg Bonde has put a lot of effort into change management during the transformations, and he believes transparency is paramount.
“We try to involve as many people in the organisation as possible – but when it comes to outsourcing that can be a bit tricky, since people are losing their jobs,” he says.
“My style of working is that I sit in an open office, together with the employees, to show that I am part of the team and they can come and talk to me.”
Once a month, Høeg Bonde and a colleague from the management team invite an employee to an informal session to ask questions and debate.
“We call it ‘meet the management’. It also gives me a good insight into what I have to focus on. Communications really does the trick, but you can never do enough in this area – people always want more of it,” he says.
The three most important IT projects going on right now are consolidating enterprise resource planning (ERP) systems to a single SAP system; developing an online platform where customers can engage with Vestas; and creating a spare parts e-commerce system.
“These are very significant and high-profile projects with a lot of money involved,” say Høeg Bonde.
“The IT department is also improving how our documentation is presented to our customers, and we are working on giving Vestas’ employees a better user experience.”
Read more about Nordic CIOs
- Fiskars CIO Frans Westerlund tells Computer Weekly about the challenges faced by IT when a business instigates a major strategic transformation.
- The IT department at Swedish telco Hi3G is on a mission to a utopian planet, with Olivier Smith at the controls.
- Mikko Vastela, the CIO of newly formed Nordic insurance company LähiTapiola, tells Computer Weekly about the importance of informing employees and stakeholders what IT is doing.
- ManpowerGroup Nordic CIO Anna Berggren talks about the importance of IT to the recruitment firm and the different approaches she takes to managing it.
- When the Swedish government introduced competition to the pharmaceuticals sector in 2009, the former monopoly faced a major IT transformation.