A conversation with Luca Demarchi, Group CIO at Bata
In this episode of the HITEC Transform.ed Series, Marcelo De Santis, Chief Digital Officer at Thoughtworks North America, speaks with Luca Demarchi, Group CIO of Bata, about Bata's new strategy and transformation, bringing change to a federated organization and more.
Marcelo De Santis: Hello everyone. Welcome to a new episode of the HiTEC Transform.ed sponsored by Thoughtworks. My name is Marcelo De Santis, Chief Digital Officer at ThoughtWorks North America, and I will be your moderator today. Both HiTEC and ThoughtWorks believe that knowledge should be shared openly. We have designed this series to provide you with opportunity to learn directly from C-level executives about their transformations in their organizations.
For today's interview is my pleasure and privilege to introduce Luca Demarchi, Group CIO of Bata. Luca is an executive with more than 24 years of experience in information technology in international companies. He's Italian and joins Bata as Group CEO in January, 2021 from Pirelli where he was a Global Head of Sales, Marketing and Retail Solutions. Prior to that, he spent almost 20 years working for companies such as Magneti Marelli, Spindox, and Accenture.
He holds a bachelor of degree in computer science from the University of Milan, and a master at ESA University of Barcelona. In his current role as Group CIO of Bata, he's responsible for designing and implementing the overall digital transformation of the group, and also provides business leadership as a member of the Board of Directors. Luca, welcome to transform.ed. It's a pleasure being with you today.
Luca Demarchi: Thank you, Marcelo. Thank you HiTEC and Thoughtworks for this great opportunity. Marcelo, it's a pleasure to meet you after some years. We worked together. Thank you very much for this opportunity and thank you HiTEC and Thoughtworks.
Marcelo: Thank you. Thank you, Luca. Let's dive into Bata. Your new role as Group CIO, you are leading a transformation. Tell us about your company and then transformation you are actually leading.
Luca: I just start talking about my company. Bata is a multinational footwear and apparel manufacturer and retailer, and selling more than 150 million pairs of shoes per year. We have more than 5,000 retailed outlets. It's big company and spread all over the world and in many counties. It was founded in 1894 in Czech Republic by Tomas Bata, who was really an authentic visionary person. He started to implement the Taylorism and industrial approach to shoes production. He revolutionized the shoemaker industry.
Today in Bata, we believe that we can produce and sell shoes that are both fashion and comfortable. Our slogan is comfort with style. I joined Bata in January 2021, as you mentioned, during the lockdown. The CEO of the company asked me to focus on customer-facing activities, consolidating infrastructure, and reducing the risk of security attacks. I pushed the e-commerce implementation and the security and infrastructure activities.
Unfortunately, we were, and we still have a very old and fragmented application infrastructure landscape. We have many local application, Bata is a very federated company, and we are trying to regionalize and standardize at the global level. In June last year, we designed a Bata strategy called stepping forward. It is a roadmap for the 2022 and 2025 with a clear direction for these years. Just after that, I designed the strategy for 2022 to 2025, with a stronger that is supporting this business strategy.
Five main pillars. One is related to the planning part because we want to improve the way in which we plan the sales, the production, all the logistics processes. The managed part in which we wanted to accelerate and automate is a lot of management process. HR, finance, supply chain.
Then know part that is know better the products, the customers so that we cangrow and drive this data approach. The sell part that is going to implement the omnichannel platform. Then we have the core IT part that is mostly related to infrastructure and security part. This is in a glimpse, Bata and what is our expectation and our strategy for the next four years.
Marcelo: Excellent. Excellent, Luca. Thank you for the debrief. I'm sure it's not easy to be in your shoes in such a challenging position and also such a great agenda that you have to transform Bata. No pun intended to be in your shoes, obviously. Question is the following. You are working basically across the enterprise. You mentioned you're working to make your company better from an operational perspective but also you also mentioned that you're working in e-commerce, omnichannel. How do you manage to prioritize those investments? Sometimes you need to invest in the back office, sometimes you need to invest in the front office. How do you yourself prioritize things?
