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Procter & Gamble recasts its strategy--and image--with new PC apps, predictive business intelligence, and virtualized processes
Crossing the Ohio River into Cincinnati and taking Fifth Street into the city center, it's easy to see why Procter & Gamble Co. is still thriving after 163 years in the consumer-goods business. Well-kempt Midwesterners fill the sidewalks, their clean-shaven faces, highlighted hair, and freshly laundered clothes all signs of P&G's success. The company has mastered the science of putting paper on a roll and soap in a plastic container and the art of selling those products at hard-won profit margins-nickels and dimes multiplied by millions of units.
But those margins are constantly under pressure as powerful global competitors cut prices or create cheap knockoffs and as the cost of raw materials-everything from oil and resin to coffee beans-continues to rise.
To resist becoming a commodity business, P&G must constantly innovate in product development so it can justify raising prices every so often on "new and improved" Tide, Folgers, Clairol, and its 300-plus other household brands. Meantime, it must forge closer ties with suppliers, distributors, retailers, and consumers. And it has to do all that faster than ever because time to market and market share are nearly synonymous in consumer goods.
As part of that broad effort, P&G is introducing a set of desktop applications to foster real-time collaboration among its worldwide workforce of more than 100,000 people and with its vast network of customers and partners. The rollout consists mainly of five Microsoft products-the Office 2003 desktop suite, Outlook E-mail client, Communicator instant-messaging software, Live Meeting conferencing service, and SharePoint document-sharing portal-plus Windows Server 2003 and other server software. The deal represents the largest license to date of Microsoft's real-time collaboration suite (Communicator 2005, Live Meeting 2005, and upgraded Live Communications Server 2005), introduced in March.
The goal is to help employees maximize one-to-one communications, create more-effective virtual teams, and, ultimately, make faster and better decisions. It's about shorter business conversations and accelerated outcomes, company officials say. That may not sound groundbreaking in some industries, but it's a major step forward for a company still working hard to shake its reputation for having an insular culture.
P&G is spending more on technologies that drive innovation and less on infrastructure. "That's exactly the way it should be," CIO Filippo Passerini says.
Photo by Chris Lake
P&G's IT managers like the fact that the apps are designed to work together and will have a familiar feel for employees with Windows PCs at home, but it's the instantaneous nature of the applications that's the impetus for change. The "presence awareness" built into Communicator, for example, might be used by a marketing manager in London to determine if a colleague in Tokyo is online and, if so, quickly send a message, make a phone call, or launch a person-to-person videoconference. "I expect collaboration will increase significantly," says Filippo Passerini, P&G's CIO and global services officer.
While the Microsoft apps are intended to make internal communications easier, Passerini and colleagues are thinking more broadly. The company already has a data warehouse on 200 million buyers, most of them women, which it taps for online and direct-mail marketing. P&G is exploring new kinds of interactive services aimed at certain consumer segments, such as mothers and teens, through Microsoft's MSN.com site.
When P&G officials talk about customers, they're also referring to retailers such as Wal-Mart Stores Inc. Designated managers are assigned to top accounts, and Passerini himself interacts regularly with peers such as Wal-Mart CIO Linda Dillman. The Microsoft products will support instant messaging among different types of IM clients and intercompany Web conferencing, helping P&G solidify business-to-business relationships. "The hypothesis is that connections will become more and more personalized over time with customers, consumers, shoppers, and employees," Passerini says.
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