Digital: "Frightening, messy, and once started, it cannot be stopped"
Phil Pavitt, leader of what the NAO described as "the most complex and successful change programme in Whitehall" followed the familiar advert's advice and went to Specsavers where he is learning retail, delivering on digital and still compelling about government IT
It's a rainy day in South-West London and high street optical group Specsavers' global chief information officer Phil Pavitt had just arrived at the Nimbus Ninety Ignite conference direct from visiting Specsavers' operations overseas. Unfortunately his luggage failed to make the same journey.
Pavitt is at the conference to discuss his thoughts on digital and his early experiences in retail - a sector that is new to him, and which he admits he is still learning about - but the loss of his laptop appears little hindrance and he expounds on his thoughts on digital, why it is disruptive, and why the government has changed its front end, but not changed its legacy engines.
For a public sector audience, Pavitt is better known as the former CIO of HM Revenue & Customs. He left HMRC two years ago and arrived at Specsavers via Aviva where he was global director of IT transformation.
At HMRC, Pavitt was a main board member, responsible for all technology across the estate, delivering the change agenda, and managing a total annual IT budget well in excess of £1bn. Under his watch, HMRC simplified its IT estate and reduced its running costs by 25%, a figure totalling hundreds of millions of pounds. Significantly, Pavitt's tenure coincided with what the National Audit Office (NAO) described as "the most complex and successful change programme in Whitehall."
Learning a new sector
Pavitt may be new to the retail sector, but he is keen to learn, while utilising the lessons learned along the way from working in other sectors, including government. That includes seeing the implementation of Specsavers' digital strategy through the prism of what it ultimately means for the partnership's customers and its partners.
"There were a number of things at play in me joining Specsavers," says Pavitt in an interview after his presentation. "I'd never done retail. If you look at my career, I'd done a different industry every job change. It's partly that I like to prove that IT is relatively common across transport, utilities and government, local government, cable, financial and now retail. Secondly I had a huge mental stimulation not to stay in the same industry. So I'm learning about retail. I had no retail experience. I had some retail presumptions but actually the reality's been fantastic.
"Specsavers has had a huge expansion period and now it's taking some time getting its fundamentals right. I've been brought in on the IT side to help that, and I found that attractive as well."
Pavitt has quickly learned what makes retail IT so different to, for example, government IT.
"Unlike government, it's not huge expenditure or huge programmes that are relatively slow moving, which the financial sector is a bit like that too. Retail is quick, fast, and it is value for money. I've never done it before. It's very exciting. It's retail for the high street, it's retail online, it's retail supply chain. It's retail corporate - how do you run your stuff? So it's got lots of elements. I was really attracted to that."
A question of value
As Pavitt has worked across a range of industries - cable, transport, government, financial services - what does he find is common across them?
"What's common across industries is understanding the real cost of what IT is and understanding what value you get from IT. Most organisations have legacy engines - they want to move quickly, which could be digital and could be anything else. But they're stuck. All of them have that legacy drag and that applies to government too. There are solutions to solving that, not necessarily involving huge amounts of money, but a different strategic or architectural approach.
"At the same time what's common across every industry is that a lot of the IT projects have got a little bit lost. It doesn't really matter what the end result is, but the project itself may be struggling. Perhaps it's scope or money. Perhaps it's not going to deliver what the first intention is, and disillusionment or disappointment is creeping in. Transparency of cost and value for money are the two things that the CEO of every industry works out. "What did we put into IT last year? £100m? And what did we get for that?" That's a great question. It could be a pound. It could be a hundred million pounds. Same question. It is the value. And CIOs that don't do a good job managing the board, or their leader, are not answering that question of the value they're giving. They might be spending their budget. They might defend their projects. They might explain their errors, their failures. But very few will say, 'You know. I bet your question's around value.'"
Can CIOs do digital?
The last couple of years have seen a growth in the role of chief digital officers to the detriment some might argue, of the reputation of CIOs. Pavitt is a CIO, while still being responsible for Specsavers' technical digital strategy and implementation. So how does he see the impact of the CDO role on CIOs?