Luca: This is another thing because as you mentioned, everyone is asking everything. There is this digital transformation and every CSO is asking a new implementation, new projects, a new platform, and they have read something on the internet. It's always very challenging that part. From my side, we identify a roadmap together with the CEO and the CFO of our company. Now we put these four years' roadmaps in place. This is let me say the structure and the core elements of the skeleton of our company. This is a multi-project.
We are working on that. The second point is that we are managing new request from time to time in an agile way. Also, there is a specific need to monitor the supply chain. Let's work and find out some initiatives. Normally, the prioritization is driven by the executive committee. There is these approval steps, very agile in this way. We go through this approval project and work on that.
Anyway. It is always like a commercial director. I'm very happy that I've been a commercial director for some years in the IT department because you have to push, you have to listen to your customer, and work together with your customer because we are jointly. We are partnering with our business that is our customer and try to enable them to go with the board and present the solution. This to me is very important. It's something that, as a CIO, you have to do to be a commercial director sometimes.
Marcelo: Excellent. I like what you said. You're bringing your business executive experience to your chief information officer role which is clearly giving you an edge on how to manage those conversations. Thank you for that. I think that will be inspiring for many people listening to this interview. Luca, let's say you've been in Bata last couple of years. You're going through this transformation you described. What would you say have been the largest challenges you face and what did you learn from those?
Luca: As you mentioned, there were something that went well during these two years and a lot of challenges from my side, from the company side. Even the COVID, the yes or no, and the differences of diffusion of COVID in all our countries was very difficult. Sometimes you have COVID in some countries and there are not COVID in the other one, so you have to plan accordingly and stop some initiatives and say, okay, we stop these initiatives but then we will come back and work once again on that activity.
That was even a difficulty with the partners because we have some times in fixed price, and you know that this company we're working with from another region, and they say, "Hey, guys why there is this? We have to stop. We don't have COVID here. Instead, they were COVID in another company, in another region, and we have to stop, because the uses were not available, were a lot of people on the COVID.
This was one of the biggest challenges that we faced but anyway, so as I mentioned before, Bata is extremely federated company and so we have many different processes in our organization. We have different companies. We have companies that are 20, 30 millions revenue, so small and then we have companies that instead are bigger, $400 million, $500 million, like in Italy. Implementing a solution that is able to support all these processes sometimes is very difficult.
We have in India, sometimes, let's talk about this process. We have 10 person working on that and then instead in South Africa, we have, for instance, five person. Different process, different complexity and trying to only formalize and try to support that sometimes because you cannot only formalize all the processes. It was not so easy. At the end, the changed management that we use is something that is very complex.
I find even in myself difficult sometimes to change a few functionalities on the system that I'm using and I can imagine that it's very complex for the rest of the person, perhaps even person that are using these tools in a day-to-day job. Change management, to me, is something that is very important and very complex and you have really to take care of that in a very structured way.
Marcelo: Thank you Luca, and knowing you, having had the pleasure to working with you, you're a person that, you're good at engaging people in conversations and aligning them and building, I would say common purpose for projects and initiatives and transformations. Let me double clicking in change management for a second, right? You mentioned your organization is federated, super large company, different sizes of businesses across different geographies. How do you manage change? Which are the top three tips from Luca Demarchi to manage change in such a complex business landscape?
Luca: To me, change is change in the organization but change even in my team, in my area. Talking about change in the organization, to me, first thing is change from the top. If the CEO, the executives are really focused on some specific target, I think that you're going to address it. This is something that, to me, is really important. Then as you mentioned, to me it is important to engage the person for whom or with whom you're doing the project and not just one or two key users, but try to be an evangelist and be in harmonization of all these projects and all these platforms is really important because the engagement is important from my point of view.
Then you have to manage the change even into your organization, into your area. This is something that I'm pushing a lot. Particularly I want my team to be business oriented. I hired even some person from the business side in order to provide this knowledge of the business because the differences between business and IT is trying to be more light. This interaction is fundamental.
