Good to Great
CIO Joe Amado's focus on leadership, project management and customer service has revved up IT performance at Philip Morris USA.
December 13, 2004
The IT department at Philip Morris USA Inc. is a poster child for aligning IT with a company's business divisions. Just ask Henry P. Long Jr.
Long, vice president of leaf purchasing at the tobacco giant, raves about how IT leaders work side by side with the heads of various departments to develop an IT strategy to support their respective business plans.
Over the past four years, the IT group has also put into place a more disciplined project management methodology that's helping it deliver projects on schedule, on budget and within scope 85% to 87% of the time, according to a benchmarking study conducted by The Hackett Group in September. That's up from a 50% to 60% delivery rate in 2000.
But what impresses Long the most is the fact that IT leaders get together with him and other business executives every quarter to find out how well the IT department is meeting project requirements, delivering on strategic objectives and supporting day-to-day operations. "They're very much aligned with each business function," says Long. "There's a real effort to focus on the client and move the business forward." Such praise from a 26-year Philip Morris veteran is a testament to CIO Joe Amado and his masterful recrafting of the 560-person IT organization he inherited in 2000. (A combination of attrition and outsourcing has since decreased the staff to 480.)
Prior to Amado's promotion, Richmond, Va.-based Philip Morris' IT department was historically viewed as technically adept but lacking in organizational leadership competence, says Howard Guttman, president of Guttman Development Strategies Inc. in Ledgewood, N.J., who has been working with Amado and his team to drive organizational improvement since 2000.
“The people who had been at the top had IT competence, but they needed to ratchet up their leadership competence," says Guttman.
Enter Amado, who by 2000 had risen to the top IT post, 13 years after joining the company as a programmer. He found that the section on customer satisfaction with IT in that year's biannual corporate employee survey revealed that improvements were needed in managing projects and aligning IT with the business.
"We had a mantra: 'We're good today, but we want to be great,'" says Amado. That helped set the tone for a multipronged strategy aimed at developing a world-class IT organization, he says.
Leadership Amado's first goal was to broaden the leadership capabilities of Philip Morris' IT managers. In 2001, Amado and Guttman held a two-day off-site meeting with the company's senior IT managers. Amado discussed steps they could take to improve their leadership capabilities, while Guttman provided executive coaching on teamwork.
"Some of the issues that came up were around conflict aversion, where there was a reluctance among IT managers to hold their peers accountable," says Guttman. He set up meetings between IT managers from different functional areas to help them build stronger bonds and identify ways to support one another "instead of relying upon Joe to be the answer man," Guttman says.
The effort continues. This November, Amado launched a three-day off-site IT leadership course that will enable him and his top managers to provide hands-on training to 25 to 30 IT managers at a time. The plan is to put 100 to 120 IT managers and staffers through the program by mid-2005, he says.
"Ten years ago, if you wanted instruction in leadership, you went to a class," says Amado. Nowadays, he says, peer training is more effective.
Philip Morris has also benefited from adopting a more structured approach to project management, drawing upon best practices espoused by the Project Management Institute Inc. in Newtown Square, Pa., and creating a project management office. This has enabled the IT organization to improve its ability to forecast and monitor the financial goals set for various initiatives, says Lisa Hunt, director of information services.
Amado explains that the biggest challenge he faced during the IT transformation was ensuring that his team was establishing the right business metrics to measure the group's performance. "I wanted to make sure we were improving the client experience," Amado says.
Apparently, he made the right choices. Amado "tries to look at metrics that are very client-focused and have meaning," such as how a particular application is helping a business division to cut costs or improve productivity, says Howard Rubin, an analyst at Meta Group Inc. in Stamford, Conn., who has worked with Amado and his team.
Thanks to a combination of online, third-party and in-house training on finance, Philip Morris IT staffers are now more adept at building business cases for projects based on metrics such as return on investment, workload and risk reduction, competitive advantage, and alignment with business objectives, Hunt says.
By using a standard set of tools and techniques, the IT organization is better equipped to predict project outcomes, says Joe Miller, senior director of service delivery. "Before, [project management] was more seat-of-your-pants," he explains. "Now, we're better able to foresee issues we may be coming up against."
"What we were trying to do was to put in repeatable processes" to help improve the group's project-delivery success rates, Amado says. Three years ago, Amado assigned a group of four people to conduct project "health checks" to ensure that those processes are followed. They meet regularly with project managers and sponsors, monitoring the use of standard methodologies.
Customer Connection Amado has also worked hard to align his IT organization more closely with the business. Recalling the valuable business experience he gained working in IT support roles in Philip Morris' sales, marketing and manufacturing divisions, Amado has placed IT managers directly into the business divisions to better understand business requirements.
He also encourages IT managers to transfer out of the technology area for a year or two to work in other divisions within the company. About 20 have done so over the past two years, Amado says.
"We have a lot more people now who are focused on the creation of business value," Miller says.
In another effort to improve alignment between IT and the business, Amado has developed a set of "visioning sessions." He brings IT and business leaders off-site to discuss business and IT strategies and how to align them more closely.
That, too, seems to be working. Ross Webster, vice president of trade marketing and distribution at Philip Morris, credits Amado with identifying the need to upgrade some systems in order to deliver real-time sales data to field reps. Those efforts, which began in 2000, produce daily updates on sales activities, such as the number of sales calls made and the number of stores contacted.
"[IT] is giving us the tools to have a much more productive sales organization," Webster says.
Despite all the changes that have taken place within the IT culture over the past four years, Amado says there hasn't been much resistance from his staffers. That's partly because the seeds for the IT department's transformation were planted throughout the 1990s as the organization intensified its focus on understanding and aligning itself more closely with the business.
"The organization was looking for that road map of where we were going and why," Amado says. "I wanted to make sure we were crystal clear on the value this organization delivers."
Amado's ability to communicate is one of his strengths, says Meta Group's Rubin. "Joe likes to look not at qualitative benchmarks but [at] his business partners and whether he and his group are doing a good job for them," he says.
Looking ahead to 2005, Amado will be working to improve business processes through the use of IT. While the processes are owned by business units (for example, supply chain management is overseen by the logistics department), IT is focused on how those processes work from an end-to-end systems perspective, he says. The goal: continuous improvement. "I feel good about where we are today because of what I hear from our clients," says Amado. "Are we great? I think we're getting close."