“Probably the best IT in the world”

Carlsberg, the world’s fourth largest brewer, is streamlining its IT operations and chucking out legacy systems. Kenneth Egelund Schmidt, VP and CIO of Carlsberg IT, chats to BM about the challenges ahead as the business looks to go ‘glocal’.

Danish brewing giant Carlsberg sold more than 12,000,000,000 (that's 12 billion in layman's terms) litres of beer in over 150 markets last year. It's an instantly recognisable global company with excess of 500 different brands in worldwide markets positioned under the Carlsberg umbrella. The Carlsberg group, the largest brewer in Northern Europe, has swallowed some key drinks rivals in recent years, including Scottish and Newcastle in 2008 in a joint acquisition deal with Heineken. These acquisitions have significantly swelled the company's stable of beer brands, and at the same time spawned separate IT departments spread across different countries. Creating seamless IT approach across borders is a focus for the business and it looks to become a bigger player on the world beverage stage.

Kenneth Egelund Schmidt is the man charged with orchestrating the day-to-day IT operations and aligning IT with the business strategies, having arrived just six months ago at Carlsberg IT headquarters in Copenhagen, Denmark. He previously spent 18 years working his way up to CIO at Denmark's Danfoss. "We move a lot of beers and soft drinks here so IT is extremely vital," Schmidt explains. "We have to make sure that we secure our day-to-day operations so that our products come out in a timely fashion and meet of the criteria surrounding logistics because commitment to our customers is extremely important. We also have to create sufficient transparency within the business to act quickly and be agile enough to make fact-based decisions, as well as leveraging our purchasing powers." Schmidt notes how Carlsberg's vast quantity of transactions need to "hassle free", which can only be achieved with efficient technology solutions. Its operations run 24 hours a day, seven days a week so any blip in the logistics and transactions can have drastic consequences. "There is no doubt that IT is vital for Carlsberg and since we rely heavily on logistics, even small hiccups create business disruptions." He also stresses that leveraging synergies and improving efficiencies across the group relies heavily on IT.

Four years ago a separate tech entity, Carlsberg IT, was formed to provide a wide range of business solutions, technology support and implement new systems for the smooth running of the group across Europe. It supports 10,000 end users in a particular complex IT environment. "Carlsberg wanted one IT department to support the business strategy," Schmidt explains whilst reaching for a glass of water on a table to his left. "Because a lot of money and people is organised around IT here, it makes sense that we have a unit focused 100 percent on IT as well as its delivery and value creation." Schmidt says he prefers to have a "portfolio" of new technologies on his desk at any one time. "I try to have a portfolio of innovating products so that we are on the edge of how we can contribute to the business, because it is our obligation to be able to introduce new capabilities at the right time."

Like any business, the black or red ink at the bottom of the balance sheet is as equally as important as rolling out new technologies, according to Schmidt. "We have business principles because IT is organised as a business within the group. We have to recover IT costs and we have to be focused like any other company." He says a major IT transformation is in progress as the group strives to become a sleeker and more efficient organisation across different territories. "We are moving to become an integrated player with ambitious beyond Europe so we need to make sire that Carlsberg steps up to being a 'glocal' company because this is the next part in the evolution. In fact, IT is forming the platform for the 'glocal' approach we take here, and it also makes it possible to create a virtual, open business so that knowledge and tasks can travel around the organisation."

Agreement

Schmidt says Carlsberg, which employs a 45,000-strong workforce, needs to cut slash costs and standardise business processes so in April he put pen to paper in a three-year IT and consultancy services deal with management consulting and technology services specialists Accenture. The Bermuda-based firm will handle the consulting and systems integration, program management, along with application development and maintenance. Carlsberg is looking to standardise its IT operations and bin clunky legacy systems, as well as implement a common enterprise resource planning platform. The architecture will be based around SAP and Microsoft software. 

"Entering this collaboration will provide Carlsberg with access to additional IT resources and know-how when and wherever needed, giving us the needed scalability."

Schmidt also suggests the shared platform will create a "pan-European" company with shared business processes. It will also create a more seamless unity between the disparate entities, allow his organisation to become more flexible with a global presence, as well as enable future growth. However, he is keen to stress that this is not a true outsourcing deal because Carlsberg IT still handles the management and delivery functions. Schmidt says one of the groups Swiss breweries will act as a guinea pig for the new platform but a full-scale rollout won't take place until 2014.

Juggling all the everyday technology issues with projects and transformations in the pipeline and on the horizon is a common issue for CIOs today. It's the same at Carlsberg IT. "The main challenge is to make sure I have a balanced approach so that we rationalise, make good decisions and have stable systems, but at the same time make sure IT delivers with the transformation of the business," Schmidt reveals whilst leaning back in his leather chair. "For me, it's about keeping the right balance between the operational part and the forward looking part of Carlsberg. Like any other CIO, when you build something you consume money but in order to build rationales and save money you have to build for the future. And, of course, we have the challenge of introducing changes to the business and being agile and fast enough to cope."

Speaking to this IT chief you get a clear impression of his passion for technology and the way it can truly transform a business, both back and front office. Schmidt describes himself as a 'hands on' technology leader who spends most of his time changing processes. "I find it interesting when looking at how we learn from and absorb new technologies as we move from being a local to a 'glocal' company." He adds: "It's important to have a huge respect for the technology and be aware of its upsides and downsides. I have to admit that when I see great technology and systems, I can still get quite excited", he reveals with a chuckle in his voice.

Investments

And while some CFOs and CEOs may balk at requests for investment in technology, bosses at Carlsberg embrace its power to transform operations.

After all, they created the separate technology unit. "Within Carlsberg there is a definite recognition of the importance of IT because it is a major contributor in being able to carry out the planned transformation." The infrastructure can be a different matter, though. "It can be difficult sometimes to argue how much should be invested on the infrastructure side but I am working hard on making sure we have a value proposition on the infrastructure because it supports collaboration. Within the area of collaboration we can show that there is value to be harvested - this could be with messaging systems, IP telephony, and so on, and you can put this in directly when you have a shared infrastructure. Many companies are not aware of the huge benefits of just the common infrastructure," he adds. For the time being, Schmidt has his work cut out on the busy IT road ahead for Carlsberg IT. "It's important that we take small steps in the right direction all the time - it's a constant change, learning, improving and taking a further step.

Accenture's agreement will enable Carlsberg to:

• Achieve strategic objectives and initiatives
• Realise long-term benefits from reduced IT costs
• Improve the pace of Carlsberg's IT application development and maintenance process
• Increase organisational flexibility by having access to the right skills at the right time, thereby accelerating the mobilisation of resources.