Data Analytics Allows P&G to Turn on a DimeBy Peter High | Posted 05-03-2013
Data Analytics Allows P&G to Turn on a Dime
By Peter High
Filippo Passerini, CIO and Group President of Global Business Services of Procter & Gamble, discusses the approach he and his team have taken to get better, more accurate data analysis into the right executives' hands in a timely fashion. The result is a remarkable track record of innovation.
WHO: Filippo Passerini, CIO and Group President of Global Business Services of Procter & Gamble
WHAT: Sharing his approach to data analytics, brought to life with the better use of big data and collaboration technology
WHERE: Cincinnati, Ohio and 75 countries worldwide
Filippo Passerini has as broad a purview as any CIO in the world. In fact, he is not just the CIO of P&G, but is also the Group President of Global Business Services. In his role as CIO, he understands the power of IT to deliver insights to the organization. In his role as head of Global Business Services, he has taken this a step further, making a multi-national consumer packaged goods behemoth feel a bit smaller. In the past, it was an assumption that good practices on one continent would not be enacted on another continent for months. This thinking reinforces the traditional geographic and product silos of a huge company like P&G. Passerini realized that if he could get the right information as close to real-time as possible, while packaging it in a way that executives around the world could view together, down to having meeting spaces that facilitated such global collaboration, a cultural change could be fostered. What emerged is one of the most impressive examples of leveraging corporate data with business intelligence and analytics.
In this Q&A, Passerini tells CIO Insight contributor Peter High about the steps he took to launch this real-time, data-based revolution in business practices.
CIO Insight: You have developed one of the most sophisticated examples of data analytics in the world. What was the genesis of this? How did you determine that this was necessary?
We are big on anticipating what's coming, and saw that being able to run the business in real-time was going to be essential for growth. So, we have been focused on analytics for a few years now. We want to create an environment where we turn data into knowledge, and knowledge into insights and actions. As the world's largest consumer packaged goods company—with nearly $84 billion in sales, operations in 75 countries, and reaching 4.4 billion consumers—we have a lot of data. The ability to analyze this massive amount of data is critical to running the business in real-time and being responsive to changes in the marketplace.
It is not about what happened last month or last year; it is about being able to move the business from a rear-view to a forward-looking view. To move the business to a forward-looking view, we realized we needed one version of the truth. In the past, decision-makers spent time determining sources of the data or who had the most accurate data. This led to a lot of debate before real decisions could be made. We've elevated their discussions from the "what" to "why" and "how." Meaning, why things are happening and how we can make interventions to change the outcome, if needed. We believe analytics will get us to the "why" as fast as possible.
Data Analytics Allows P&G to Turn on a Dime
We recognized the value in having access to the right data, at the right time, and with actionable insights. We also realized the power of visualizing that real-time data in an immersive environment. I believe in a complex world where there is an incredible amount of information, visualization helps distill what really matters, and the results have proven the value of our investment.
Having this data is a powerful start, but bringing the right people together to make the actual decisions can be tricky in a company as large as P&G. How have you accomplished this?
We refer to this as the "power of and." We need strong analytic models and an immersive environment and a business analysis providing unbiased expertise. We believe the synergy between these three components is, in many ways, a breakthrough, and has led to a quantum leap in value creation.
We created analytical models that help leaders quickly identify opportunities and to determine where proactive interventions may be needed. The visualization of the data in business processes allows leaders to view the data more easily, to process the information faster, and to quickly turn insights into actions.
In order to enhance the experience of viewing the information, we developed what we refer to as Business Spheres, a truly immersive environment that physically surrounds business leaders with models. We also integrated video-conferencing capabilities to eliminate the need for travel and enable face-to-face interactions.
An important role that we have woven into this process is the business analyst, who is an unbiased expert who facilitates the discussion and helps to guide the business team's focus. They have the responsibility of bringing context to the data and identifying opportunities that the business should be addressing. The business analyst also helps the businesses connect the dots and reapply lessons learned across categories, regions and business units.
What is different here is that all of this data is coming into the context of the business discussion. It is not fragmented by geography or management level. Also, importantly, it is coming in real-time to help us make better, faster decisions. It has been pretty transformational to the way we do business.
To be perfectly candid, culture change is never easy. There are some people who were used to seeing information displayed a certain way, and by digitizing our data and having it available in such a powerful way, it was different. Another initial challenge was the availability of the same information to everyone at the same time—or “information democracy." But it did not take long for leaders to understand the value of the Business Sphere and adopt to the new technology and to different ways of doing business.
Can you provide some examples of the kind of data that is assembled?
It is important to recognize that data only has worth when organizations can use it to take meaningful action that creates value. It's not about the data. It's about how we're able to use the data to create value by being more innovative and more productive every single day.
Data Analytics Allows P&G to Turn on a Dime
We have a base set of analytical models that allow us to do a deep-dive on different aspects of the business. For example, one model is focused on our 40 largest and most profitable product categories in the most important geographic markets. These top 40 businesses represent about 50 percent of sales and nearly 70 percent of our operating profit, so you can see why it is an important model. Another example is our model that focuses on identifying ways we can make our supply chain more efficient.
One of the ways in which IT helps simulate the in-store experience is by creating virtual stores to see the products on the shelf. What was the genesis of this approach? What are the benefits of it?
Innovation is the lifeblood of P&G. It is the primary way we drive growth, prevent commoditization of categories, reduce cost and deliver consumer value. So we are constantly partnering with our cross-functional colleagues, in this case R&D and Design, to improve our innovation capabilities.
We try our best to anticipate what is coming, to detect new trends and to devise the right strategies to address those trends before they impact our business. So a few years ago, we saw a trend that was having a major impact on the world: speed of product innovation to market. This was across many industries: automotive, consumer electronics, fashion and also, frankly, our Consumer Packaged Goods industry. You may recall, as an example, that car manufacturers used to produce a new model every five or six years. Now it is every 12 months. Because of this dramatic speed of product innovation to market across all sectors, we decided that we needed to reinvent some of the ways we do work.
In the past, packaging design was costly and time consuming. We would create physical mockups for our consumer testing. Design and production of these prototypes could take from six to 12 weeks. It was difficult to efficiently reflect changing consumer preferences and needs using traditional, physical research methods.
Today, using virtual technology, designs are created much faster and at a fraction of the cost. Consumers respond to a virtual mockup of our new packaging. We have virtual stores and virtual shelves, which we can literally build in hours and days instead of weeks and months. Consumer insights are integrated more efficiently throughout the process, enabling our brands to deliver a product and shopping experience that delights.
This has been revolutionary, saving us millions of dollars and dramatically accelerating the time it takes to launch a new product in market. Virtual solutions are now used on more than 80 percent of our initiatives, enabling our brands to reach consumers faster, more efficiently, and with a product that exceeds her expectations.
About the Author
Peter High is president of Metis Strategy, a boutique IT-strategy consultancy based in Washington, DC. A contributor to CIO Insight, High is also the author of World Class IT: Why Businesses Succeed When IT Triumphs, and the moderator of the podcast, The Forum on World Class IT. He can be reached at firstname.lastname@example.org.