Long the face of Big Tobacco, Phillip Morris International (PMI) is leaning into IT to remain relevant in an industry undergoing disruption. With light shed on its dark history of concealing scientific evidence of the health impacts of smoking, cigarette smoking has reached its lowest levels among adults in decades, spurring the $133 billion company to consolidate its corporate IT and customer-facing channels into one global IT function as part of a push to become a more vertically integrated company.\nTo facilitate this shift, CTO Michael Voegele is modernizing legacy systems and processes with cloud services and agile delivery models. Voegele, who was hired away from Adidas Group in early 2019 to orchestrate PMI\u2019s tech overhaul, is also reskilling employees and hiring key tech talent to implement and manage these changes.\n[ Be sure to learn the secrets of highly effective digital transformations \u2014 and beware the 7 myths of digital transformation. | Get the latest on digital transformation by signing up for our CIO Leader newsletters. ]\nThe transformation is hyper-focused on creating an omnichannel experience for consumers of the company\u2019s e-cigarettes, commonly known as \u201cvapes,\u201d a smoke-free tobacco product.\nDigital transformations have received greater urgency during the coronavirus pandemic as companies rush to adapt their business models to the New Normal. More than 80 percent of companies are accelerating their digital transformations in response to COVID-19, according to research BCG published in October. One critical factor for success is an integrated strategy with well-defined goals tied to specific, quantified business outcomes, says Patrick Forth, a BCG managing director and co-author of the research.\nBye-bye bimodal\nAn integrated tech strategy is exactly what Voegele has set his sights on. To achieve this, he is unwinding a bimodal IT operating model in which ERP and other back-office systems and front-facing capabilities, such as consumer engagement, had run separately for several years. \u201cOne big issue with the bimodal setup is you can\u2019t decouple the back end from the front end,\u201d says Voegele.\nFor instance, spending a half year on a new ERP release doesn\u2019t square with running code sprints every three weeks when the company is trying to expose inventory to deliver an elegant omnichannel experience for consumers eager to purchase products using their smartphones. Such experiences tend to be brittle, and difficult to secure across systems.\nFull vertical integration of the stack \u2014 akin to consumer-friendly models built by AirBnB and Uber \u2014 is PMI\u2019s path forward, Voegele says. It\u2019s a challenge made even more complicated by the fact that PMI, which was spun off from Big Tobacco\u2019s Altria Group in 2008, comprises several disparate technologies. The consumer-centric operating model Voegele is targeting includes:\nModernizing legacy systems. The complexity of PMI\u2019s business makes it infeasible for Voegele to jettison everything and go totally green field. Rather, he is consolidating and decommissioning many legacy systems that offer similar business capability into a standard system that serves every nation and affiliate. Moreover, these legacy systems must work with modern tech systems, which requires a standardized process model. \u201cOnce you have that process and discipline, you can start thinking about the tech stack,\u201d Voegele says.\nBuilding open ecosystems. To generate speed and agility, Voegele is shifting compute and storage capabilities to the public cloud. He is also reimagining PMI\u2019s cybersecurity model, and is partnering with hyperscalers to build \u201cdifferentiating software\u201d that can bolster consumer engagement. These capabilities, complemented by agile delivery models and CI\/CD pipelines, are enabling PMI to build a vertical platform, Voegele says.\nCultivating the shift to customer-centricity. To facilitate this organizational change, Voegele is reskilling 1,500 IT workers in modern systems and holding them accountable to business goals. It\u2019s about \u201ctraining competitive people to drive the consumer journey,\u201d Voegele says. A strong change management and communication program complements this journey to foster transparency.\nNegotiating the CTO role remit\nVoegele initially had reservations about the focus of the CTO role, a PMI first that included reporting directly to CEO Andr\u00e9 Calantzopoulos.\nWhen Voegele interviewed for the position, Calantzopoulos told him one of his main responsibilities would include managing a multi-million-dollar transition to SAP\u2019s S\/4 HANA \u2014 a common occurrence among companies migrating to the cloud. Calantzopoulos, tired of maintenance and licensing costs incurred by the existing system, wanted a quick renovation on this front.\nBut Voegele told Calantzopoulos that he didn\u2019t want to spend 80 percent of his time transforming the company\u2019s ERP system just to save some money. In Voegele\u2019s view, the role should be more comprehensive, including modernizing the company\u2019s technology processes, talent and tech systems to better serve consumers. And it should be a transformational role.\nVoegele has experience with this. In his prior role as CIO of Adidas, Voegele supported Adidas SpeedFactory, a manufacturing facility that relies heavily on robotics, automation and 3D modeling to cut sneaker production from months to weeks. A big impetus of the SpeedFactory was turbo-charging the supply chain in the event that Amazon.com or another retailer elects to make apparel on demand.\nThe e-cigarette market\u2019s nascent nature and relentless R&D engines make it ripe for similar disruption. In Voegele\u2019s view, a more nimble tech operating model can help PMI pivot more quickly. To wit, PMI\u2019s consumer-centric model appears to be resonating with PMI employees, as Voegele reports a 34 percent increase in Net Promoter Score (NPS) among staff in the past nine months.\n\u201cNPS engagement is the secret sauce for successful transformation because [employees] are confident that we can achieve the goal we set,\u201d Voegele says.