Fabian Schroeder
VP Global Digital – Governance
BSH Home Appliances Group
Fabian Schroeder, Vice President of Global Digital Services - Governance of BSH Home Appliances Group, refers to himself as “an original nerd.” Having held a variety of consulting, business and IT leadership roles, Fabian calls understanding both business and IT “essential to me and for the BSH Digital Transformation.”
At BSH, Fabian and the team led a digital transformation that coupled IT into the business all the way up to the board level. Here, Fabian shares his insights on digital transformation at BSH, the challenges of aligning IT with business, their experience adopting an agile operating model and how their transformation creates better value for customers.
You’ve alluded to some of the extensive work around reinventing IT at BSH; can you share the rationale for undertaking such a transformation?
When I worked on the business side of BSH, specifically within the product divisions, there was always a request for speed, and we wanted to get quicker. We didn't like long projects that failed. This required the IT unit to operate differently to fully support the business, but there were resourcing challenges within these teams: besides top-down cost and headcount targets, the IT had little right to challenge the business requests. This made aligning ‘digital’ with the business tough.
As time moved on, the business became even more dependent on IT delivery – not just for CRM, logistics, production, development, or HR. The product itself had become digital, and future business models and revenue streams were also subject to this. Due to budget and personnel constraints, IT was becoming a ‘bottleneck’ for the company’s business success.
There was an underlying business issue, the ‘burning platform,’ you might say. To me, it was clear – the tools of the past no longer serve our future, and something had to be done.”
Together with the CFO, we decided to start a conversation with the Board, so that we could further explain that the role of IT needed to evolve towards a value creator for the BSH business, from database operations to consumer products. There were some tough conversations about the business objectives, and how to ensure IT does not become the bottleneck in achieving these goals, but an innovation driver.
The discussion was less about how we distribute the costs that have already been assigned to IT, and more about how IT gets the right budget and resources so that we could effectively collaborate with the business to safeguard today and fuel the future.
What were the steps you took when engaging other areas of the business, outside of IT, with your journey?
A transformation like this needed to be a company-wide activity. Any P&L owning units would have to have the highest interest in this transformation. So, if we were to be successful, we needed those business owners as key partners. We reached out personally and were largely met with great support.
The challenges we faced were in relation to central governance functions whose relevance was beginning to decline. They were taken out as ‘moderating middlemen,’ as we established a direct relationship between Business and IT. This meant that Business and IT could now jointly prioritise projects. The Business determines the what, and IT determines feasibility and cost. The prioritisation became a joint effort, which was an important step.
This change was embedded in a multitude of linked activities. We abolished the so-called digital strategy, the standalone digital strategy.
We now say there's only one corporate strategy with digital aspects.”
We also abolished the top-down, cost-capped IT Budget. The IT budget became a business funded budget, driven by outcomes as required for business. With this, we also changed from a micro product to a capability-based portfolio management for both change and run.
We also had to communicate the idea that this was a simplification process – to make life easier and more efficient, rather than adding layers of organisational complexity. In my view, the solution was not to add more layers or functional silos, but to de-complexify by changing the operating model with ONE corporate digital supply. And that was our next step.
What was the next step in terms of strategy?
We wanted to have clarity on accountability (inside IT and Digital and towards the business), to be 100% Agile (with flexibility, transparency, speed), and to make better use and to develop our resources personnel better. This would be a multi-year transformation.
The key question was: how can we become an integral part of the business while keeping efficiency? It quickly became apparent that this was no longer an “IT only” issue – it involved all “digital units.” Moving from cost budgeting to outcome-based budgeting was also tough.
So, after completing step one, treating IT as ‘part of the business,’ we expanded our activities to the ‘corporate digital supply’ operating model and began to spread the transformation to the whole corporation.
Step 2: Change the operating model and embrace agile: Clear end-to-end accountability for services, 100% Agile “Digital Services” (speed, flexibility, transparency) and People Development
For step 2, we began looking at new ways of working in the digital organisation. Besides the traditional “IT” (Enterprise IT, Industrial IT, Infrastructure), we had 5 other units, e.g., Digital Transition and Electronics. So, in total we had 6 units. To produce an outcome, they had to work together.
We had some homework to do because, for an outcome, you often needed three or four of these units working together. A lot of initiatives got stuck, the money spent was high, and the outcomes were low.
We developed an operating model for ONE Agile Digital Unit to be ready for an Agile Corporation as the second step.
This was a crucial step to ensure that resources and outcomes are integrating seamlessly with IT and the business. This would mean that we were ready for corporate value streams that are delivering outcomes to our customers and consumers.
Part of this process also involved bringing in new skills – people with a blend of IT, marketing, sales and engineering that further helped bring a sense of natural cooperation between business units.
In part two of this series next week, Fabian shares how BSH Global Digital Services adopted agile as the second step in their transformation journey.
Special thanks to Fabian Schroeder and BSH Home Appliances Group.
Fabian Schroeder is a member of the DACH CIO Community. This is a peer-led community, where other CIOs from top organisations, such as Robert Bosch GmbH, Linde Plc, Andritz, Lufthansa Cargo AG, Aldi Nord, and more, connect virtually and in person to network and learn with each other.
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