German automotive supplier Mahle is in the middle of a digital transformation. Electric/electronics, software and networks are extremely important to the company’s new products, and its information technology has to be converted companywide. In an interview, CIO Markus Bentele discusses the art of juggling all the changes and the new collaboration between Mahle’s IT and the group’s operating units.
Mr. Bentele, your job is to take an IT unit that evolved over time and turn it into a global support system for digitalization. Where does Mahle’s IT transformation stand at present?
You have to look at more than one dimension to answer this question.We are pressing ahead in a range of areas in parallel, and they fall under digitalization in some cases and are independent of the process in others. That’s what makes the transformation of corporate IT so exciting. We see digitalization as a very agile, fast-paced process that has an impact on company strategy, the development of business fields, and business processes. Combined with new forms of mobility, we realize that we are facing a totally new series of tasks, and we have to gear up for them. This involves technologies, infrastructure, resources, training, processesand not least of all the company culture.
It almost sounds as though you are pressing the reset button…
No, it would not be accurate to say that. The change that we are undergoing is based on our internal, expert knowledge as well as the successful cooperation with customers and partners that we have built up. We are continuing to develop the IT world, but we are not rebuilding it from the ground up. We have always had these iterative processes, but they moved at a different speed.
But the time pressures today are different, aren’t they?
That’s true, of course. We act during time windows that have become much narrower, and everyone is feeling the pressure to transform rapidly. Some people might see this as a disruption. In the past, we did have more time to make changes and were able to make progress in an evolutionary way. Now the trick is to find the right balance between evolution and revolution.
Where can we see tangible changes in your organization, work processes, tasks and leadership culture?
IT and the business side are once again involved in in-depth conversations because they face the same disruptive challenges. The latest events in the auto sector show that the two sides must be in a position to adapt to totally new scenarios. The interplay of the operating units and corporate IT has become more important. Mahle’s management at midyear decided that IT would no longer merely provide a service, but governance as well. Specifically, this means that we are responsible for standardized IT support companywide in harmony with corporate goals while guaranteeing process stability and robustness. The dialog now underway makes it clear that we need strong cooperation on many fronts. IT is needed for future business models and the development of new products. The dual strategy is preparing the company for a future where fields such as e-mobility, software, services and other new fields play a role beyond the current product portfolio.
Is this a difficult step for Mahle?
It is a necessary step, and I can frankly say it’s not a particularly easy one for IT. We have to leave our comfort zones behind. We are holding up every building block in the portfolio and examining it from the standpoint of the new requirements. If it meets them, we put it back. If it doesn’t, we redevelop it in the right direction.
You report to finance chief MichaelFrick. Is your mission really oriented to the future or are you just managing a cost element in the present?
I can certainly reject that idea. Our CFO, Michael Frick, deliberately brought me onboard in early 2017 to guide and support Mahle’s dual strategy and the digital transformation. I have not taken on any purely cost-related responsibilities. My job is to exploit the opportunities offered by the standardization and automation of IT services. It is a matter of global scaling and optimizing the use of resources distributed across regions.This naturally enables us to make a major contribution on the cost side. But the focus is much broader, as the IT budget illustrates. We are taking funds that had previously covered the costs of individuality and complexity on the operating level and redeploying them into new technologies and innovations. We no longer see IT costs as a monolithic block of expenditures.They are being treated as product development costs or as spending earmarked for a particular purpose on the business side.
Can you give us a concrete example of this?
Consider the costs of building and starting up a“digital automation office.” This new competence center is designed to support the digitalized automation of the operating departments, starting with the use of process mining, robotic process automation and risk-based maintenance, to identify inefficiencies and processes. These are all services that weigh heavily on the IT budget initially while offering real value on the business side.The shift in the cost planning is largely accepted, but discussions are still underway on whether and how the operating units can be obliged to adopt specific business uses.
So the digital transformation is actually a huge change project…
Yes. Out of the more than 800 staff working in Mahle IT worldwide, some will find it easy to take this new approach. Others will find it harder. This is completely normal as different emotions are in play, ranging from euphoria and optimism to reservations and anxieties. We deal with people from different parts of the world with a range of cultural backgrounds. If I want everyone to pull together, I can’t just pound on the table or nail the new directive to the door without comment. Change requires psychological leeway and breathing space, and I have to accept the fact that it leads to discussions that are not always comfortable. Still, you can’t be led astray. The team will always be a key to success. So will the pursuit of a common goal.
In the past, Mahle IT was decentralized and oriented to regions. There was no uniform global service catalog. Is that still the case?
Yes, but “still” is the key word. During the first quarter of 2018, we appointed dedicated service owners who are going to specify a uniform global service catalog by the end of the year. That is a major step because our teams are moving from local service functions to global responsibilities. Structures, processes functions and tools have to meet new standards. With ITIL training and a lean administration initiative that all IT staff are completing, we are laying the groundwork for a common understanding and a coordinated approach. This is the only way to maintain global systems as a global unit. We are using our diversity, scaling and regional resource allocation to make global platforms and 24/7 service models possible.
You want to bundle specialized knowledge into so-called Centers of Expertise. How is this new structure going down with IT teams and the operating units?
This is a new situation for everyone involved, and there is certainly a great deal to learn. But this also shows that digitalization doesn’t just bring technological progress. It above all requires a cultural turnaround. We’ve already talked about this. I am convinced that Mahle IT will perform superbly and meet the needs of the operating units with its new configuration of five centers of expertise. Responsibilities are clearly assigned worldwide, and access to expertise is guaranteed.
Mahle’s range of products is gradually migrating into fields shaped by electric/electronics, software and digital networks. What challenges do these changes pose for corporate IT?
We are pressing ahead with massive digitalization in cooperation with other specialized departments, but are doing it without an IT department inside of IT devoted to it. It does not make sense to have two separate departments – which might be moving at different speeds. My goal is to turn Mahle IT into an enabler for digitalization. On one hand, we have to meet our traditional core tasks. On the other, we have to be creative in an agile environment. A symbiosis of the two makes the difference. For example, as our enterprise architects run into changes in infrastructure services, digitalization architects are supposed to inspire innovations and technological advances. But we need additional IT skills for this and an active dialog with the business side.
More specifically, Mahle has launched a major project, dubbed “More,” to consolidate the SAP landscape companywide. Where does “More” stand currently?
In coming years, we are going to spend many millions of euros to convert our entire ERP system world and switch to SAP/S4 Hana. We are leaving 102 production systemsbehind and using the consolidation as an opportunity to standardize our processes – across business units and regions. From this standpoint, “More” is notjust an IT project. It is transformational on the corporate level. The digital backbone that we envision includes uniform global systems for HR, product lifecycle management, MES, reporting and purchasing. You can see that IT doesn’t bring digitalization on its own. But it gives the company the technical tools that it needs.
Mahle is owned by a foundation, which generally implies little inclination to take risks. Does this ownership limit your ability to experiment and take the long view?
I don’t think foundation-owned companies are risk-averse. They operate from a perspective of sustainable development. This involves doing the right thing long-term, not meeting the short-term profit goals of shareholders, as is the case for publicly traded companies. This is a common misconception. As a foundation-owned company,we do avoid rash, ad hoc decisions, but that certainly doesn’t mean we shy away from risk. On the contrary: We calculate it precisely and focus our activities on offering our customers added value long-term and ensuring the prospect of lifelong employment for our employees. So to answer your question, we can try new things out – and we make good use of these opportunities.
Interview by Ralf Bretting and Hilmar Dunker