Managing Change: Three Phases of an IT Organization Transformation

The CIO of London-based home improvement retailer Kingfisher had to optimize operations and give business leaders a strong voice in governance before he could innovate with technology.

Our change journey at Kingfisher, the world's third-largest home improvement retail organization, began three years ago, when we started to transform distributed line-of-business IT functions into a centralized, global organization. Like any journey, there are stages. This one had three. First, we had to optimize operational efficiency, then revamp our IT governance process. Then, finally, we were able to begin using technology to drive business innovation.

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The Science of Change

As with most CIOs coming into a new company, my initial challenge was to optimize operational efficiency. I started by listening to everybody. I heard from business leaders and IT staff, of course, but I also went out to help run stores, sit on the trucks, stand behind the cash register and face the customers at the service desk. The front line is where we need to earn our respect as new CIOs, especially if we're going to instigate major enterprise change.

I saw what our IT expenses were across our 11 markets, and made sure our spending became more transparent to company leaders. We had significant diversity in our IT infrastructure and in our applications, which needed to be better leveraged and made ready for changes in how our customers were shopping—especially regarding their use of multiple channels.

It took us a whole year to get all the basics right, earn the hearts and minds of key business leaders and get the right people on the bus. We changed a large part of the existing IT leadership. We gained trust among end users by fixing some basic operational issues, such as the stability of our point-of-sale system. And we saved money: Among our cost-cutting initiatives, we delivered a 25 percent savings by getting our vendors to standardize pricing across geographies based on the lowest price we were being charged.

The next part of the journey was to align IT with the business. In retail, alignment means using IT to leverage our capabilities across different channels—increasing sales and providing new opportunities for the Kingfisher store brands while at the same time using less capital. For six months we built, reviewed, challenged, debated and enhanced our target enterprise architecture.

These exercises culminated in the creation of one IT entity—singular in architecture, operating model and staff—to serve Kingfisher's brands in Europe and Asia. We transferred several hundred IT staff members, who were assigned to the local businesses and geographies, into a groupwide function called Kingfisher IT Services (KITS).

The Road to Innovation

Of course business leaders were concerned about losing their dedicated IT teams. But we built a new governance structure, whose members are our internal customers, to ensure that our senior executives would drive IT decision making. Although I facilitate this group, they make the decisions on staff, services and processes. Instead of the CIO pushing and pulling, they own that agenda and they take it further than I could by myself.

Our governing body is named the IT Executive Board (ITxB). It is chaired by one of our executive directors and has seven managing directors or operating company board members who meet at least quarterly. Under the new governance structure, we unified our previously diverse IT strategies. The ITxB members debated and decided on the Kingfisher enterprise architecture—that is, the most relevant business processes and data—which became the KITS operating model.

Having become a credible IT officer and a trusted business partner, I was finally able to start exploring the possibilities for creating new value and begin stretching the company into emerging areas such as multichannel retailing and home installation services. While change can be an aspect of any IT transformation, it's at this innovation stage that major change becomes a possibility.

Three Faces of Change Management

To discover the art of the possible, to communicate that vision and to motivate people to change, you need to play three CIO roles:

Coming into a new company, you must optimize operational efficiency and make IT spending transparent. In this role, you're the Cheap Information Officer, concerned with costs.

When it comes to aligning IT with the business and its goals, you become a traditional Chief Information Officer, positioning yourself and your senior team as business partners.

Once you have earned credibility and become a trusted business partner, you are positioned to play the third role, that of Chief Innovation Officer. Only then can you start to innovate and explore the possibilities to create new sustainable value.

For example, we have refreshed all of the processes and systems in our Brico Depot stores, simplifying each process according to two goals: getting closer to our customers and creating a more dynamic supply chain. Because of our single integrated system and one view of the truth, our staff now has real-time and accurate information about in-store inventory positions available via PDAs, and we can log special orders for customers anywhere in the store using wireless and mobile technology.

Lessons of change

There are a number of lessons that emerge from this change effort and others I've been part of:

Be humble. Recognize when you or your team makes a mistake; own up to it and learn from it.

Pace yourself. One of the most common errors is trying to change too fast. Sure, some business colleagues will get frustrated and want you to go faster. But you have to set a pace that, although a stretch, is still achievable. You will know the pace to set by looking at the culture you are working in.

Put the team first. As CIO you have to do the heavy lifting at the beginning, but for change to be achievable and sustainable, the team must own it and make it happen.

Teams can only work effectively if they have a clear, shared mandate that's wrapped in the value you intend to create for the customer or shareholders. At times people may say, You are the leader, you tell us where to go. But you'll be more effective as a catalyst, defining the challenges and the opportunities for the group. Focusing on your team also keeps you modest (it's not all about you) and humane (you will lose your team if you mistreat people).

Don't ignore IT operations. Operations is your bread and butter, and you need to keep an eye on it. Make sure you have a strong team to which you can delegate day to day management. IT operations have to run like a Swiss clock or your change efforts will grind to a halt.

I'm lucky to be respected and empowered to enable change. I see a lot of CIOs who have tense relationships with their CEOs or CFOs. They are mired in cost cutting and in complaints about services.

If you are in that position, you will not be consulted on the change agenda in the wider arena of your company. You'll be part of somebody else's strategy instead of crafting the strategy yourself.

Jean-Jacques Van Oosten is group IT director at Kingfisher and a member of the CIO Executive Council.

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Copyright © 2008 IDG Communications, Inc.

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