cio_adidas_salomon_s_organizational_structure

Section One: Profi les of IT Centralization

adidas-SalomonThree-Tiered Applications and Infrastructure

Company Overview

2002 Revenues: !6.5 billionCompany FTEs: 15,000

Company Description: The German-based adidas athletic shoe and clothing fi rm merged in 1997 with Salomon, maker of skis, snowboards, and TaylorMade golf clubs, to become the world’s second largest sporting goods company. adidas-Salomon manufactures in Asia and markets and sells products globally, with 80 percent of fi rm revenues generated by the adidas division.

IT Department Overview

Over the course of three years, adidas-Salomon transformed IT from a function led independently at a country level to a global function with regional and central IT teams reporting to the CIO.

Control LocationGovernance: Central CentralApplications: Central/Regional Central/Regional/LocalInfrastructure: Central/Regional Central/Regional/Local

IT spend as a percentage of total revenue: 2.2 percent

Percentage of total IT spend controlled centrally by HQ CIO:2002: 35 percent2004: 100 percent2006: 100 percent

Number of in-house IT employees: 500 FTEs

Number of contractors/consultants: 120 FTEs

Number of outsourced employees: 100 FTEs

Number of countries in which IT operates: 48

Number of data centers:2002: 202004: 202006: 5

Number of live fi nance ERP instances:2002: 82004: 52006: 3

Source: adidas-Salomon AG; Working Council research.

Charting the Course for Principled IT Centralization

Detailed Description of the IT Function

Key Organizational AttributesThree Levels of IT Balance Additional Effi ciency with Local Responsiveness—Central IT develops and maintains enterprise-wide applications and infrastructure, leads IT strategy, sets architecture standards, and ensures IT priorities align with business needs. Regional IT manages regional rollout of centrally developed applications or infrastructure. Country-level IT provides on-site change management and user support.

Salomon and TaylorMade Stand-Alone IT—The IT functions for Salomon and TaylorMade are managed as centralized autonomous functions. The CIO maintains oversight into the budget, headcount, investment, and strategic planning.

Interaction Between IT and BusinessIT Steering Committee—IT steering committee guides the development of three-year IT strategic plans and budgets. Business unit steering committees direct IT priorities which are then consolidated into a global plan. The group-level steering committee approves the consolidated IT plan and communicates it to both the business and IT.

Business Liaisons—Liaisons manage relationships with the seniormost executives in the regions (North America, Latin America, Europe, Asia–Pacifi c), and the corporate functions (Global Operations, Global Marketing, Finance, HR/Corporate Services), in addition to helping the business develop the IT portion of business unit strategy.

Executive IT Satisfaction Survey—The CIO personally interviews 20 senior executives annually on satisfaction with IT performance and business–IT alignment. This survey creates an open communication channel with IT.

IT Employee Survey—IT employees biannually complete a survey of understanding of business strategy as well as job satisfaction.

Funding Mechanismsadidas-Salomon uses chargebacks that vary from full chargeback for certain services to partial chargebacks where group IT is covering a portion of costs.

Organizational Self-AssessmentStrengths—Direct reporting structure of regional IT to central IT provides global control of IT while maintaining resources close to the business. Three-tiered organizational structure matches the business strategy of developing and selling regional products.

Development Opportunities—Further consolidation opportunities are available across the TaylorMade and Salomon divisions.



Adidas-Salomon Europe

Infrastructure

Local Infrastructure

Support

Local Applications

Support


Infrastructure


Support

Local Applications

Support

adidas Europe130 FTEs

Three-Tiered Applications and Infrastructureadidas-Salomon IT Organizational Structure

As of January 2004

• Help Desk and IT Security• Service-Level Management• Data Center Operations• Network Management

• Governance of IT Standards• Enterprise Architecture• Solutions Architecture• Advice on IT Projects

• IT Strategy • Vendor Management • IT Training and Communications• PMO• Quality and Process

• Liaisons Assigned by Global Functions

• Account Strategy, Budgeting, and Performance Management

• HQ and Global Applications Development and Support

• Stand-Alone IT Function • Stand-Alone IT Function


Infrastructure• Implementation of Centrally

Developed Applications• Infrastructure

Maintenance


Infrastructure• Change Management

Support • On-Site Support

Regional Infrastructure

Applications Implementation


Support

Local Applications

Support

Salomon IT

68 FTEs

adidas Asia

55 FTEs

adidas Americas

35 FTEs

adidas Europe

140 FTEs

Offi ce of the CIO

13 FTEs

Infrastructure

42 FTEs

Applications

78 FTEs

IT Architecture

8 FTEs

Business Liaison

11 FTEs

TaylorMade IT

37 FTEs

CEO

CIOIT Steering Committee

Structure replicated in Americas and Asia


Charting the Course for Principled IT Centralization

Goal 2002 2003 2004

One Shared IT Infrastructure

• Corporate purchasing standards

• Global procurement for infrastructure, software, licensing, and consulting

• Standard client platform• Global remote access• Active directory

• Security standardization• Follow the sun support

One IT Organization and Process

• Central reporting, activities unchanged

• CapEx business case process standardized

• Launch annual executive satisfaction

• Adidas IT reorganization to three-tiered model

• Launch annual employee satisfaction survey

• Restructure local developers to virtual teams

• Change of reporting lines to regional IT managers

One Application per Business

Function

• Project launched 2003 • Focus on deploying applications fi rst to Europe

• 30 legacy systems retired

• 70 legacy systems retired

One Global Data Model • Project to launch 2005 • Project to launch 2005 • Project to launch 2005

Toward a Global IT PlatformReorganization is one pillar of the larger plan to create an IT function that provides consistent service globally

Result

Infrastructure Spend

Percentage of Staff Reporting Directly to CIO

Number of Applications

2002 2003 2004

15% 0%

2002 2003 2004

35% 35%

100%

2002 2003 2004

160114

12



adidas-Salomon’s IT Migration PathGradual Transition to Centralization

Reorganization Trigger • Business Unit frustration with IT quality, delivery, and cost • Business migrating to regional and global structure

What Changed

• CIO gained dotted-line control over all IT• Central IT teams created to liaise with business units, consolidate

infrastructure, set architecture standards, develop and manage outsourcing contracts such as WAN

• Regional structure created to serve adidas business units• Reduced role for country-level IT• Process-by-process standardization of global applications starting with

order management

Why• Radically reduce IT complexity, create transparency into IT spend and

reduce costs• Allow IT function to serve increasingly globally structured fi rm

Implementation Tips• Strong CEO backing • Quantifi able results delivered early to shift perception of IT• Focused on communications: road shows, Web site, surveys

• Shifting attitudes to service provision gauged through surveys at executive and staff levels

• Business drives process standardization

Country Managing Director

Country IT

HQ IT

CEO

adidas Country A IT

TaylorMade IT

CIOCFO

CEO

BU CEO

Offi ce of the CIO

Business Liaison HQ IT

Salomon IT

CEO

CIO

Infrastructure IT Architecture

Offi ce of the CIO

Business Liaison Applications

TaylorMade IT

Salomon IT

adidas Europe IT

adidas Americas IT

adidas Asia IT

2000 2003


cio_adidas_salomon_s_organizational_structure

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