Editor's note: This is the first of two parts about Johnson & Johnson's technology operations. Be on the lookout for the second part next week highlighting the adoption of emerging technology.
Customer demands are among the leading reasons companies evolve. A traditional retailer suddenly has to morph into an e-commerce giant, on the forefront of new technologies and direct-to-consumer offerings.
Other companies, however, have always had to contend with vast portfolios and networks of stakeholders, each with their own unique requests. Johnson & Johnson is split into three main areas — consumer products, medical devices and pharmaceutical — it has over 200 operating companies, each with a fair amount of autonomy.
Each area is a multibillion business, led by J&J's pharmaceutical division, which realized $10.3 billion in sales during the third quarter of this year.
Across its vast sprawl, technology standardization becomes implausible.
Instead, J&J's technology organization enables standardization when it can provide a technology "faster, better, more efficiently" than individual operating companies could get on their own, said Stuart McGuigan, chief information officer at J&J, in an interview with CIO Dive.
Relinquishing control over a vast technology profile takes patience and perseverance, inspiring lines of business to become cued into their technology constraints and needs.
Having a vast, sometimes redundant portfolio, has a hidden advantage: with duplicate technology systems, J&J became the master of transformation, honing the technique to modernize systems over and over. Major undertakings became routine, allowing the company to move from disruptive overhauls to adopting advanced systems.
The incoming CIO
Having spent an unusually long time at one company for a CIO, McGuigan joined J&J in 2012 as part of the businesses leadership transformation wave spurred by CEO Alex Gorsky who was tapped to head the company that year.
Gorsky brought a focus on operations and technology to J&J, McGuigan said. He had a vision for how technology could transform innovation, product development and better serve customers.
The top-down investment paved the way for J&J to prioritize technology transformation, placing it ahead of the adoption curve for then emerging technologies like hybrid cloud.
McGuigan's initial focus was bringing modern infrastructure and capabilities. J&J just completed a five-year program to move all computing to hybrid cloud. Fitting in with the decentralized model, close to 90% of computing workloads are in hybrid cloud, according to McGuigan.
J&J was ahead of the curve in terms of cloud adoption. In 2012, an aura of mystery still surrounded the technology, with business leaders fearful of relinquishing data and apprehensive over its security controls.
Cloud technologies may have been around for over a decade, but large-scale and investment only upticked in recent years.
Even in 2015, using cloud on a large-scale was outside the norm, said Mark Davison, global partner, robotic process automation and cognitive, at Information Services Group, in an interview with CIO Dive.
Companies were initially hesitant, but now they wouldn't argue over the merits of the tech. Customers are pulling companies to become more digital and honing the underlying infrastructure is a crucial step.
In 2012, when McGuigan proposed the infrastructure transformation to Gorsky and the board of directors, "it was a much bolder thing to say," he said. But "we had an opportunity to either revitalize our infrastructure and technical capabilities as they were, or to leapfrog."
J&J had a few business aspects that edged the company in favor of transformation, according to McGuigan. Because it has a portfolio of 200 operating companies, its basic technology platforms were on a smaller scale than a company that had aggregated on a few platforms.
With its footprint broken down into smaller parts, it could migrate in a graceful way over time, McGuigan said. "We could move companies as they were ready and as we got very good at it, we were able to do the migration with zero disruption."
Now, J&J's focus has turned to linking business strategy with analytical transformation.
"The appetite for transformation, if anything, has increased," McGuigan said. "And using technology in a smart way to continue to transform the company and that will live well-beyond my tenure."
Transformation at work
The best technology to highlight J&J's technology stack — and the challenge of its transformation undertaking — is its ecosystem of ERPs. Each of the three core lines of business have different process demands.
In the pharmaceutical division a sales representative will have a highly scientific conversation with with a key opinion leader about a new cancer product. The hospital or pharmacy orders the product and the supply chain makes the connection.
But medical device and orthopedics procurement would work in a different way. When looking to acquire replacement knees or hips, a J&J representative works with inventory management, making sure the right kits show up in the operating room. Traditionally, they also help the surgeon make decisions about the right products to choose for the procedure.
The pharmaceutical and medical device examples require an ERP, but the transactions and needs are different, according to McGuigan.
If we had forced every business to the same ERP processes and systems, McGuigan said, "we would either have encumbered them or limited them in terms of their ability to configure what they're doing specifically to their customer or it might be a regional difference."
A business as vast as J&J can't afford to lose the flexibility by having a rigid ERP. The company can reduce its ERP footprint but not put too many constraints on the technology. So while 140 ERP systems is not the the expectation, J&J can move toward having 50 systems and inject data into a common platform to better understand customers, trends and transaction processing.
"We have the ability to make changes in market to address either e-commerce needs that are emerging or changes in the way we interact with governments and other payers," McGuigan said. "We have the flexibility to make those changes there, locally, quickly."
As J&J transformed more of its ERP systems, "we became our own consulting firm, we became our own factory because we got to test and learn over and over and over again," McGuigan said.
It got to the point where it could deploy a common SAP footprint in a pure agile fashion. J&J honed the process so much, that it rolled out every country in Latin America over a two-year period without any "hiccup or disruption," he said.
McGuigan's tenure is a bit of an outlier among CIOs. While other C-suite executives stay in a role an average of about 5.3 years, the average CIO tenure is 4.3 years, according to data from Korn Ferry.
With a business successfully transformed, some leaders get the itch to move on to a new technical environment. Sometimes the shift is inspired by boredom or the desire to take on a new challenge.
"I never expected to be in one job for seven-plus years, but it hasn't been one job," said McGuigan. "When you look at all the different businesses that we're involved in, it never gets boring."
McGuigan's tenure also speaks to his accomplishments. For a CIO to be in place that long, they have successfully engaged the business as a partner and undertaken new initiatives, according to Davison.
Key to a CIOs success is having a business leader who sees an IT function as more than just plumbing. But CIOs also have to be immersed in the business, McGuigan said.
"You have to get rid of some of the old reflexes of traditional CIOs, where everything has to be standardized," McGuigan said. "All too quickly [standardization] becomes the goal and we inflict this standard on specific businesses where it's not faster, it's not better and often it's not cheaper and we do it anyway."