“I think this is the opening up of a digital economy, and every business is wrestling with that,” says Phil Jordan, Group CIO for Telefonica, the worldwide telecommunications company. On a cold and misty day in Madrid, the Spanish company’s British CIO describes how technological, social and economic events are reshaping one of the foremost communications companies in the world.
“We are one of the world’s largest communications providers as a fixed and mobile service provider; we have operations throughout Europe and Latin America,” Jordan says of the firm whose brands including Vivo, Movistar and O2.
“As our industry matures, the business model is changing and we are starting to see a decline in our traditional core business,” says Jordan.
“New growth is coming from digital and data services, so Telefonica is now about enabling customers to use connectivity services and to help the digitisation of other industries. The level of maturity and therefore organic growth is market- and region-specific and we have a broad spectrum of businesses at different points of maturity and with different economic conditions.”
The uptake of technology has had a positive impact, especially for CIOs.
“It is starting to make people realise that IT is so important to the evolution of the business. In my time the level of understanding of what IT can do for your business has been transformed.
“The great thing about this macroeconomic climate is it’s causing people to embrace change.”
Being headquartered in one of the most troubled economies within the eurozone does bring with it some challenges, admits Jordan.
“Being a Spanish business has been really tough in 2012. There is a lot of focus on our debt and we do have a lot of debt position from a period of large-scale M&A activity. We have done a major job regaining financial flexibility through debt reduction, using our global scale to leverage debt and operational performance,” he says.
From the 1990s to the 2006 acquisition of O2 and recent deals in Germany, Israel and China, Telefonica has been on an aggressive buying spree to increase the size of its telecommunications footprint.
“We are benefiting from the decision to invest in Latin America. The telecommunications market saturation you see in Europe is not the same in Latin America and our core products and Digital are growing very fast in that region,” Jordan says.
But Jordan and Telefonica don’t treat Latin America, like their Spanish forefathers, as an Eldorado that will furnish gold on the mother nation.
“We are a global business with European and Latin heritage,” he says, adding that the experience in Latin America is bringing the organisation expertise in emerging markets expertise.
Jordan has two roles at Telefonica: as well as being Group CIO he’s CEO of the shared service business Telefonica Global Technology. This company’s role is to centralise all commodity areas of IT, and rationalise and improve services to the entire group. Telefonica Global Technology already services over 20 countries with infrastructure, applications and security services.
“It is very much defined by things that we can do once. We will move more things into the shared service if it is efficient to do so,” Jordan explains.
“A lot of our front office should be local as the customers are local but, as parts of our business mature, we will identify the bits that are commodity and move to the shared service for efficiency. That reduces the run costs so we can invest in growing the business with new digital services,” he says.
Jordan has a real strength for understanding the needs of individuals and organisations within the group, and leads by understanding what can be done, rather than imposing his will.
“The nature of the local businesses is changing, so it’s the role of IT to empower the local business to be part their transformation to a digital business. That means local business IT can move away from being an IT provider to being one focused on customer information, digitised services and business change.
“What we are trying to do is get the operating model consistent so that the commodity model is common. But I’m not a slave to a model. Standards and standardisation are vital as the key that defines reusable IT but you must always think global and act local, because what is true of Panama is not true for the UK, Brazil or Spain.
But as Telefonica’s Global CIO, Jordan has to balance local needs with global standardisation that benefits the business.
“Standards are not difficult to create and implement and I do believe they are the number one tool we have for common ways of working,” he says. A common ERP and email is already in existence in most Telefonica businesses.
“In the corporate back office, I have zero tolerance for localisation: when we make decisions we make them as one company.”
Shared services and the challenges of Spain’s economy mean Jordan’s team are at the forefront of driving efficiency and transformation.
“We are optimising the way we invest and to reduce the run cost. We spend too much on the day-to-day because we have too much business and process complexity and therefore IT legacy. So the role of IT is trying to simplify the business and therefore the IT we have,” he explains.
“Calling it cost-cutting is too one-dimensional. Your IT is the DNA of the business, so we have to be careful that it’s not negatively affecting the customer, so you spend on growing the business.”
Jordan’s agenda is transformation and that means the global IT budget is around 4% of revenue but is still more than €2 billion a year, which he describes as “very competitive”.
“We are attacking running costs and helping transform the organisation and I am very proud of that. IT brings a greater focus on cost in the business.”
“As voice is becoming part of our past, we need to find new products and services that customers will value.
“I believe the future of our industry is all about data and being the best provider of digital and data services. Telefonica Digital is critical to position ourselves in this new business world. It is a business unit in its own right and focuses on new revenue sources, partnering opportunities and data sources that exist across the Telefonica footprint. We are looking into other industries where we can extend our business model – good examples are finance, healthcare and education,” he says.
Jordan explains that the infrastructure network and ability to monitor it and offer quality of services will be key to Telefonica as pure telecommunications and networking is challenged by over-the-top providers of text and data services who don’t have the burden of large fixed infrastructure costs.
One possible market being openly discussed by CIOs is machine-to-machine (M2M), which Jordan says could be a major opportunity, driven by the growth of the Internet of Things.