I see in my previous experience, particularly, a person from the business has come in the IT with IT knowledge. To me, the IT really has to understand the business targets, the needs. What are the main business processes? I even push a minded way of doing things. Even to me, this is fundamental. Always push activities and do whatever is needed to respect the deadlines, set milestone deliverable. This is very, very important. This is something that I even learned from you, Marcelo, to meet the deadline, to be consistent on what you promised and what you are, let me say selling and proposing to the company.
Take risk and be very competent. Competencies is fundamental. We need to push the culture of continuous learning in all the things that we do because there is something new on the market from new technologies. A new way of managing the process. This is something that we have to be really open, collected these things in the market from our competitors, from companies, from other markets, really, really important.
Marcelo: Thank you, Luca. You just mentioned something that made me think about another question. You mentioned about competencies. You have a large team. I'm sure it's a team that is pretty much global. When you think about technology talent, what kind of skills and competencies are you building in your team as you look forward to this transformation that you're leading?
Luca: To me, one of the most important knowledge that we have to do is project management. Both waterfall, agile. I'm not a fan of extreme way of working, of project management, but it's very important that someone is able to structure a project, manage the stakeholders, understand what are the key deadlines, what are the steps that we have to do for completing some activities, and anticipate, and then those critical situations. This is to me one of the fundamental things that I want my team to have.
Sometimes I'm even facing some challenge with the teams that are saying, no, we need more functional capabilities, more, let me say, functional analyst instead of project management. I say, okay, functional analysis is good, but then they have to have a project management approach. This is critical in my idea. Then not always look at the best talent, but I'm looking at the person that really take a passion on the activities that they're doing.
They have to work harder if necessary, and then this is a mind approach that we have to do. Then talking about competencies, so data is fundamental. The ability to work with data. The importance that we give to the data. This is really an important element because this is key in my opinion on the success of the company. Really understand and filter the data is something that is not so easy, but sometimes it's fundamental because there are person that ask for everything and for any report and any data.
At the end, the ability to bring them to understand. What do you want to do? What do you have to do? Let's understand what type the data that give you this possibility to achieve that target. Not just asking data and understanding all these things. Then even, I try to organize a meeting on the communication part. Even that is fundamental.
IT normally has been struggling with the communication part, and this is instead the key element of our organization and the ability to negotiate. We negotiate everyday. We negotiate with our business colleague. We negotiate with our boss. We negotiate with our partners. This is a key element on what we are doing. Then I'm pushing even business training.
This year, I focus my team on attending a merchandising training. I've asked to the merchandiser lead global to organize some sessions, and he is going to presenting to my team, what are the processes of, sales planning, assortment, allocation, replenishment. All these steps that are fundamental because merchandising is a key process of our organization. It's very important that we understand that.
Marcelo: Excellent. You are building skills that are not only on the technology side, but also making sure your team understands your business. Very nice combination, Luca. Thank you for these comments. You talk a lot about data. I've been in similar industry in the past, and I know how important is data for consumer companies, for companies like yours that have big brands. You really need to understand what the consumer thinks, how the consumer makes a decision on buying or not your products. What's your approach to data for Bata? What's your philosophy? How do you get that data in the right hands, as you said before, to make the right decisions?
Luca: I started with analyzing the situation in Bata and the situation was good in some companies. Some countries, we have a local data warehouse, old-fashioned data warehouse, but even daily reports that were good and in some other countries instead, we didn't have any reports, or at least very basic reports, weekly report, monthly report. Sometimes are collected with the manual activities. What I decide and I proposed to the board was to implement one global data platform that is going to support not just the local needs.
No. If the local companies that doesn't have any reporting capabilities can use it, but even to aggregate data in a more structured way. To me was, at the beginning say, okay, it's easy. We take data from the data warehouse, [foreign language], and then we take data on some Excel files, some other countries, and let's do it. At the end, I face some challenges on that because different type of data, different type of KPIs and indicators that all the country are using.
