Capturing the Lion's Share

When Darryl Warren took the CIO reins at Lion Nathan last year he knew that if the Lion technology team was to meet its core purpose of achieving"transformation through technology", it could do with a little transformation itself. As a result, Warren has overseen a major restructure of brewer Lion Nathan's IT organisation. It is a reform he believes will help the organisation to reap the potential of IT to transform the business and enable the company to reach its goal of being the most admired company in Australasia, not to mention the best drinks company of the 21st century.

"Lion sees e-enablement in its broadest sense as being one of its key game-breakers going into the future," Warren says."So what do I want to see? I want to see technology being a key transformational tool used by Lion Nathan going into the future."

Warren has restructured Lion technology into three streams across the Australasian business - products, services and account management (where three account managers are assigned per business unit) - following a review of its service delivery model. The newly-forged matrix structure is designed to be flexible and responsive to changing business needs, Warren says, with customer satisfaction a major driver in the organisation and the new structure enabling the group to measure IT's performance against that matrix internally.

The company is also in the process of installing new systems and technologies. E-enablement initiatives under way include"refreshing" its New Zealand B2C offering Shopnaked.co.nz and launching a Steinlager Web site. Another project on Warren's e-agenda is the installation of the .Net Peopleplanet human resources portal to automate all the people processes Lion Nathan runs internally.

The Australian business is a major shareholder in artesian.com.au, a B2B portal for the hospitality industry. The company also has a majority stake in an Internet development company, ANZ-based Real Developments, which partners with procurement company Cyberlinx and Artesian.

"We're significantly moving to develop portals," Warren says."We've always had intranets in place but the challenge has been finding the information that you're looking for. So we're moving to a portal metaphor where we present the information that people are looking for, based upon their needs, directly to them through a portal interface. Peopleplanet has a portal interface, we have a finance portal currently in pilot called Finnet, which also uses a portal interface, and all use a common infrastructure - Microsoft Digital Dashboard as it happens to be - as the delivery mechanism."

An online supply chain management system from i2 Technologies is helping cut the cost of demand forecasting, with savings already being made in the beer brewing operation. An internal survey in August last year showed beer inventory levels had already been reduced by 25 per cent.

The restructure is also helping the IT organisation to use its trans-Tasman capability to provide greater coverage to the organisation. In practical terms that means a help desk manned from 7.30am Auckland time until 5.30 in the evening in Perth, using simple follow-the-sun principles. The CTI computer telephony integration (CTI) solution, which has been in place since September of last year, is used to centralise Lion Nathan's existing distributed call centre operations, to provide a standardised and improved method of call handling (see"The Online Shout", page 92). The next phase of the project will involve the upgrade of the system for migration to Siebel 2000.

"We're going to leverage the solutions across both countries, clearly, and I guess leverage the e-enablement push that we've got, in order to really free up people's time in the business to add value," Warren says."That's the criteria. If we can get rid of most of the underlying drudge and paper and all that sort of thing, then we can actually free people up in our organisation to add value to the organisation rather than concentrating on the trivia."

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All the Beer in China

Lion Nathan's brewing operations in Australia, New Zealand and China together sell around one billion litres of beer each year. Its numerous brands are valued collectively at $1.8 billion, and include Tooheys, XXXX, West End, Emu and Hahn. It also distributes two of its brands - Steinlager and XXXX - in Europe and North America. The company delivered double-digit earnings growth in a challenging environment this year, with net profit after tax for the six months to 31 March 2002 of $100.1 million - up 12.5 per cent on earnings for the comparable period in the prior year.

The Australian business is the largest business and the primary earnings driver, accounting for 70 per cent of Lion Nathan's assets and in the 2000 fiscal year, 80 per cent of earnings before interest and tax (EBIT). New Zealand, with 20 per cent of the assets, accounts for virtually all of the balance of the EBIT.

With Australians continuing to guzzle more beer every year, and with new brand strategies on the table, Lion Nathan is confident of its ability to continue the level of earnings growth achieved in Australia in the 1999 and 2000 fiscal years. The picture in New Zealand, where consumers are drinking less beer every year, is more challenging but the company expects a combination of a stable pricing environment and cost initiatives to deliver modest growth. In China, Lion Nathan expects a recovery in beer consumption and cost reduction initiatives to slowly ease the losses currently being incurred.

In response to the highly competitive environment, in April 2000 the company announced it would move its head office from New Zealand to Australia, becoming one of many other NZ companies who have left home to base their operations overseas in recent times for cost reasons. In January this year, Warren relocated to Sydney after being appointed companywide CIO last August, reporting to managing director of technical services Phil Warburton. Here he oversees the work of about 65 people in Australia and New Zealand, and manages an expense budget of about $25 million a year, depreciation inclusive.

A Lion Nathan employee since the late 70s, where he began in the finance side, Warren became IT director New Zealand five years ago. At that time he says the business systems were reasonably rudimentary. There was a core transactional system, but with the business focus of the time concentrated around invoice processing/payment/sales and a little bit of sales analysis, the business requirements of that system were fairly simple.

