See the Light
19 November 2010 Christiaan de Backer
As CIO of a young but swiftly growing company, TomTom’s Christiaan de Backer is often obliged to explain the value IT can add to the strategic development of the business. Here he talks to Elly Earls about the future of the organisation’s IT systems following its acquisition of Tele Atlas and his role in promoting technology.
IT can contribute much more to a business than the traditional automation of transactions. By providing the right information at the right time, an effective IT department can help top-level executives make the best decisions, improving profitability and benefiting a company's bottom line.
Before being appointed CIO of TomTom earlier this year, Christiaan de Backer was running a successful and world-renowned IT department at digital mapping provider Tele Atlas, an established company familiar with sophisticated computing solutions.
But when GPS provider TomTom acquired the mapping giant, de Backer's role began to change. 'TomTom is immature compared with Tele Atlas,' he notes. "It's a young company. It's still in the build-up phase, and still learning the value of IT.
"This was less the case at Tele Atlas. When it came to automation and the use of IT in the company's processes, things were much more sophisticated. For example, we had customer relationship management systems implemented with full views of customer deals, but, for TomTom, that is not the case."
In his role as TomTom's CIO, de Backer hopes to improve this, and one way of moving forward is working as closely as possible with his CEO. "There are a few IT mechanisms we are using to try and get as close to the business as possible," he says. "We analyse the business requirements, build proposals and define our priorities together. Where do we want to put our investments? There are always more requests than we can handle with our resources and it's all about doing the right thing for the business."
For de Backer, there is one essential caveat: "You always have to safeguard some money for solving the company's existing issues. Otherwise, you are just investing in new things and don't have enough capital to fix the basics." Yet, without risk, there is no reward, and innovation is also one of the CIO's top priorities. "We have to do some innovative things that are not always justified by the business case," he adds.
"It's hard to justify upfront, but it is essential to try out these technologies." Of course, when implementing new IT systems, a full risk assessment is carried out. "We apply all of our security guidelines but we also need to make sure that, with the way the systems are set up internally, there is no segregation of duties," de Backer remarks. "In terms of laying the infrastructure, we look at back-ups, archiving and making sure the system is compliant with all relevant laws."
Nonetheless, in an uncertain climate, CIOs must try to keep costs down, a delicate balance to achieve in a company so focused on innovation. De Backer believes this means reducing costs where possible, but at the same time investing in areas where there is a future. "You will probably have to cut a little bit deeper before you have the money to invest in the right things," he says.
Innovation and cost reduction often go hand in hand, something that is obvious across de Backer's department. Virtualisation, standardisation, optimisation, technique monitoring and capacity planning mean that the company is able to make the best possible use of its existing infrastructure, rather than investing in costly new servers. "We are innovative, as much as possible," says de Backer, "and we are also looking at alternatives such as cloud computing to see where it makes the most sense."
While cloud computing is probably not the way to go if a company has a stable load on its machines, there are other scenarios where moving online is the most attractive solution. "When you have an unpredictable load, it seems to be a good opportunity," de Backer admits. "It is much more sensible than spending all that money in-house for a peak that you have once a month."
It's all about "right sourcing", according to TomTom's IT aficionado: "You need to use the right technology for the right applications. I don't like to say 'Let's move everything to cloud computing,' because it seems to me a bit too much like the 'e' wave we had at the beginning of the century. Everything was 'e' and if it wasn't, it was outdated. It seems pretty much the same now with cloud."
While price models could change in the future and pay-as-you-go options could be delivered without upfront commitments, at the moment de Backer believes companies need to remain balanced when considering new technologies. Many CEOs try to distance themselves from their organisation's IT departments as much as possible, but at TomTom IT is linked to product development, somewhat shifting the traditional balance.
"The CEO couldn't care less about traditional IT; the SAP, the HR systems, the logistics systems and so on," de Backers notes. "It was the same at Tele Atlas, and I remember what my previous CEO said when I first joined: 'I don't want to see you, because if I see you, there's something wrong.'"
However, there is a lot of IT involved in product development at companies such as TomTom and Tele Atlas. "Cost savings are managed through the IT systems and automation, but product development is also part of IT at TomTom," de Backer explains. "It's a lot about generating revenue streams and bringing new services to the customer. Although that is not traditional IT, and it is more the responsibility of the CTO, it is still, to some extent, IT."
Two become one
As de Backer looks to the future, the most pressing challenge for him is the amalgamation of the IT systems of TomTom and Tele Atlas. But while the most difficult integrations are to come, the applications that have already been merged were not without their issues. "Some things needed to be fixed immediately," says de Backer. "The two infrastructures needed to be integrated." The calendars, email systems, telephone systems and the basic network had to be interconnected so that applications from one part of the organisation were accessible from the other.
De Backer was also keen to achieve some quick wins, putting him in favour while he began the long process of integrating the two companies. "It sounds silly, but one of the first visible applications I integrated was the directory with pictures. It was nice to deliver because it made one part of the company visible to the other; for me, that was important."
As the CIO looks to put the two companies on one HR system, one finance system and one internet, the real challenges arise. "It takes more resources and more time," he remarks. "We are building those plans and standardising the HR systems." The HR systems and the intranet are set to be brought live this year. Yet the financial system will be his biggest headache. With the two organisations on different platforms and in different businesses – TomTom is more logistics-orientated and focused on inbound and outbound royalties – the hearts of the two company's ERP systems are different.
In terms of product development, IT could also have a role to play in a revision of the business model as the company looks to deliver live services. "You're talking about providing the cheapest fuel prices to customers, and local routing," de Backer says, adding that the biggest challenge will be to change the revenue stream or business model in that area. "We sometimes pay to get the information from the points of interest, when it should be the other way round."
Following the acquisition of iLocal, a company which finds stores, brands and products in Holland, TomTom is starting to create business directories in Europe. De Backer has a lot on his plate. He is faced with the challenges of expounding the value IT can give to TomTom as well as integrating its existing system with the more sophisticated processes in place at Tele Atlas.
But the most important lesson that can be taken from his experiences is that a sensible IT strategy can lead to a much-improved bottom line.