“The use cases for M2M are huge. We are very focused on driving this for global businesses right down to SME organisations. We understand customer usage and are well placed to offer the global reach and scale required.”
As with most CIOs Jordan and Telefonica are reviewing their vendor relationships. Currently IBM, HP, Indra, Accenture, Tata and Microsoft are his major suppliers and a major new deal with unified communications specialists Amdocs has been agreed in Argentina.
“The reality is we work with everyone, but we need to rationalise and we want fewer and deeper relationships with suppliers. We have been open with our partner ecosystem on this consolidation.
“There is a different mindset that I can already see and I can see those that we will work with,” he says.
Of the current big technology trends, Jordan is a big fan of consumerisation in the enterprise.
“We are embracing it; if you stand in the way of it you are fooling yourself. We put in mobile device management (MDM) and that has gone down well.
“Consumerisation puts an open platform in the enterprise and that’s exciting to users who can utilise corporate and public cloud services for their own productivity. For example I can do what I need to do on a vanilla Mac,” he says, gesturing to his desk.
As for cloud computing, Jordan isn’t keen on the ‘cloud’ term favoured by sales and marketing teams, but prefers to talk about Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS), which he thinks are for more ‘contextual’ to the needs of business.
“Utility computing is a great way to optimise cost in a very business-centric way,” he says.
Change for the better
Jordan has been in telecoms since 1998 when he left financial services to join Vodafone as a desktop service manager. He thrives on the dynamism of the sector.
“People who enjoy being a change-agent CIO find there are few sectors that change as often or as fast as a telco. Change is every part of every day.
“So no one is ever finished with transformation, but that means we have to work hard on early benefit realisation and proof points for the CEO to gain confidence from that all the pain of another transformation project will be worthwhile. But if you love technology as I do, it can get very exciting,” he adds.
When comparing life at Telefonica to his roles at Vodafone, it is in the scale of his current employer that the challenge and the opportunity lie.
“We are an ambitious business, spanning both Europe and Latin America and yet it is one continuum. Telefonica has more of a fixed-line heritage and that is visible in the culture as well as the technology,” he says.
“I’m privileged to have been CIO for two fantastic businesses in my industry. I decided to join Telefonica O2 UK because it was the market leader and I was excited by the growth and innovation ambition. I was struck by how genuinely focused it was on striving to delight customers and that has a lot to do with the style and leadership of [former O2 CFO and now Telefonica Digital chairman] Matthew Key and [Telefonica UK CEO] Ronan Dunne, two of the most visionary leaders in the sector. O2 still feels like a young vibrant business.
“When Telefonica bought the O2 group there was a focus not to do anything to impede its growth and Telefonica was very respectful as a parent, and that was seven years ago.”
At Vodafone Jordan worked with group CIO Albert Hitchcock and Global CTO Steve Pusey.
“Pusey and Hitchcock have done a fantastic job of real continuity and they have driven a lot of change. Having been part of doing that with them and doing their equivalent roles now I appreciate what they have done,” says Jordan.
His Vodafone career also saw him working with Darrell Stein – CIO at retailers Marks and Spencer – who Jordan describes as being “a real active change agent”, as well as Jeni Mundy, the Director of Northern Europe at Vodafone, who he says is the “best values-based leader”.
So with C-level stars as mentors, how does Jordan describe his leadership style?
“I blend a little bit of what I learned from them every day. I learnt a lot about building teams by being in them. I like a little bit more diversity now in my teams and I’m better at understanding what my shortcomings are and building teams that fill in for my shortcomings. Your ability to choose more diversity is easier in a big organisation.
“Building teams and environments are the most important thing I do and the main part of my job and making sure that environment makes things happen.”
Jordan says one of the things he has most enjoyed about moving to be Group CIO in Telefonica in Madrid is the diversity of nationalities, cultures and styles that he gets to work alongside. His own Global IT team is sizeable too, and boasts 6000 IT professionals.
Jordan works closely with Telefonica’s new CEO Jose Maria Alvarez-Pallete.
“He is very technology-savvy and an active sponsor of IT transformation in our business,” says Jordan of his boss.
“He has an extremely clear vision that data, insight and ultimately IT are critical to our future business success.”
Jordan has a young family and describes living in Spain as a big shared adventure for all of them. As I depart the Telefonica office for the journey back to the UK, it’s clear Jordan enjoys journeys, whether they be personal, technological or business.
Phil Jordan CV
September 2011-present:Group CIO, Telefonica, and CEO, Telefonica Global Technology
2010-2011: European CIO & CIO O2 UK, Telefonica
2007-2010: CIO, Vodafone
2006-2007: Head of Consumer Business Solutions, Vodafone UK
2005-2006: Head of Technology Evolution, Vodafone UK
2004-2005: Head of Enterprise Systems, Vodafone UK
2002-2004: IS Manager, Vodafone UK
1999-2000: Head of IT, Safaricom (Vodafone joint venture in Kenya)
1998-1999: Desktop Services Manager, Vodafone UK
1993-1998: IT Manager, AXA Sun Life
1990-1992: Mainframe Operations, BOC