"It's a tough question. So much of it depends on the personality and background of the individual. Some CIOs will never be CDOs, not because the business doesn't want them to be or that they don't want to be, but because they just don't have the necessary skillset or attitude towards digital. I think to be good at digital you've got to be good at business first and the required IT, and not necessarily the other way round. That's because digital is not about technical capability, it is about understanding how the business and how the users use the business's products. So I think it's a bit personality based.
"Secondly, I think it depends on what the board want to do. I've seen boards appoint CDOs because they want to make a huge statement. And I think that's legitimate. Sometimes CIOs are bitter about that but sometimes companies want to say, 'We're this serious about digital. We've invested in one of those (CDOs)."
Pavitt believes some CIOs may have to "grow up a little", work with the chief digital officer and recognise if a digital statement is being made.
"Some CIOs - and I hope I'm in this camp - actually demonstrate their digital credibility, even though it's not in their job title. I don't have digital in my job title, but interestingly enough, I am looked at as a person who can start the thought process, because I've got the mindset and the experience. Also, we don't need to make a big digital statement as we are an e-commerce platform already. So there's no definitive one or the other. I think the debate in itself is unhelpful. It makes CIOs who don't have digital in their title feel worse, and those that do have it in their title are under huge pressure. There is a combination of factors at play here."
Looking at digital in government, Pavitt applauds the Government Digital Service's (GDS) role in increasing digital traction, but believes the putting down of CIOs has been unnecessary and counter-productive.
"The GDS mantra, which I've been on record talking about before, is very good in that it has brought digital into the conversation of the civil service. The downside is it makes digital the only thing talked about.
"It's made CIOs think they can never do it and there has been this brushing away of all the CIOs, and appointing other people - it's actually thrown the baby out with the bathwater. I know many government CIOs who are very capable digital people, but they are not being given that opportunity, and I think that's a failure and a mistake."
Rethinking the legacy
Pavitt argues that the biggest positive learning for government is the change of language.
"Digital by default is a commonly used metric, a metaphor, and a measure. There is much more online in government because Mike Bracken and GDS have been there and are doing their thing. Without them, I don't think it would have happened. But I also think because they are obsessed with the front end, they've missed the whole legacy back end. Name me the departments that have revolutionised themselves and their legacy engines. There's not many to name. But the front end looks really really good. But who is going to change that legacy because one day that disconnect will be huge? They are playing into the hands of the big SIs who will turn out and say, 'You'll have to swap it out, and only we can do it.'
"So I think there's an interesting fundamental dichotomy that will eventually appear where the front of government will look really good and rightly so, and the back of government increasingly becomes expensive, archaic and out of date. And that's going to be a problem."
So how does Pavitt think government should try and change that?
"Well, you should have done it as you've gone along. It's easy for me to say, but at HMRC we did. We had the decommissioning strategy of HMRC, the 13 machines strategy it was called, and it was a fundamental driver of the digitisation of the front end. For government, now you're there, you have two or three things. You've got to fundamentally rethink how you're going to run legacy. Should government departments be joining up all their data centres into one UK data centre and use the leverage of bringing it together to modernise it or decommission it? You might think of a very different commercial model which we did at HMRC, a retirement strategy with small amounts of pump prime," he says.
"As each decommission frees up a few pounds, you invest those few pounds. So is it a fundamental change of design of government, of how you align IT so that the core stack is run corporately or centrally? Do you change the commercials? The worst case scenario which you may have to consider is paying hundreds of millions of pounds to get out of it. But I think the first two are very attractive."
Warming to his theme, he continues, "Is there a different design government can do? And in that design move away from legacy? Is there a different commercial model ? Are there suppliers who are willing to have the balls to step up and come up with a completely different commercial model? I exaggerate for effect because you'll never do this, but could government launch Government Legacy Ltd, that runs everything that's legacy? Where is the commercial thinking in that space? Of course you'll need help. But it gives you a better commercial model rather than just outsourcing it. You can take a joint venture (JV) partnership, a joint investment to help you over this four or five years of modernisation, of the legacy. I'm not saying what to do, I'm merely illustrating the thinking of what should be done."
