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Procter & Gamble recasts its strategy--and image--with new PC apps, predictive business intelligence, and virtualized processes
Collaboration Is Key
The directive to collaborate more comes straight from the top. In a note to potential product-development partners on P&G's Web site, CEO A.G. Lafley writes, "We've collaborated with outside partners for generations, but the importance of these alliances to P&G has never been greater. We want P&G to be known as the company that collaborates-inside and out-better than any other company in the world."
By most accounts, Lafley, who took the P&G helm when former CEO Durk I. Jager was pressured to resign in June 2000, has turned the company around by doing just that: listening to employees, customers, and partners rather than just telling them how things need to be done. The result? P&G has increased profits an average of 19% over the past three years, topping analyst estimates for nine straight quarters. With 2005 revenue of $56.7 billion, it ranked No. 26 on the Fortune 500.
But P&G's reengineering isn't just focused on revenue growth. Two years ago, P&G cut its 4,400-employee IT workforce nearly in half under a 10-year, $3 billion outsourcing contract with Hewlett-Packard. The remaining staffers were folded into Global Business Services, a shared-services unit that also provides support functions such as human resources and payroll. Passerini has been centralizing P&G's IT department within that unit for the past year.
The desktop-app rollout is part of a P&G tech strategy that focuses on three main areas: one-to-one communications, real-time and predictive business intelligence, and "virtualization" of business processes. In using that term, P&G doesn't mean virtual machines or data-center automation. It's about morphing labor-intensive processes such as package design into electronic processes that apply 3-D imaging. Advances in virtualization will get products to market more quickly, Passerini says.
The CIO declines to say how much all of this will cost or even to pin a number on P&G's overall IT budget. But he does give this much: Operational IT costs-money spent on basic infrastructure-are trending down "significantly," while investment in technology meant to foster business innovation (including collaborative apps, business-intelli- gence tools, and virtualization technologies) is rising. "That's exactly the way it should be," he says.
The Microsoft apps are intended to replace Lotus Notes on the company's 80,000 Windows PCs, plus 12,000 more Windows PCs that are part of P&G's $57 billion acquisition of Gillette, which closed Oct. 1. "Intended" because Global Business Services isn't forcing the issue (not just yet, anyway). "We don't have big deployment milestones in people and dates, which is the old way," says Laurie Heltsley, a director with Global Business Services. "We're talking about an adoption strategy where people can opt in."
Company officials project that 80% of PCs will be upgraded to the new tools by sometime next year, driven by what they expect will be employee enthusiasm for an integrated suite of contemporary desktop apps. The Lotus Notes environment is pressing 8 years old. P&G has long had an E-mail culture, having developed its own E-mail system 25 years ago before commercial offerings became popular. As one measure of all the messages flying back and forth inside P&G, the company has archived a staggering 20 terabytes of E-mail in storage.
Still if adoption of the new Microsoft tools goes slower than expected, Passerini admits he may apply a stronger hand in pushing the software across the company. The last thing his IT group needs is to support both Notes and Microsoft Outlook indefinitely. Hewlett-Packard will help with the rollout and management of the desktop environment, under an extension of the original outsourcing contract.
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