Catching Up With Jim Noble, VP & CIO, Altria
CGT's Executive Editor Kara Romanow talks to Jim Noble, vice president and CIO, Altria Group, Inc., (parent company of Kraft Foods, Philip Morris USA, Philip Morris International and Philip Morris Capital Corporation) to find out his take on industry trends. Plus, find out what inspires him and how his "need for speed" also applies to guiding IT for the Altria family of companies.
What keeps you up at night?
This industry is going to go through an evolution from barcodes to radio frequency smart tags (RFID or the Internet of Things) that will transform how businesses are run. It will change everything from out-of-stock situations on superstore shelves to tracking capabilities for counterfeiting and contraband products to selective recalls. All of these opportunities should be the catalyst for radical changes in the associated business processes. Some companies will reluctantly conform to the requirements for tagged products only when they are demanded of them, without changing their underlying business processes, and they will be the losers because this will just be a cost overhead. The winners will be those companies smart enough to anticipate this change and plan for it.
How will we use the data generated by the 80 billion devices in our products if we tag at the item level? It will take time to adapt our information systems since there is no substitute for experience in discovering what is needed to create business insights from all that data. Hence the need for speed, so that IT can avoid being an obstacle to business agility by adopting a launch-and-learn attitude.
We employed an approach called "Real Options", where the business spreads its systems investments across a number of potentially risky options and "scales up or gets out" -- in the language of the Venture Capital (VC) community -- as events unfold. We believe the VC model is the quickest way to gain the experience necessary to exploit emerging technology, which in turn keeps the company agile and innovative.
How do manufactures and retailers better collaborate?
We still hold out the hope that we will reach the nirvana of collaborative commerce, which is what the current work with retailers is leading towards: where all parts of the supply chain are in constant contact with each other, companies know if promotions are having an impact, and therefore, make better business decisions and are much more dynamic.
Kraft is currently putting a lot of effort into the Demand Driven Supply Network. If these changes were only within the four walls, then we could at least be in control of the pace by driving our own programs.
However, consumer packaged goods (CPG) manufacturers have to be able to interact with multiple retailers.
That requires standards like the Global Commerce Initiative (GCI) and the EPCglobal Network, which take time to evolve and can crush innovation unless you can sustain a high level of drive and energy. T his is an endurance race, not a sprint.
What are the pros and cons of a shared services model for IT?
This can be both an obstacle and a solution to serving the real needs of the business. The problem arises when the shared services approach is created to get economies of scale, because there are very few in-house IT teams that have the scale to support diverse solutions and still achieve leverage economies. That leads the in-house IT team to force standardization out of necessity.
This may not be a good match for the flexibility required by a CPG company since CPG companies are really portfolio and brand managers that buy and sell lines of business all the time. Conversely, a shared service that is then transferred to a third-party partner can offer far greater flexibility for mergers, acquisitions and disposals. This approach to IT operations is the so-called Build-Operate-Transfer (BOT) model used by Procter & Gamble and the Altria family of companies, among others. Altria encourages our operating companies to be fast and agile by picking the right niche supplier in each area of excellence rather than complying with some corporate dogma. The role of the central team then reverts to being coach on strategic sourcing, and concentrating on innovation rather than operations. And, of course, coaching on the need for speed.