Severn Trent Water CIO Myron Hrycyk discusses the firm’s total operational reorganisation

In the same month that Myron Hrycyk became CIO Severn Trent Water, the FTSE 100-listed utility pleaded guilty to two charges from the Serious Fraud Office of overcharging its customers and of misreporting water leakage data in 2001 and 2002. New chief executive Tony Wray had to travel to the High Court to receive the industry record fines and lead the company out of a dark period in its history.

That was in April 2008, and today, Severn Trent has almost completed the most radical transformation a company can go through: every part of the organisation has been altered, right down to the building from which it operates.

As CIO meets Hrycyk at the company’s dated Birmingham HQ it is preparing to move to a new building down the road in Coventry that will be one of the most ecologically friendly in the country.

“When I joined they had just bought the land and selected the architect,” says Hrycyk, who was to be central to the development of the building and in transforming the methods that staff use to operate the company.

“It does make the CIO think broadly,” he says of the business issues. “It makes you want to deploy some technology ahead of the move as there is less risk. You can start to build new working practices, as you want to introduce these ahead of the move, so the move is a transition of methods. It’s a wonderful inflection point to discuss data handling, email policies et cetera. It is an opportunity to change views on the use of technology and to change them and get people to rethink.

“It is really exciting seeing how the technology debate is influencing people and enabling new working patterns as people become more mobile and begin to work in groups.

“This, in turn, is influencing the technology. In December we piloted thin clients with 60 people, SAP was integrated within Windows 7 on a thin client and the feedback has been very positive,” he says.

On arrival, Hrycyk told the board that they did not have a technology strategy in place to achieve their transformation plans, and this included how they would be using IT in the new HQ.

“I asked them ‘why are we putting 300 servers in?’ So we virtualised servers and put them somewhere better to be more efficient. This was seen as IT stepping forward to offer better services and IT caught up with the ideas of the new building.” The move will take place this coming October when 1700 people move in [to Coventry] over a phased period. As an organisation that is responsible for a vital natural resource, Severn Trent is keen to become closer to the environment as a business. As a result, the new building has very few car parking spaces and the IT team has been busy developing information resources to help staff get to the new building by public transport.

Creating a new IT strategy for Severn Trent wasn’t just about moving to a new building. Hrycyk inherited an IT infrastructure that had not kept pace with the size of organisation and since 2008 he has been modernising and pouring investment money into systems that will create efficiencies. Hrycyk calls this placing bets on technology, especially the SAP ERP system that forms the spine of the organisation. “ERP removes the complexity of the business processes and our reliance on legacy systems that are a cost,” he says.

Hrycyk’s other “bets” were on networking services from BT and Cisco, Microsoft for collaboration, Azzurri for mobile services and HP for the infrastructure. “We had a business plan that was crying out for the technology to support it,” he says. Challenged on whether you can really call signing deals with the household names of IT services a “bet”, he explains: “As a CIO for a FTSE 100 organisation you don’t take wild bets. My definition of why they are bets is that these suppliers have to be safe in the long term, but also offer potential for future growth, plus SAP on SQL Server is different, whereas most people go for Oracle.”

Severn Trentis not an organisation that is afraid of a gamble either, and has a five-year plan agreed with regulator Ofwat that means its customers will have the lowest bills in the country, while also being the best utility in the country. This is encapsulated by an internal strategy dubbed ‘the safer, faster, better programme’. Again this is relying on a total transformation of the company with staff being trained and standardised communications methods. As we will see later, Hrycyk is a fan of corporation-wide standards and has plenty of experience of them at bellwether organisations like the Oxford University Press (OUP) and Unipart.

Severn Trent demands that Hrycyk and IT reduce operating expenditure by 15-20 per cent per annum when it is fully rolled out, much of that expected to come from the SAP implementation. “SAP gives us a quality platform, when I buy SAP I buy into that company, their R&D and forward plans. SAP is a really sensible choice.” SAP is replacing bespoke systems for operations such a scheduling and procurement, all of which required support and therefore created costs.

