Building Competitiveness and Business Performance with ICT

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Real SuccessKONE: Using technologyto ensure customers getto where they want to goWith a workforce of 38,000, KONE provideselevators, escalator and automatic buildingdoor solutions to more than 250,000customers who demand a smoother flow ofpeople in their buildings all over the world. Itis a challenge that the family-owned companyKONE (pronounced KOH-neh) has committeditself to since its founding in Espoo, Finlandmore than 100 years ago. Indeed, the currentChairman of KONE’s Board of Directors is AnttiHerlin, a descendant of Harald Herlin whobought the company in 1924.In 2011, KONE had annual net sales of EUR5.2 billion and employed 35,000 employees.KONE’s operating environment continued to beaffected by the worldwide economic downturn,which reduced new construction activity inEurope and North America and likewise sloweddown the modernization of elevators in agingbuildings. However, sales of new equipment inAsia-Pacific has been growing steadily for thecompany and as a result new equipment sales,which accounted for 46% of its total sales, grewto EUR 2.4 billion in 2011, an increase of nearly4% compared to 2010.Providing Mobile Support to KONETechniciansWith over 15 years of experience in hightechnologybusiness, KONE CIO Kati Hagrosruns a fully centralized IT department with about280 IT employees located in 25 countries. “IT isclearly seen as a strategic function because alldevelopment programs nowadays have an ITelement and nothing moves here without us,to put it in very pragmatic terms,” said Hagros.One of the biggest challenges facing the CIOis providing mobile support to over 20,000KONE technicians who are out in the field atany one moment in time either installing ormaintaining equipment. Said Hagros, “WhenKONE sends a person to a site to install anelevator or maintain one, they need to havea personal digital assistant or telephone withthem, so that they know what time to be there,to have the right materials on-site, and to reportback. This has been, for years, a critical part ofKONE’s business model. How does IT providethe KONE people on-site at the right time andwith the right information? There are a lot ofmobility aspects there.”In addition to supporting internal staff, Hagros’team builds and maintains online services forthe company’s customers, such as propertydevelopers and facility managers. Customerscan for instance track equipment maintenancethrough a web portal, explore elevator designsvia a mobile app or generate three-dimensionalmodels online to help with their planning.Hagros’ team also installs system-to-systemintegration so customers can leverage datafrom KONE’s equipment for decision-makingand optimization.Moreover, the IT department has developedselected tools for a key group of stakeholders,the architects who design the buildings in whichKONE equipment is integrated. “We believe thatthis kind of defining, planning and co-creatingthe designs with the architects is somethingthat will pick up more and more,” said Hagros.Adopting a Standardized PlatformIn planning for the future, Hagros is developinga unified communications system that will betechnology and platform agnostic for boththe office staff and the technicians on the field.Up to now, most KONE technicians took acompany-issued PDA into the field with themto communicate back to KONE headquarters.This approach will be changing with thearrival of the open-PDA model, which enablestechnicians to use their own office tablets andsmart phones. Furthermore, the performancerequirements facing these technicians havebecome more demanding, partly becauseKONE is growing fastest in markets wherenetwork availability and internet service arespotty. “We are installing elevators in themiddle of nowhere, literally, construction sitessomewhere in central China,” Hagros said, “sowe have to adapt to that all the time.”While communication technologies anddevices become less controlled, Hagros putseven tighter control on the core processes andmaster data. In this effort, Hagros has won thesupport of the KONE Executive Board and theglobal business owners. Said Hagros, “it comesback to having strong global governance. Inorder to have consistent processes and dataand run standardized platforms, we sometimeshad to compromise the local needs and userexperience.”Taking a Realistic View of the CloudWhile Cloud services have been used foralready years at KONE, Hagros knows “thatcloud-based services are not the answer forall services. Hagros has been satisfied, forexample, with the data services provided toKONE’s global sales people for the past fiveyears. However, Hagros said she was shutteringcloud-based providers of specific humanresource services. Said Hagros, “the availabilityand performance were below the level of ourglobal scale of operations, so we are goingback to more traditional applications.”Going forward, Hagros has just launcheda program to update the next level ofcollaboration tools, including documentmanagement, unified communications, andinteractive collaboration workplaces. SaidHagros, “We pay a lot of attention to safetyand service skills and now we are putting alot of emphasis also on training our peoplehow to use these collaboration tools. We seethem directly contributing to our employeecompetence development and engagement.”Selecting applications is however not the mostimportant task for Hagros. She spends mostof her time discussing business problems,analyzing business cases and realizing benefitsof IT through strong network of processowners and key users. Said Hagros, “All ITprograms are directly linked to KONE strategyand linked to five corporate level developmentprograms owned by business process owners.Strong business governance combined withfully centralized platforms is the winningcombination.”14 INSEAD eLab ICT Report
