>> This interview is taken from the experience notebook to download “Accelerating your application transformation”
Christophe Huerre is Thales’ Group CIO. It details how the company’s digital factory and IT department are carrying out a cross-functional transformation around applications, the cloud and above all data, to enable the group’s activities to generate new areas of value.
Why does the subject of application transformation seem key to you at Thales today?
Two complementary dimensions must be taken into account. The first has become obvious to major manufacturers: digital must be a source of revenue in its own right.
At Thales, it is the digital factory that covers this subject: how to identify digital products and data recovery that will become a new source of revenue, in extension of our traditional civil or defense businesses? To support this ambition, the IT Department will have to manage the standardization of technological choices and the proper functioning of the collaborative environments that allow them to be used.
But the DSI also has an interest in pursuing this objective of application modernization; it is the second dimension. We are no longer dealing with major ERP, PLM or e-commerce projects… The current concern is to ensure that the company becomes a data driven company. The challenge is indeed the data, its extraction, its combination… to be able to find the value where it is. It is therefore a question of building the decision-making overlays, the APIs, etc. to develop the new generations of truly data-oriented applications in a very rich ecosystem. Legacy apps can’t make it a data-centric business; this application transformation is therefore necessary.
How is the link between the DSI and the group’s digital factory established on such subjects?
The digital factory is a spearhead for accelerating the transformation of all group functions, including the IT department. She was a pioneer for example on DevOps, on the adoption of agile methods, on the deployment of new cloud development platforms. It was a way to demonstrate the efficiency of the model and the interest of being able to ignore infrastructure constraints. It serves as a model for transformation on the scale of the IT Department, which has more than 2,000 employees worldwide and which faces an industrialization constraint that is very different from the innovation process. The IT Department has a duty to control costs at scale and part of the savings made can also be reused for innovation. In a way, the DSI makes it possible to enhance the value at the level of the group as a whole of the assets that may have been carried at the start only by the digital factory.
Concretely, what makes it possible to carry out this industrialization?
We have two major families of digital products and for each of them, we had to work on a specific approach. The first includes products for our customers. In this context, the digital factory will deliver its first MVPs and the framing study it conducted with the business. And once it reaches a “marketable” level, it will transfer the product to the software development teams integrated into our businesses, who will scale it. For this to work, there must above all be a mix of teams between the entities in order to ensure the handover. This close cooperation within the teams makes it possible to ensure that, after a certain number of sprints, the MVPs are passed on naturally to the businesses that initiated them.
And the second family of digital products?
It is obviously the one for internal use, provider of productivity. These are all the applications used in the management of the company, including the most transversal ones. These tools are taken over by the DSI in terms of life cycle management. The DSI then created a replica of the operation of the digital factory by integrating the constraint of controlling costs at scale. To achieve this, we use all the types of resources at our disposal: internal, near shore, offshore… depending on the needs.
It is a transmission contract in the proper sense that is made, and which makes it possible to define the necessary knowledge transfer, around a typical number of cycles. In this way, MVPs become internal products serving the major cross-functional functions such as HR, finance, etc. We had to drastically change our operating methods to get there. Today we have between fifty and sixty agile squads around the world that continue to support projects that have been recovered from the digital factory. Some have even been initiated directly by the DSI in agile mode.
How do you ensure that you properly capture the needs of the businesses in order to meet them?
Initially, the iterative process of capturing internal opportunities was at the digital factory, but now it is an integral part of the group’s new governance model. This is based on the concept of value towers, one for each major function of the company, which define the field of possibilities in terms of transformation over one year.
These value towers make it possible to define short, medium and long-term needs, and to express them in terms of efficiency and differentiation. Based on these expressed business needs, the projects that will support this vision and the investments to be made are defined. Value towers have an overall budget allocation, to which project pipelines are then aligned. These digital projects, which can be a tool in its own right or an integration of applications between them, go through a systematic filter: do we know how to value the result and do we know how to extend this object to a sufficiently large audience within the group?
Industrialization is at the heart of the reflection: we have greatly reduced specific local developments, to favor reusability from one business unit to another and from one country to another. Each value tower has a member of the comex, functional leaders who represent the business, and CIOs, to make rapid cross-departmental decisions together. Added to this is a kind of internal algorithm, which makes it possible to calculate the points of each project in terms of valuation and potential, and to monitor that the value that was promised at the start is indeed achieved. It is the heart of the transformation reactor today, with the objective of having a hundred squads that will support these global projects. Infrastructure, decision-making, RPA… all IT department subjects are concerned.
What role does Thales cloud transformation play in this equation?
The group operates in civil and defense markets, which do not have the same taste for risk and adoption of cloud resources. Our issues are more geopolitical and economic intelligence than cybersecurity. If there were only the technical dimension at stake, it would be a long time since I had any infrastructure of my own! But that does not prevent us from carrying out a fundamental transformation.
By design, the digital factory was exclusively built on cloud development resources and platforms, with sometimes the constraint, for developments for internal use, of being able to transfer them to on-premises if necessary. Keeping these possibilities in mind, we try to define development frameworks that can be easily transposed and that work both on premise and in the cloud. One of the challenges of application transformation and cloud transformation is to succeed in standardizing, despite the differences in environment. The role of the CIO is to find the right balance.
Does the question of the right balance also arise in the application modernization effort at the level of the existing system?
It is obvious that some applications are very structuring and very complicated to deploy, without being providers of positive differentiation for the company. These are heavy investments, which cannot be reinvented in the medium term. We have five major pillars in this logic: ERP, PLM, project management tools, engineering platforms and complex document management. We want to bring innovation to everything else, all around.
The effort is thus made on the upper layers of the information system, where the key words will be interoperability and communication between all these applications. Engineering activity, development platforms, CAD tools, link with PLM, Kubernetes… we are investing heavily to enable the exchange of data between systems, because that is where the value lies. These are the new components of the application landscape that did not exist in companies four years ago. It is on them that the effort must be made to release the potential of the data in our possession.