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Issues of the Ariadne Capital Journal - Through the
Maze
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| Reuters Plc Chief Information Officer Greg Meekings: Interview |
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| Interview
by Cornelia von Scheven, Associate, Ariadne Capital
Interview conducted
at the Economist CIO Roundtable
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Greg Meekings has been Chief
Information Officer since September 2002. His remit covers,
IT Services, Business Applications, Business Process, Sourcing,
and Shared Services. The CIO's mission is to "move Reuters
globally to a set of optimal business processes and systems
in order to drive excellent customer services as well as significant
cost savings". Greg sits on Reuters Global Operating Committee.
Q: What is the best advice you can give
start-ups wishing to sell into large corporates? How do they
get your attention? How do they ensure a sale of product/service?
A: There are several barriers
for a start-up to get the attention of senior managers at
corporates: firstly diary time - finding time to pitch to
a CIO is difficult. Start-ups have to be persistent and
patient. Secondly timing - in Reuters' case in particular
- barriers are caused by a combination of budget control
and technology planning stage. Reuters no longer has the
budget it had in the past and in the past 18 months it has
focused on cleaning up previous investments. Reuters is
at the moment more likely to spend money on deployment training
to make the most of previous investments.
A CIO is anxious about technologies
that put him at business risk. He will judge a technology
on the basis of whether it is an optional or a must-be product/service.
Real business value and return have to be measurable. For
example solutions to performance problems of legacy software,
when there are any, are very desirable.
It is imperative for companies
to know how to express their value proposition when approaching
a corporate. The value has to be immediate; solutions should
bring money savings or help the CIO in getting credit for
doing a great job.
Networking and contacts are important
and corporate relationships should be leveraged.
An actual sale depends on the
business decision process of the corporate; it depends on
how strategic the offering is to the corporate and on how
much it costs. If the cost is small, the CIO and his team
take the decision. If the cost is high the decision will involve
the senior business management team. Reuters has a business
sourcing team, which it engages to find opportunities and
negotiate contracts with prospective start-ups.
Q: How are investment decisions
taken in your organization? Are you the sole decision maker
or do you listen to the recommendations of your middle managers?
A: We decide with an investment
committee and prioritize investment decisions on their capability
to transform the business, improve the customer service and
thirdly on an ROI assumption.
Q: What are your views and
current implementations (if any) on offshore or outsourced
IT development done in lower-cost countries? Do you have any
existing facilities or partners in India, Eastern Europe or
China?
A: I am cautiously optimistic. We have had good experiences
with Satyam, who do most of Reuters' legacy systems, in an
on-shore - off-shore model, where nine out of ten workers
are in India and one is present in Europe, to manage ongoing
support and maintenance of the systems.
Reuters is building it own off-shore
centre in Bangkok, where labor is ca. six times cheaper than
India. Reuters already employs 600 people in Bangkok. If a
company needs specific skills, like in Reuters' case, it is
better to build an own off-shore capacity; if however a company
is able to get scale benefits, it should outsource to an outsourcing
partner. As an important employer in Thailand, Reuters can
furthermore benefit from tax credits and employs roughly 20%
of technology graduates.
Q: In reference to the article in the Harvard Business Review,
"Does IT Really Matter?", is IT like a utility or
is it a point of differentiation and value-add to a company
internally?
A: A large amount of IT does not
generate competitive advantages, and is commodity-like. But
there are always opportunities, such as process management
or sales force and administration automation.
Q: What are your biggest pain
points?
A: Recognizing that to get the
value-added services, we need to change the behavior of users
to help them make the most of what they get.
Managing cost and legacy is a
second pain point. An established business has 20 years of
history - also in terms of technology - they cannot erase
or switch off, because they generate large revenue.
Q: How are you facilitating
platform diversity to protect against viruses and worms?
A: Reuters uses a Microsoft operational
platform. After much consideration we came to the conclusion
that Linux would be too expensive for us, it is costly to
support. Microsoft is more prone to virus attacks and therefore
it is necessary to invest in security in firewalls, patch
management and online virus scanning, and to work closely
with Microsoft, as I do. Microsoft is investing billions of
dollars into virus problems.
Q: What are the primary drivers
behind your IT spend? Going forward, how do you manage your
technology portfolio between legacy systems and innovation?
A: Primary drivers include the
aim to reduce costs every year by £40 million - reduce
staff and use Siebel as a basis for managing project automating
orders. Self-provisioning software is important to reduce
costs and up-sell services.
At Reuters, I am progressively retiring the legacy applications
- a combination of Oracle, Siebel and Microsoft - however
I have not had the budget and management time to think about
innovation. One has to be careful where to innovate; it works
fine for internal products, but is often too risky for all
customers.
Q: Who drives business transformation
in your organization?
A: A person who reports to the
CEO is in charge of business transformation at Reuters. I
have some responsibility and report to the head of operations
and technology. Graham Albert runs the fast forward program.
Product heads drive product innovation. I retain control on
what is bought at Reuters; it does not work always to sell
to lower ranking IT managers.
Q: Is your IT budget shrinking
or growing?
A: It has shrunk and is continuing
to shrink but at a lesser rate. We use off-shoring to save
money and contribute those savings in part to the bottom line
and in part for internal IT capacity.
Q: What is the biggest challenge
of communicating the value of IT investment to the rest of
your Board?
A: Understanding what the real
value proposition is. If there is a 12 month payback, it is
easier to convince the Board.
Q: What are the primary initiatives
in your five year plan?
A: I do not have a five year plan;
I have a two year view of the world. My primary projects currently
are self provisioning, and information management and business
intelligence. Reuters has lots of legacy systems and we need
a consistent way to report through the company. We need to
be able to take data from anywhere, organize it with meta-data
and store it. We are building this system in-house, with sequel
servers and off-the-shelf Intel boxes, standard ETL technology
to have a multiple, integrated analysis engine, including
report writing functionality.
Q: How do you source technology
to solve business problems?
A: We go to the market place and
use research houses such as Gartner or Giga to look for what
companies exist. Then we analyze their competition and then
decide on the best player.
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Ariadne Capital Journal - Through the Maze Volume
4, Edition 2
