On Wednesday afternoon last week, Toyota Australia announced the date on which workers would down tools at its Altona plant. October 3 will mark the end of more than five decades of Toyota vehicle manufacture on these shores.
There is no single reason for Toyota’s decision – made back in 2014 – to pull local production. An unfavourable dollar rate, high operating costs, low economies of scale, a fragmented market and the effect of free trade agreements were all contributing factors, the company said.
But this is not the end of the road for Toyota in Australia.
As CIO Ellis Brover explains: “We’re treating this as a once in 50 year opportunity to set up a new company from the ground up, the way we want it to be.”
The morning following the announcement, Brover speaks to CIO Australia from Toyota’s Melbourne offices. Brover has spent close to 15 years at Toyota Australia, working his way up the executive ranks after starting with the company as a software architect.
The change brought about by the end of manufacturing is “huge”, he says. But the mood on his floor today, given the circumstances, is positive.
“It’s actually quite an exciting time,” he says. “I don’t want that to sound trite. Obviously there’s a lot of people with serious impact to their lives, but for those of us who are staying with the company, it’s also a bit of a once in a career opportunity to really influence how a new company of this size is going to be set up and work.”
The firm’s strategy now is to become a “national sales and distribution company”. Inevitably, that means a dramatic reduction in its workforce – from 3,900 to around 1,300 including the consolidation of its Sydney corporate offices into its Melbourne headquarters. It also requires a new approach.
“We’re taking the opportunity of this massive change to really rethink how we do everything,” Brover says.
Guests without guesswork
Central to the rebirth is a concept known internally as Franchise of the Future, and with it the creation of an exceptional experience for Toyota guests (the company’s term for its customers).
“The basic approach is that by focusing on making that guest experience outstanding, business success will follow. Rather than the traditional way in the automotive industry, focusing on numbers and volumes, obviously they’re definitely important to the business, but we believe that by getting the guest experience right the volumes will follow,” Brover says.
Toyota’s 200 plus local dealerships are privately owned and independent. Unlike many other franchising organisations, a corporate system is not imposed on dealers, who are free to choose whichever IT systems work best for them.
“The challenge for us is that we need to be able to work with this diverse landscape of back-end systems out there and yet try to produce a consistently outstanding guest experience,” Brover explains.
The vision is what marketers often call a ‘seamless customer experience’, which will work something like as follows:
An individual is browsing the Toyota website at home on a device and choose a car they are keen on. They build an online 3D model to their own specifications – picking out the colour and seat material and accessories, and get a quote. When they go to their local dealership, the dealer has all their preferences (currently that information is “essentially lost” says Brover), ready-loaded on the already deployed big-screen kiosks, and then takes them on a customised test drive.
The experience continues after-sale too.
When booking a service customers will be able to book at the dealership closest to their work, for example, which might not be the same one they bought their vehicle from. A phone app will integrate with their calendar to find an available time that best suits.
“Then you drive up, your numberplate is recognised, they know who you are and welcome you,” Brover explains, “they’ve got the paperwork ready to sign, or rather an iPad, and then off you go.”
Making this possible requires some complex integration of a diverse range of systems.
“What we’re doing essentially is working out which parts of that experience we believe are really unique to Toyota and need to be a particular way to make us the best. How do we make sure those things, that are delivered through systems that we’re providing or that we’re controlling, interface seamlessly to the back-end systems the dealerships are using? So they’re not re-keying information and not updating systems and having to produce reports?”
Although this kind of seamless experience has been mastered by some in the retail sector, the automotive industry is still “catching up” Brover says.
“But we don’t think that other automotive manufacturers are already doing this to any great extent. We are blazing a bit of a trail but it’s a very competitive industry and we won’t be alone for long,” he adds.
In with the old
When the Altona plant ends its operations later this year and the last Australian-made Toyota, a Camry, rolls of the line, around 100 IT systems will need to be decommissioned.
“That process isn’t as simple as turning off a bunch of switches and getting rid of servers,” Brover explains.
Huge amounts of data will need to be retained, both for statutory reasons and for continuing business operations. In some cases that data will need to be reformatted so it can still be used by other systems, in other cases new systems will need to be built.
“And there are still interfaces to systems that will persist, so we’ve got to figure out how to rewrite those and how to configure those so that the sales side of the company can continue to run even when the manufacturing systems are no longer there,” Brover says.
Exhaustive planning has already begun, which will be begin to be executed in October. Given the complexity and amount of data transfer required, Brover predicts “it will take some time to do it all”.
Built into the plan is a major Sharepoint project in which all documents currently stored on shared drives will be catalogued in the cloud.
“We’re taking the opportunity to rationalise all of those, clean them up, categorise them, all of that,” he says. “We’re going to end up where every electronic document in the company will be in a shared, searchable repository that people can access from anywhere.”
In the driving seat
As Toyota Australia transforms, Brover and his team’s responsibilities are growing fast. Last year saw double the number of new systems projects than the year before. This year the number will triple.
There has been “massive growth in our scope and workload”, Brover says. All digital systems (the company has no dedicated CDO, “I guess it’s mine,” Brover adds), in-car technology and dealership systems have been added to his remit.
“Our trend seems to be to bring more into the scope of IT and grow IT,” he says. “It buoys me. It’s challenging but it’s exciting that I’ve got an opportunity to be in a company where the role of my function and the importance is growing and my people feel that.”
To ease some of the pressure, the company has moved to an as-a-service model of provision. The latest deal saw Toyota sign with Datacom to supply IT infrastructure and support services. All its vendors, Brover says, are being held accountable to business outcomes rather than detailed technology SLAs.
“That’s a big change for us,” he says. “We found that the market wasn’t quite as mature as we thought it would be. It wasn’t quite as ready for that model yet in Australia so we felt a little bit like trailblazers – which we weren’t really expecting.
“It’s an essential part of our new strategy. I need to have fewer people who are managing servers and networks and switches and so on and more people who are doing digital and architecture and analytics. That means I need the vendors to take more accountability for all of the operational areas.”
The (new) Toyota Way
As the IT function expands, there have been some growing pains.
“It’s pretty tough to absorb so many workloads in terms of staff, making sure the structures are right, the processes are right. I think that’s our hardest thing, how to manage the growth,” Brover says.
While the headcount is being reduced across the company, IT is recruiting. Recruitment is a “tough one”. Brover is seeking candidates with both IT and business acumen.
“It’s a little paradoxical in an environment where the count overall is shrinking, but it reflects the changing nature of the industry that some areas are shrinking but other areas are growing. As the demand for IT is only growing, we need more people. The right people,” he says.
“We’re looking less for your traditional operation and coding skills and a lot more for business partnering, architecture, digital, customer service skills – less of your traditional hardcore IT skills.”
Before the year is out, Toyota Australia will be a very different company to the one it is today. Technology is driving the transition.
“We’re certainly keeping our rich heritage and our culture and what we call The Toyota Way, but because of the extent of change it does feel like we’re resetting in many areas and setting them up for the future rather than being constrained by legacy,” says Brover. “It’s a great time to be in IT.”