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CIO interview: Jo De Vliegher, Hydro
The CIO at Norway's Hydro has established an IT department that allows for regional autonomy and central guidance at the same time
For CIO Jo De Vliegher, the federated IT structure at Norway-based aluminium and renewable energy company Hydro is both a curse and a blessing.
The IT department is dependent on consensus and dialogue, he says, so while it might take longer to make a decision, when people are finally convinced there are few problems with executing it.
In some of his previous workplaces, he says, people often resisted decisions after they had been made. “At Hydro, people bring all their worries to the table before the decision instead of after.”
The basic philosophy behind the federated structure is to ensure that local responsibility is not removed through centralisation. He says: “If you are managing operations in Brazil, for example, you should have sufficient autonomy – all business units have this autonomy. We do not have a culture where everything is decided centrally, and people are supposed to deliver targets in an impossible context. Responsibility and mandate should go hand in hand.”
The main risk De Vliegher sees is that IT solutions and responsibilities can start to diverge across the units, which leads to fragmentation. “That can be quite a challenge for IT and must absolutely be kept under control.”
To try to counteract the drawbacks of the structure while retaining the benefits, Hydro has implemented a virtual IT organisation. “That means that we now have a virtual IT management team, made up of my own hierarchy and key people from the business areas. All the members have their own responsibilities, but we have pretty open and transparent dialogue about what everybody plans.
“The balance is never really set and we regularly need to evaluate if our structure is optimal for our strategy.”
People in the federated areas also provide input to and get guidance from the central IT department. “There is a comprehensive set of rules everybody has to follow. We have relatively clear governance, providing directions with different levels of detail, depending on areas. For example, all areas should have ITIL processes. And if you need to set up new application hosting, we have produced details about how you are to do it.”
There are also rules about which outsourcing partners to use. “We are making a very active move to streamline and reduce the number of vendors. We are also strengthening our ability to manage and control our vendors, which is a benefit for all parties. We are not intending to insource again, but rather consolidate some of the weaker outsourcing arrangements we have made earlier.”
Today, the central IT department consists of about 70 people, and the total number of IT personnel in Hydro is about 200. “If we were to do everything by ourselves, we would probably need 700 people, so we are 70% outsourced,” he says.
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The outsourcing arrangements were in place long before De Vliegher took over as CIO two and a half years ago. “We had a number of severe quality problems a number of years ago, and one of the reasons was that outsourcing had gone too far. We lacked critical competence internally. No vendor can deliver in such a situation. To have too little knowledge yourself and a narrow interface with the vendors is a recipe for disaster.”
Another reason for a revised competence strategy is that Hydro is using cloud-based Office 365 and in-memory database management system SAP Hana. “Since there are not many vendors with real service offerings in these platforms out there, it is natural for us to acquire competence ourselves, and fill gaps with specific consultants rather than package deals.”
Exactly how much will be outsourced in five years’ time is not clear, and the precise percentage is not a goal in itself, according to De Vliegher. “We have spent the last three years building partnerships with vendors we believe in, and we now have a rock-solid partner base. Now we will move forward, and we will see on what path it will be. But we will continue to strengthen our own organisation, and cooperate with a few select vendors. To have key partners in place was one of our key success criteria when we crafted our current IT strategy.”
The strategy states that IT first and foremost should make the company more efficient, safe, informed and up to date, according to De Vliegher. “Key words are hassle-free, quality of service, flexibility and safety. And with safety, we mean not only cyber security and compliance with laws and regulations, but also corruption and human rights – it is not easy to operate in, for example, Brazil.”
To provide the employees with relevant information, Hydro is streamlining the number of information sources. “We are striving for a seamless experience in real-time on all devices. It is important to be up to date in terms of technology – we see great business opportunities here. We have to look at big data, internet of things, augmented reality, and so on. This is necessary if we are to make big leaps forward and become much better,” says De Vliegher.