Although there is significant interest in what will happen at HMRC with only two and a half years until the Aspire contract runs out, Pavitt demurs against commenting on his old department. "It's a huge challenge. I can't say more than that."
A "live" journey
At Specsavers, Pavitt admits the partnership is going on a journey that is 'live' in every sense.
"And that's the thing I've learned about retail. There isn't any downtime for thinking as we're selling all the time. We have our joint venture partners who own and run the stores and we have our customers. So we're learning our customer journeys in detail, in every country we operate, making sure our e-commerce is absolutely the best there is in the market. Our catalogue is online, and so is finding our store. All that is all in there.
"We're just about to deliver a single view of the customer for the UK, which will eventually become global. So we're doing all these fundamental steps. By the time we get to this time next year, most of the fundamentals that will help us become a truly digital organisation will be in place. What I'm also doing is working with the board and with marketing to begin to decide what we want to be in this space, and we haven't fully answered that question yet. What do our partners want us to be?
Pavitt is aware that while Specsavers is a bricks and mortar organisation currently operating in ten countries - with a growing online and digital presence - importantly, it is also a "clinical and medical" organisation, which has "huge" social responsibilities.
"So how do we get those answered? With the typical click and collect app? Is that where we should go? Probably not. So the fundamentals are being done in the strategy building phase and then we will be keen to execute our digital strategy through proof of concepts probably this time next year. It's quite exciting because someone's in a store in Bolton trying to buy frames and I'm in my office saying, "Let's do digital." This chap is in a queue for two minutes - can we shorten that? In 'live', you're designing digital. And when you do digital, you can't stop it. The genie's out of the bottle. The customer loves it and then becomes a consumer - and then it's nonstop."
So what does Pavitt believe he's learned, starting with retail, and then Specsavers?
"I've learned a lot about retail that other people will know, of course. I've learned about the speed. I've learned about the unpredictability of consumers with choices they have. I kind of knew it intuitively, but you can see it. I've learned about retail theatre and how to make sure the experience of the customer is not just good enough to exact the product but is actually better than that so they talk about the journey they've been on. You want people to talk about the journey, not just have a better journey.
"The other thing I've learned about retail is there isn't a chance to do heavy, deep expensive investments. Competitors are moving every day. It is short, sharp and iterative, and it may require agile insertions of cash, effort and time - quick moves of the retail dial, that sort of stuff. That's retail, and layered on that, of course, is Specsavers. I've come to love what Specsavers stands for because it is about customer service. It's easy to say that, but go to any Specsavers store in the UK. They're packed. The pricing is critical of course to that. But so are the displays, and the attitude. So customer service - what can we do better? I go to a board meeting and this all they talk about. Does this improve the customer journey? Is this better for customers? The customer intensity is huge. And then of course, we're a partnership, a partner-oriented organisation.
"Broadly every store is a joint venture. They are businesses on their own. So as an IT bloke, I'm not just serving corporate. I'm also serving stores and those stores are businesses. 'But I don't want to take that IT, Phil.' 'Why would I buy those iPads, Phil?' So I'm not just rolling it out, I'm having to sell it to businesses. That is really exciting - you don't choose anything, or everything. You have to be very, very specific - that's going to move the dial. That's going to change the bottom line. That's going to improve the customer service. And then sell it internally. It's quite exciting in that sense.
"So the whole Specsavers thing is based around this family JV concept, which I found impressive. The day they announced me going to Specsavers, I got more texts and emails saying, "Are you joking? With the obvious joke, 'Should've gone to....''. I recounted to them how large Specsavers is and what I'm going to have to do. But my killer statement for all of them - because they know me quite well - is, it is actually the opposite of what the IT market expected me to do. So that's why I did it. Once I started talking to talk with Specsavers I found them too attractive to say 'No.' Mentally, it's a huge rush. If you know anything about me, I just run towards the word 'No.' Retail is 'No.' I think retail is amazing. Just amazing."