Real SuccessFerrovial: Selective usesof cloud-based serviceslead to enhancedperformanceFerrovial, the Spanish infrastructure group,showed a 1.4% increase in profits during the firstnine months of 2012, as its growing internationaloperations were able to offset the continuingweakness in the Spanish market. Net profitsat the world’s leading private developer oftransport infrastructure and services increasedto €488.5 million in the first three quartersof 2012, while sales increased 2.5% to €5.65billion. For the full year 2011, Ferrovial had a netprofit of €1.27 billion on sales of €7.45 billion. Asa result of its sound financial position, Ferrovialobtained an “investment grade” rating (BBB-), with stable outlook, from both credit ratingagencies Standard & Poor´s and Fitch in 2011.This rating will enable the company to accessthe capital markets, if necessary.In 2012, Ferrovial was organized around fourareas of activities: Services (three businessunits: Cespa is focused on waste management;Amey on infrastructure management and publicservices; and Ferroser, one of the largest facilitymanagement operators in Europe), Toll Roads(Ferrovial manages almost 3,000 kilometers ofroads throughout the world, such as Canada’s407 ER), Construction, and Airports (Ferrovialis the world’s number one airport operator,operating such airports as Heathrow in theUK and Antofagasta airport in Chile). Ferrovialhad operations in over 15 countries and a totalworkforce of about 70,000 employees.Introducing cloud-based services atFerrovialAppointed as CIO in April 2008, FedericoFlorez’s title is now “Chief Information andInnovation Officer.” Florez recently transferredtwo key yet non-core functions, HumanResources and Purchasing, onto the cloud. Inso doing, the graduate of INSEAD’s AdvancedManagement Program was able to reduce costsmore than expected, as the cloud approachhad a price tag that was less than 15% of theclassical approach.Measured by time, the savings were alsodramatic. “We implemented 70,000 employeesonto the same HR system in the cloud in only sixmonths’ time,” said the award-winning CIO. “Aclassical implementation of this project wouldhave normally taken more than 18 months’time, and so we saved the company one fullyear on this project. And time is a cost for me,because I would have had to allocate internaland external resources during that year.”Flórez achieved these quick wins by observinga simple but hard-to-follow rule: not tobe misled into believing that cloud serviceproviders have no limits to their offerings. “Weadapted ourselves to the services in the cloudand not the other way around,” said Flórez.“I made it clear that I only wanted solutionsthat did not need to be changed or adapted. Iwanted solutions as they were, I did not want tochange them, even for software testing.”Another factor that facilitated the selectionand move of the functions into the cloud wasthat Ferrovial had already spent several yearsstandardizing, centralizing, and outsourcingthese functions. Upon joining in 2008, oneof the first challenges Flórez tackled wasincreasing the efficiency of technology withinFerrovial. With too much heterogeneity intechnology and skills across the company to beefficient and meet the competitive demands ofa global organization, Flórez decided to createan ICT-based platform for innovation and agility.“We are a global company and need to be ableto provide global services,” Flórez said.As amember of both the Executive Managementand Chairman of the Innovation and PurchasingCommittees, Flórez ensured that the processof standardizing and centralizing skills andtechnology was closely linked to the company’sbusiness strategy. Flórez also presented his ICTstrategy plan to the Board of Ferrovial to ensurehe had their support.With the support of Ferrovial’s Board ofDirectors, Flórez and his team increased thequality of services by establishing service-levelagreements, clarifying which project solutionswould be developed, and introducing businesssensiblemetrics to improve and engage withnon-ICT colleagues. At Ferrovial, where mostsenior managers have studied engineering,having metrics enables the CIO to convinceother senior managers of the benefits ofspecific ICT solutions.Flórez and his team also studied the businessprocesses across Ferrovial and likewiseexamined the ICT systems that could bestsupport these processes. From this exercise,they realized they did not have to performall the business processes internally. Theyidentified commodity processes and servicesthat seemed to be the most promisingcandidates for outsourcing, such as e-mail,payroll and human resources, some purchasingprocesses, network services, and even someICT infrastructure services. This enabledFlórez to save resources on operations andmaintenance and invest a greater percentageof the ICT budget on innovation.Last year Flórez, now CIIO (Chief Informationand Innovation Officer), was asked to lead anew corporate-level initiative called the GlobalProcurement Committee. Its aims are to ensurethe continued coordination and control ofglobal procurement activity in Ferrovial. “Wedid the same for purchasing as we did for HR,”said Flórez. “We put all the purchasing processin the cloud and the implementation wasextremely quick.”Building Business Performance and Competitiveness with ICT 15
Page 1 and 2: Building Competitiveness and Busine
Page 3 and 4: Foreword“ Information andCommunic
Page 5 and 6: ExecutiveSummaryFor the first time
Page 7 and 8: FindingUses of technologycan become
Page 9 and 10: Real SuccessEuropean policiesdesign
Page 11 and 12: FindingSimply focusing onICT invest
Page 13: FindingHigh performersmatch investm
Page 17 and 18: FindingHigh performingfirms involve
Page 19 and 20: FindingDigitized platformsare assoc
Page 21 and 22: These results provide additionalsup
Page 23 and 24: Overall, complementarities holdacro
Page 25 and 26: Real SuccessFerrovial: Howinvestmen
Page 27 and 28: Key Implicationsfor BusinessLeaders
Page 29 and 30: Key Implicationsfor PolicyMakersThe
Page 31 and 32: Next StepsTo remain relevant and co

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