My idea was, okay, start on one data platform, do the artificial intelligence machine learning activities and prediction on the sales forecast on analyzing the data and creating cross-selling opportunity. Instead, at the end, I just put the basic pillar of creating in an incremental way, this data platform starting from the most important things that were last year on the omnichannel part. Then moving on the merchandising, then we are doing on the finance and supply chain part.
My idea is really to have a one data platform that is able to provide information in a similar real-time to all the executive and anticipate and provide actionable insight to the team. Not just the data, but to put some intelligence in the data that can provide some action to the salesperson, to the sales assistant.
Even on the finance team, analyzing what is the trend of our stock in other countries, what is the forecast of the sales, and try to support and anticipate action. Anyway, frankly speaking, the roadmap is not so easy and it's not going to happen in weeks, that part.
Marcelo: It's certainly a journey and data in many companies, I have to say what I've seen in many different companies having put for many years on the back seat and suddenly got into the front seat and now you need to do a little bit of I would say cleaning of the situation. I think you seem to have a very good strategy, Luca. Thank you for sharing your real-life experience.
Let me ask you a completely different question to your part of the world of Bata. We all know that decisions on business strategy these days include in most of the cases decisions around technology and data. How do you describe your role in those board conversations? How do you influence the decisions? How do you collaborate with the rest of your colleagues to shape business strategy basically?
Luca: My idea is to engage as I mentioned before, to engage all these business leaders and have a direct conversation a clear conversation with all of them. I'm doing periodical meetings, periodical updates on the steering that we have, even just highlighting some updates on the executive committee meetings. Say, we implement this, we did this, we have some challenge in this and very sketch update. Then we have organized with the top management quarterly updates on the activities that we're doing.
Frankly, I'm very happy on the executive knowledge on the digitalization. My CEO is a great leader and he's an enlightened person on digitalization. He's challenging all the other executive and I'm very happy about that. Even my boss that is the CFO is a very great leader on that part. We make compromise because sometimes we don't have the budget for doing all the activities that they would want to do and we plan this roadmap according to what is even the trend of the market.
I'm always try to engage all the team, to share in the team what is the situation, what are the challenges, even the successes that we have and then I think it becomes linear. It's not something that is zero then you update the rest of the team and say, "Guys, why do we have this? You implemented this and we didn't know." It's like a harmonization process and a fluid process to share and to talk with these people even if they're very busy. I'm very busy too so sometimes not so easy to meet up together, but this is my approach.
Marcelo: Excellent, thanks and you're right. I mean, it's an evolution. All these transformations are not like flipping the switch and then it's an evolution. In regards to that, to acknowledging that transformations are a journey, an evolution, and things change, you have constraints. You mentioned I might have budget today, I might not have a budget tomorrow while I'm going through basically a recession in the economy which is hitting almost every industry and every country across the globe. What metrics do you use, Luca, to measure that you're going in the right direction with your transformation?
Luca: This is something that we defined together with our CEO because he always challenge us and say, "What do you measure success?" How we can understand if we succeed in something. We have this clear roadmap on the main projects and we are monitoring both the project management point of view. We use the project indicators that measure the status of data of a project considering the main deadline and deliverables.
We have more than 100 project initiatives, some small, some big that we continuously monitor and we provide this periodical update to our executives. Then we have two major indicators. One is the IT indicators that give us a sense of how well we implemented a solution and we monitor, for instance, the defect and the number of bugs that we face, number of CRM, then adoption of the solution.
These are more from IT point of view. How well we implement the solution. This was a discussion requested from our CEO. We highlighted for each initiatives from three to five business indicators so that measure the benefit that the project is going to provide. Even if they are not considered into the business case at the beginning, but we are measuring-- For instance, for the merchandising project we are managing the availability of products to our stores so that the more probability we have so that we increase the probability of sales. For CRM, we mention the number of customers and then average tickets and all this information.
