In the driving seat

Since taking on the role of CIO of Volkswagen UK, Nick Gaines, has changed IT from a taboo subject to a key element of the car giant’s business strategy. BM reports.

“The challenges we've had in the past year were almost because we've been a little bit too hands-off as a customer”
-Nick Gaines, CIO at Volkswagen UK

Any CIO who inherits an outdated and inefficient IT infrastructure has a tough job on their hands. But when Nick Gaines took up the role at Volkswagen UK in 2008, he faced the added complication of disparate systems across the company's various brands and an unproductive outsourcing partnership. Immediately he set about the task of first fixing the technology basics before starting to implement a unified IT infrastructure across the group. Describing the system in place when he took up the role, he says: "Basically we were in a position where Volkswagen had become a large business but we hadn't invested much in our IT infrastructure for a number of years. A lot of our systems were written 20 or 30 years ago and were running on some mainframes that we operate from our business in Spain. And these systems that run our core business, to say they're ancient would be an understatement."

Ringing the changes

A particular concern, for Gaines, was the fact that the UK's core online sales system was based on an outdated mainframe system based at a Volkswagen plant in near Barcelona: "The system was based on the old green screen variety of mainframe and this is what our retailers used to sell cars. So whilst we may have an amazing presence on the internet, hidden behind all of this was some pretty ancient stuff. On top of that we were running computer rooms that should have been demolished as health hazards," he jokes.

Gaines blames the state of the company's outdated IT infrastructure on the fact that nobody within the company had previously taken charge of the situation and developed a road map to change it. There was also he says, a lack of understanding of the link between IT and the company's business objectives: "I would say the best description is that no one had loved the IT. And that alignment between what the business needed and what the IT was doing was sort of disconnected." Gaines was determined to change this and immediately set about creating an agenda for change, starting with phase one, "fixing the basics". This involved replacing Volkswagen's core sales and CRM systems and rebuilding its IT infrastructure to put in place proper project and programme delivery methodologies and. It also involved putting in place an "IT service management culture" and rebuilding the IT team. He and his team have only just completed this phase and have so far replaced the core sales systems for the Skoda and Seat brands. A new data centre has also been put in place, following the migration of data from Volkswagen UK's previous facility in Milton Keynes. Gaines hails the project a success so far: "To run a project for two years then bring it in on time, cost and quality is a rare event in the IT industry. To do it when you're changing everything around at the same time is kind of an interesting challenge."

Joined up thinking

The second phase of Gaines' action plan is to develop core IT systems that can operate across Volkswagen's different global businesses and brands. Explaining the thinking behind the project, he says: "What we try to do is, rather than having unique brand specific and market specific solutions, with each brand and country doing their own thing, I've been working with my colleagues across the rest of Volkswagen and we are choosing common systems and hosting them as shared services to a number of different countries. Some of my colleagues have said 'oh, you're giving up some local autonomy' but in reality we're gluing together the business and exploiting capabilities on a global scale."

As well as creating common core sales, vehicle logistics and CRM systems this involved the virtualisation and building of new data centres and replacing outdated operating systems: "I had a very large number of old servers and other obscure operating systems, which were based on unmaintainable hardware so we've virtualised almost everything and then rationalised out the variations of databases, middlewares, operating systems and so on and that's been quite an interesting activity."

When it came to transforming Volkswagen's IT – re-assessing the company's outsourcing arrangements was high on Gaines' agenda. With this in mind, last May the company signed a five-year contract with India's largest IT firm Tata Consultancy Services (TCS). The agreement will see TCS support Volkwagen's business transformation programme and its move to a standardised business platform. The move represented the first time that Volkswagen had implemented a mixed onshore and offshore model for its IT systems. The company also has outsourcing agreements with Cable & Wireless, which handles its telecommunications needs, and T-Systems which maintains mainframe applications. Gaines describes the advantages of having agreements with multiple outsourcing partners: "What we've been able to do is significantly improve service delivery performance and cut costs as well because we've been matching the capabilities of our partners to the needs of our business better. If you only have one partner then it's inevitable they won't be a good match across all the different things that you want to do and also by getting a bit of competition in the mix that encourages a better level of performance."

He said that in terms of outsourcing agreements the company had learnt from the experiences it had with a previous outsourcing partner: "For a long time we were working with a single outsourced partner and the relationship wasn't very great. I think that the challenges we've had in the past were almost because we've been a little bit too hands off as a customer and so we've adopted a different stance now which is about driving the performance of our partners a bit more proactively and that's been pretty successful. Gaines goes on to say that the new arrangements with outsourcing partners have already improved the efficiency of Volkswagen UK's day-to-day operations.

