British American Tobacco CTO Nick Giannakakis reveals the digital foundations of an evolving business

British American Tobacco CTO Nick Giannakakis has only been in his role since February but is already taking a central role in a rapidly changing industry.

“We are in the midst of a big transformation,” Giannakakis tells CIO UK. “Our business is changing. We are moving to potentially reduced-risk products and we are changing our offering to the market, moving from a traditional business-to-business to a direct-to-consumer model.”

Those potentially reduced-risk products include the the e-cigarettes and tobacco heating products (THP) that generate a nicotine-containing aerosol with a tobacco taste that the user inhales. These products have become integral to the BAT business as cigarette sales decline and tobacco-free alternatives such as vaping gain popularity.

BAT is adapting to these trends by expanding its portfolio to “next-generation products” through a combination of in-house product development and the 2017 acquisition of Reynolds American, the producer of the Vuse e-cigarette. The strategy has made BAT one of the world’s leading vapour companies.

The FTSE 100 group aims to generate revenues of £5 billion by 2023/24 from its THP, vapour and modern oral products such as Lyft, a tobacco-free oral substance containing nicotine that’s placed between the upper gum and upper lip. Digital technologies allows the company to turn these products into experiences.

“We want the consumer to be part of our community hub, to have an omni-channel experience at every touchpoint with us, and technology is a key enabler for that,” says Giannakakis.

Building on data

One of the core components of BAT’s digital transformation is data. Giannakakis is spearheading the company’s transition towards becoming a data-centric organisation that can identify and respond to consumer needs.

“With our consumers, we don’t offer simple products; we offer experiences,” he says. “And in order to do that, the key enabler is our services, we are to become a data-driven organisation.”

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BAT collects data from a growing range of sources, including new ones such as vaping forums. The data can then be analysed by machine learning techniques to create new insights into customer behaviour and predict their future needs.

Giannakakis and his team have already deployed data-as-a-service in BAT’s four main markets across three continents, and aim to extend it to all of the company’s markets by 2020.

“Our aim is to move from descriptive analytics and diagnostics, which we are mastering now, to predictive and very soon to prescriptive,” says Giannakakis. “This is our target: a totally data-centric organisation.”

Innovation platform

Giannakakis enjoyed spells in IT leadership roles at SAP, Coca-Cola and Swiss Luxury goods company Richemont before joining BAT in 2014 as its global head of its centre of excellence, where he took the IT lead on the company’s digital transformation programme. He was promoted to CTO in 2019, taking charge of BAT’s global technology strategy and digital transformation initiatives.

A key component of these efforts is automation.

“As a very big conglomerate, we used to be very good at harmonising our processes,” says Giannakakis. “We need to go one step beyond that to fully automate where we can. And we do that by using – for example – state of the art robotic process automation. This robotic process automation helps us to move from harmonising and optimising processes to the next level of simplification.”

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To give BAT the scalibility and elasticity it needs to adopt emerging technologies, Giannakakis is investing in the cloud.

“Currently, we have a multi-cloud strategy,” he says. “Our idea is to enable platform-as-a-service technologies and this multi-cloud offering. We consider cloud as a platform of innovation. That’s why we always discuss with our partners what they can do towards the platform.”

Vendor ecosystem

Giannakakis’ cloud strategy is centred on close collaboration with vendors, who help BAT maximise the value of its deployments.

“Our aim is to create our partner ecosystem,” he says. “We will work with selective partners and we have strict rules of engagement with them. We have specific KPIs on how we will work with them, what we expect from them and what they can offer… And we will try to move to an agile way of operating with them.”

Giannakakis believes this approach will provide the foundations for a range of digital platforms that will support BAT transition to a direct-to-consumer business model.

“These will create an establishment that will change the overall business,” he says. “This will be a key enabler in driving change from our technology aspect. If we succeed on that, the rest will follow.”