For each project, we have these indicators. As we approach most of the initiatives in an incremental way in the idea of think big, start small, scale faster, we start smaller because even on budget constraints, but we normally implement something considering a smaller portion of functionalities or not all the functionalities on a limited number of countries. Normally, we consider one country or two countries. For the ERP, we started ERP and we are considering Africa that are smaller countries and India. For the merchandising, we are considering India that is a big company, and Thailand that is instead a smaller one.
So that we test this project, we are going to evaluate the indicators of these business indicators. After that, we are saying okay, we are succeeding, we are not succeeding. This is the approach that we are having. We even stop a project because we understand that it is not producing any benefits. We say, let's stop this. It's not the right time. It's not the right moment. It's not the right person. Even the technology, let's stop this and work on other thing. This is how we try to implement, as you mentioned, in a journey way, incrementally activities, projects and even test on the field that the things are moving well.
Previously, a long time ago, there was some big implementation in Bata of IT solution without having success. There is this heritage in our company that say big project starts small because we had so many challenges in the past. Let's see that the things are moving. Frankly, the things last year, so we implemented things. The budget is increased this year and is increasing next year, even if, as you mentioned, Marcelo, the situation nowadays is quite complex or it's going to be complex. Not today, but in the future could be complex. We are very cautious on the next few years.
Marcelo: Excellent, Luca. Congratulations for how you're managing all these turbulance. And still making progress still [crosstalk]
Luca: I had a great guru, Marcelo.
Marcelo: [laughs] I don't know who is that person, but [laughs] thank you for that. I don't think I deserve that, but thank you for that. Luca, two years from now, three years from now, how do you see yourself? How do you see your company? How do you see your team? How do you see the transformation you're leading?
Luca: I think that the company will be in a different situation, at least in some areas that we are addressing. New processes in some areas: finance, HR, supply chain, sales, and marketing. Most of them I'm expecting will be completely digitalized. New approach and new application landscape that today is very fragmented locally, and instead, we will have best-in-class platform managed at the global level, perhaps not deploying all the countries, but with a clear roadmap and rollout.
A company that is more data driven than the one that we have today that has the possibility to access data in a near real time situation with, as I mentioned before, actionable insight for making better decision. I will really want to test and then scale artificial intelligence for all the main process of our organization from the planning to predicting main elements of our processes. Let me say that I'm expecting that really, artificial intelligence is going to be not like a commodity, but is going to augment our capacity and our processes.
This is something that for sure we have to boost even if we are building the basic pillars as I mentioned before. We are starting in a new ERP, the new merchandising data platform is ongoing. We are implementing basic things, but at the end, we are even working and looking at new things. Even I see a lot of attention and a lot of fertile terrain for the HR processes. Even a better way of managing the employee of supporting on the recruitment part and to support the talents and keep them growing and increasing their career expectation.
Marcelo: Excellent, Luca. I think there is something to quote from what you say, AI augmenting the processes of your organization. Surely it is an inspiration for many people listening to this interview. I'm going to ask you the last question and then we are almost ready to close the interview. We have many colleagues from HiTEC listening to this podcast, colleagues from ThoughtWorks, many other colleagues that are in the technology industry. They're looking at Luca, CIO, Bata, telling these amazing stories about transforming an organization across the world, very complex, landscape using emerging technologies. What will be your words of wisdom for those listening to this interview?
Luca: To me, it's all about people, knowledge, and hard work. We are interacting with people to be able to discuss, convince, listen, change people in order to make the transformation happen. The knowledge is complex, but you can overcome and solve it if you have good knowledge and passion. At the end, you have to work harder with passion, harder than your competitors in order to make things happen. To me, it's all about people, knowledge and hard work.
Marcelo: Amazing words of wisdom, Luca. Thank you very much. Unfortunately, we have arrived at the final of this interview. Thank you, Luca Demarchi for joining us today. Thank you to our audience for watching this interview. We look forward to connecting with you again for the next episode of HiTEC Transform.ed series to hear from executives on their experiences leading the transformation of their organizations. Thank you. Take care and stay safe.
Luca: Thank you very much, Marcelo. It has been a pleasure.
Marcelo: My pleasure.