"Until that stage we'd had a brewing business in New Zealand, a wine and spirit business, a retail business, all of which had somewhat disparate solutions. At that stage the focus was on getting synergies from those solutions, but also taking the business forward into the late 90s with stronger business solutions, leveraging new technologies and making them available to the business where there was a business need. So clearly the focus was on technology to meet business needs as opposed to technology for technology's sake."

Warren brought together the business solutions of New Zealand Wines and Spirits and Lion Brewery in New Zealand and developed arguably the first successful business to consumer (B2C) model in New Zealand for Liquor King. He also developed and deployed data warehousing and sales analysis tools for the business.

During his stint as IT director the position became a New Zealand MD direct-report role, allowing Warren to sit alongside his peers at the executive table.

"When I first took on the IT director role there was a CIO of Lion Nathan who was based in Sydney and an IT director based in New Zealand and an IT director in Australia," Warren explains."The New Zealand IT director initially reported to the CIO, and then reported in line to the country MD. So the reporting lines changed around - there was a dotted line at one stage to the country MD and a solid line to the CIO, and then we turned that around and made it a solid line to the country MD and a dotted line to the CIO."

Warren says it is a change that has prepared him well for the bigger Australian role, where he has responsibility for New Zealand and Australia directly and China indirectly from an IT point of view. Adjusting to the new environment in Australia proved relatively easy, Warren says. Although the two countries had been run independently from an IT point of view, the Sydney IT environment was quite similar to the one he was used to, thanks to heavy levels of liaison between the two IT directors and their teams.

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Delivering on Promises

Like most CIOs, Warren sees his biggest and most persistent challenge as the need to deliver more with less, and in the shortest time frame possible. He doubts anyone in the industry is a stranger to such pressures. For Warren the keys to meeting that challenge include a heavy emphasis on reusability and a determination not to build where the organisation can buy.

"We've also built a new IT organisation and a new structure . . . We've been bedding that in for the past six months. Now we're starting to get the wins from that," he says.

Building credibility with business leaders was relatively easy, he says, because of the length of time he had been around the business and the number of projects he had been involved with in the past.

"I only moved here in January this year, but when I started commuting probably one of the first things I did was to get all of IT together on a videoconference, and get all of them to understand the new business model that we'd created with my direct reports. We then went out and engaged the organisation with the new structure, presented that new structure to most of the significant leaders in the organisation."

Warren says the approach mirrors his determination to engage with business earlier and more strategically, rather than only at the project and delivery phase. He is determined to get the business involved earlier and more fully in the decision-making processes, and to ensure the IT team offers the benefit of its experience as early as possible rather than just at execution time. It is an approach that is already paying dividends, he says.

"My role is clearly to lead an IT organisation. But the main role I guess I perform," Warren says,"is the one of informing management both upwards and downwards within the organisation of the role that IT plays in the organisation and the value it brings to the organisation."

SIDEBAR: The Online Shout

Lion Nathan is using a CTI implementation to collapse five regional call centres into one

Lion Nathan's computer telephony integration (CTI) project began in 1998, when the company engaged a consultant to help it enhance customer service. CIO Darryl Warren says the company was looking to address several key challenges. One was the regional nature of Lion Nathan's business."We have very strong regional brands such as Castlemaine in Queensland, Swan and Emu brands in Perth and the West End brands in SA," Warren says."The customers relate very strongly to their regional brands and we are a regional brewer."

Another challenge was the peaks and troughs of Lion Nathan's business cycle, with the company facing regular peaks in its order taking and replenishment cycles."The big order taking days of the week are Monday and Tuesday, so order volumes are very heavily skewed to the beginning of the week, following the big draw-offs on the Fridays and the weekends," Warren says."Monday is probably twice as big as Friday, and then there are very large volumes around events like Easter and Anzac Day, so it is a business with very large variations in terms of the number of orders we receive per day."

The need was for a reliable, technically advanced call centre with a host-based routing system to be integrated with a Siebel CRM solution. The system had to allow Lion Nathan to provide customers with a single national call-in number, while allowing Lion Nathan to keep its regional identify.

Lion Nathan selected NSC to provide integration services. The company was the first enterprise in Australia to integrate solutions successfully from Avaya (the desktop application) and Siebel (the front end).

"I guess in terms of competitiveness it really is about improvement of customer satisfaction. When you're in a market that is largely dominated by two major players and a number of smaller players, customer satisfaction is one of the levers you can use to gain market."

The project is now offering a vastly better level of service in the call centre, he says. When customers call, their identity pops up on screen. Agents can answer the phone appropriately according to the region the call is coming from, greet the caller with region-specific announcements, use region-specific music on hold and readily determine the caller's local time.

Agents can display the customer record at same time as the call is presented, and easily link CTI with the customer.

"We weren't doing simple presentation of caller ID to the agent," says Warren."We wanted to screen pop to show who they were, we wanted to be positioned ready to take the order for the particular customer and we wanted to answer the phone appropriately for their region. The ability to be able to answer the phone, for instance, and recognise the customer, is really quite powerful.

"We also get better agent efficiency in terms of the call centre agents. We reduced the time of the call, leading to greater order turnaround. We improved customer satisfaction because they liked being recognised. We had the ability to - through one call centre - act as a regional business.

The call centre and CTI system installation consists of the following functional elements:

• Definity ECS
• CVCT
• Siebel
• CMS
• Conversant with Callback Manager
• Definity Audix