Building bridges

It has been all the more important for Gaines to prove the validity of his IT projects, given what he describes as the distaste for IT that previously existed within the company and the vast gulf that existed between those working on the technical side of Volkswagen and those in the boardroom: "When I arrived IT wasn't even the whipping boy. It was almost regarded as something you didn't want to be anywhere near. It's hard to put it into words but people had the lowest possible view of IT in our business." He says his proudest achievement to date as CIO has been in transforming that attitude and raising the profile of IT within the business: "Forget building infrastructure and new applications. By far the biggest journey for our business has been to build a different culture both within IT and between the business and IT. Because at the end of the day we're not here to do IT. I'm here to sell more cars and more parts, to sell more finance and to drive down costs. IT is just my specialist skill and the extra value I can add. I position IT as the tool with which we can transform the way we do business."

In order to achieve this major shift in attitude towards IT, Gaines has to build a team with the right attitude, and to recruit members who were "motivated emotionally by the business outcome and not the technical purity or esoteric, architectural beauty of IT." He believes he has achieved this, creating a team behind him with the right attitude towards IT within the organisation: "The MD said to me the other day that the IT folk have now got a spring in their step. They've got a smile and a positive attitude. This is a huge personal journey for most people and we've made some tough decisions along the way."

Perhaps the biggest mark of how successfully Gaines has raised the profile of IT within Volkswagen has been the fact that despite the harsh economic conditions, particularly in the auto industry, investment in technology and Gaines' ambitious plans to overhaul the IT infrastructure have not been affected: "I'm very lucky that we have an enlightened board in Germany as well as the board in the UK who recognise that there's a huge opportunity to innovate in the sales process and IT is pivotal to that. As a result of that my strategic programmes to rebuild the infrastructure and re-engineer the core business processes remained untouched by the recession. Our board voted to protect them throughout this time and that's been incredibly positive."

The technology horizon

Though Gaines and his team are still deeply entrenched in the transformation of Volkswagen's IT infrastructure and services, he is already looking ahead at how the company can further capitalise on emerging technologies, such as cloud computing. Because it outsources so many elements of its IT service, Volkswagen is already a user of cloud computing technology. Gaines says he is impressed so far with the speed with which cloud technology enables technology changes to take place: "The interesting thing about cloud computing is the time to market speed. You can implement change quicker when you remove the dependency on the end device or the end infrastructure." He adds, however, that for him the most interesting aspect of the technology in the year ahead will be security – a key challenge for Volkswagen with its disparate brands and global operations: "To bring together cloud delivered services, internal delivered services and conventional services the biggest challenge for a large enterprise like ours is security. Particularly when I've got a heavily outsourced supply chain, globally delivered services from our factories around the world and UK delivered services both from our outsource partners and from here. Actually creating the right security model to match the service to the business is really tricky stuff." He says this issue becomes even trickier for companies moving from delivering services predominantly internally to delivering cloud services: "The issue is, where the boundaries are and how you design security when you've got a virtual supply chain running a virtual infrastructure for a virtual business."

As well as cloud computing Gaines is keen to harness the power of social networking in order to increase loyalty among Volkswagen customers and spread the word about their products: "A customer who had a great experience with us will become an advocate and they will help to sell more cars. They might be tweeting about their new Skoda or whatever and the value they generate could be huge. So we have to be there delivering services that support that world. The change in consumer behaviour is a really exciting place for our business. I think it will drive innovation in the year ahead."

Gaines labels himself a "nerd" describing his obsession with the latest technologies as  "my secret vice". But he says it's not IT itself that excites me but its role as a business enabler: "The technology is almost irrelevant to me. All these different technologies are merely different ways of delivering services. What really matters is matching the service you deliver to the needs of the business." And it's this ability to translate technology from geek speak to business case that has helped Gaines to put IT at the heart of Volkswagen's operations.

About Volkswagen UK

Volkswagen UK is one of the country's biggest importers of vehicles and employs 600 people nationwide. It operations were centralised in 1978 when the company moved its UK headquarters to Milton Keynes. Volkswagen's relationship with the UK started in 1952 when the first two Beetles were sold in the country. In 1953 Volkswagen Motors LTD became the company's official UK importers.