A bigger SI layer
Another key area of interest for government is wider adoption of solutions from SMEs. Pavitt strongly approves - but insists they need support.
"I love SMEs. I spend my time encouraging them, promoting them, working with them, to give them some pointers. When government said a certain percentage had to be SMEs, there were two fundamental problems with that. And I was very vocal in government. Procurement was - I don't know about now - was set up not to allow SMEs to operate in government, especially in IT. HMRC was the first department to bring an IT SME in. Weeks after the government announced the target, we brought our first one in. They got the procurement questionnaire and it was 40 or 50 pages long. And Procurement said, "We can't go with them. They've failed virtually every question."
"It was a big global corporate questionnaire. You ask SMEs today, despite the G-Cloud, and they still say the cost of doing business with government is prohibitive. A lot of SMEs that have brilliant technologies for government won't go near it. Too scary. Very few SMEs do business with government apart from G-Cloud, and even that is expensive. 1,200 companies on it is ridiculous. So procurement is a huge barrier.
"The second observation, which is anathema to the Cabinet Office was to get as many SMEs as possible in. Because they believed that if SMEs come in, systems integrators (SIs) go down. And I sat in front of the government and I said, "You know what? It goes up." And they thought I was bonkers. But who is going to guarantee that two men and a dog if they decide not to do business anymore... who's going to guarantee that having built our critical service on them that someone's going to do it? Who's going to make sure that when the dog is not well, someone's going to do it? Well actually, you need a proper SI. Now whether the government itself is the SI or the department, or an SI is the SI, more SMEs need a bigger layer of SI - or there's a fundamental power problem. My last two years in government they were trashing the SIs. Sometimes like they deserved it. More often than not it was a crazy mantra. So if you come to Specsavers - not yet because we've only just started - we're going to have more SMEs. I'm gearing up the IT team to be a good SI layer, so we will be our own SI, covering those SMEs. Because you can't have one without the other."
Does Pavitt see any parallels now with what he did in government?
"There are some parallels, though Specsavers doesn't have public shareholders. My first job is to tidy up its IT, 100%. My second job is to get it to understand its costs of IT, its investments in IT, to get the value question answered. But the most exciting thing is that Specavers is entering this new era. It's in 10 countries, and it wants to be the dominant player in those countries - it is in most of them. I want to make IT at the front of that conversation and not at the back of that conversation. It may be about speed to market. It may be about new products. I want IT to be seen as the true enabler. For most organisations, I go for two or three years. They often want me there for longer, but I kind of do my job, and I move. I think I could stay with Specsavers for quite a few years, four or five years, maybe more. Partly my age, but also because I want to see this through right to the very end, all the way through to creating the legacy, the heritage, the DNA of IT. I'm enjoying it. I should have gone to....and I did."
Pavitt on Digital
In his presentation, which discussed the talent, skills and capabilities required to deliver digital transformation, Phil Pavitt made the following points:
- "Digital is the answer, so what's the question? Digital is disruptive - you can't change it."
- "Digital is about finding the right people, with the right credibility, the right mindset, the right sponsorship, the right support, the right suppliers, and becoming internally digital by thinking, by execution and ultimately serving the customer."
- "Digital is front to back. Where the UK government has got it wrong in many of its departments it is has pimped its front end. But it's not changed its legacy engines. That is not true digital. Digital is right from the legacy engine right to the very front. If your digital strategy does not do that, or you're told you can only do that with a huge investment, that isn't true. I remember taking the VAT system in government, a 1984 system. We wrapped it in technology that meant we could put the whole of VAT online."
- "Digital breeds Agile. Agile methodologies and digital go hand in hand."
- "Digital breeds innovation - it's frightening, messy, and weird people turn up. Weird ideas appear. It is messy - the old governance doesn't work. The old hierarchy doesn't work."
- "Once started, digital cannot be stopped."