Tapping SAP

Large-scale implementations can have long RoI lag times, but Hrycyk set out to create savings from the moment the SAP tap turned on. “We have a stream in the SAP project that is decommissioning. You can often end up not decommissioning and that’s where your benefits come from. I have a benefits management team driving through efficiencies. Back in December we went live with the financial piece (procurement, financials, HR and supply chain) of the SAP implementation; I am already reaping the benefits in reduced maintenance costs and I am already factoring them into IS budgeting. It’s something good to go back to the board with,” he says. In June this year phase two of the implementation will be complete, covering staff scheduling for 1800 workers, mobile access and asset management.

Hrycyk is a confident believer in the benefits of SAP and is keen to discuss why even though he and CIOs at a huge number of sites have succeeded, SAP projects continue to garner poor press. “I told our chief executive just this morning, the best SAP implementations are the quietest. When it goes wrong it was a noisy implementation from the beginning. When you talk to CIOs that are serious about long-term investments, these are the CIOs that have done SAP before.”

IBM is the chosen systems integrator, replacing the Oracle financials and in-house Cobol-based asset management technology. Hrycyk was head-hunted into the role as Tony Wray and Severn Trent replaced its entire board following the High Court fines. Discussing his CEO, Hrycyk says it is better to work for a chief who knows technology than one who doesn’t.

“Non-technology knowledgeable CEOs can be an easier ride, but because of that they may want to do something entirely different to your ideas,” he says, adding that CEOs that understand technology give the CIO more support.

“To operate at board level you must have a trust at a business level of what technology can do.” For those CIOs without a board place he advises a tone that communicates the business benefits of what technology can do and to build a relationship with the financial director. “You really have to be able to understand their issues.” But Hrycyk believes that CIOs cannot continue on the board at the current level. “To be responsible just for technology is too narrow. CIOs must spread to processes.”

Career flow

Severn Trent is the first utility on the Hrycyk CV. He began his IT career in financial services, which led to a stint with the insurance division of Lloyds before moving into publishing as the IT leader at OUP. “That was my first brush with SAP as they were the first publisher to adopt it,” he says.

It was also his first brush with running and transforming a business, not just the IT function. OUP belongs to Oxford University, and some of its revenues are diverted back into the world-famous educational establishment. As a result it is an organisation that closely mirrors its university founders with a beautiful headquarters building that looks like one of the colleges; inside there are fine dining rooms and a very collegiate feel.

Read what a typical day is like for the CIO at Severn Trent

Hrycyk explains how one day he was unexpectedly called into the office of the Secretary to the Delegates – the Oxford equivalent of a CEO. The Secretary wanted Hrycyk to sort out a “warehouse system”, by which he meant the land, the building, staff and everything required to operate it. Hrycyk built a new warehouse in Corby, and says the experience made him realise that IT “has to be more customer focused”. He remained in publishing, moving to Hodder Headline, before a stint in the IT vendor world as deputy IT director at Xerox Europe and another SAP project. A return to Oxfordshire followed as part of the IT setup at Unipart.

Unipart is the lucky survivor from the British Leyland debacle of nationalising the various UK vehicle manufacturers; Unipart, as the name suggests, was the parts distribution network. Unlike Rover and MG, when Unipart was privatised it adopted Japanese management techniques with a few of its own to enable it to become a major player in the supply chain industry.

His stint there was successful, with another SAP implementation under his belt, this time a global roll-out from Cowley. But as with many CIOs, he got itchy feet.

“I had done as much as I could, so I thought, I’ll leave this Rolls-Royce organisation and find myself an Mk2 Ford Cortina to work on,” he says.

“I am pleased to say they were unhappy I was going.” He went to a smaller rival for a short while before that headhunter called and enticed him with “the opportunity to do a massive transformation.”