Philip Morris exec on shift to cloud and data-driven operations

Philip Morris International (PMI) is in the midst of a business transformation, and cloud and data technologies are playing a key role in helping the firm reach its destination.

Famed for its heritage in cigarette manufacturing, PMI is shifting towards smoke-free products that, although not risk-free, create a nicotine-containing tobacco vapor. Michael Voegele, chief digital and information officer (CDIO) at PMI, said that operations and supply-chain management are some of the key areas of data-led change for the business.

PMI is investigating how it can use data to improve decision making across a range of areas, from smarter internal financial processes to optimization of manufacturing facilities and onto product innovation. Voegele explained how his team is introducing cloud and data technologies to improve decision making processes.

VentureBeat: What are the key tools you’re using to boost operations and supply-chain management?

Michael Voegele: When you look at this classically, from an integration-tool perspective, we have decided to use MuleSoft. For storage and compute, we are utilizing AWS Hadoop clusters, and we’re looking into S3 moving forward. And then there’s a bunch of tools that you would usually find within the data space and the key one is Power BI, which we have as part of our cloud-based Microsoft solutions.

VentureBeat: How are you using AWS for cloud computing?

Voegele: We’re not on a hybrid cloud roadmap. At the moment, we’re using AWS as our chosen partner for what we call the shift and lift and consolidation components of the data center. But we are also using AWS as our development platform in the context of those differentiating applications. We do use Microsoft Azure as well, but that’s just basically for the collaboration and digital workplace components, which includes Office, Teams, and SharePoint.

VentureBeat: Why did you pick AWS as your cloud partner? 

Voegele: There’s not so many of them, so you could actually go to AWS or Azure. Google was still lagging on the services side — it’s catching up and is aggressive on the pricing. Alibaba, for us, wasn’t really a choice at that point in time. But when we look at the other two, AWS or Azure, what was really a distinct difference for us was the level of engagement, the level of understanding, and the level of investment. What was, for me, fundamentally important was that I don’t just want a partner that provides a compute and storage platform. I need a partner that comes in and helps me create a different skill set in IT.

VentureBeat: How has AWS helped you to develop internal capabilities at PMI?

Voegele: What we have done is build a really deep partnership in the context of provisioning and in AWS-based learning initiatives. Everybody is going through an online certification training on cloud practitioning for AWS. Instilling this moment of continuous learning and shifting those capabilities towards understanding cloud computing, and how you utilize cloud computing, was an important part in this conversation. Making the most of the cloud is not just about price and capabilities, it’s also about a willingness to come on board and help shift the organization.

VentureBeat: And why did you pick MuleSoft and Power BI?

Voegele: Power BI was part of our contractual agreement with Microsoft — if I already pay for a tool, why should I pay somebody else for doing the same thing? So I think that was just a logical solution. In the case of MuleSoft, we looked at other integration providers, and we looked across our criteria catalogue at that point in time.

Then all of a sudden, Salesforce came in and acquired MuleSoft. So this is also something else that you need to consider with IT provision: how much are you betting on one horse, how much is the market actually consolidating, and how much are you linking yourself up to a certain provider? Now that’s already happened multiple times in my career already. You wanted to create independence and more distribution and then, all of a sudden, you see those companies come together and merge. But, it is what it is.

VentureBeat: What’s the biggest challenge to making all that technology work?

Voegele: I think we’ve got a pretty normal IT stack, but I don’t think making it work is a technology challenge. I think that the biggest challenge that we’ve had — and where we’ve made significant steps forward — is how we drive data literacy across the business. People have to start asking different questions. Because when you don’t bring in this understanding of the power of data, and if you don’t bring data experts into the conversation very early, you will actually go down the wrong path. You have to ask different questions; you have to look at things a little bit differently when you actually want to solve issues with data.

VentureBeat: How are you helping PMI to think differently about data?

Voegele: One of my key roles is to help the organization understand that all the technology investments will not materialize significant value if we, as an organization, keep focusing on the way we worked and were structured in the past. It’s important that people understand that throwing money at technology will just feed an old, expensive organization. And I think this is fundamentally what we are driving towards at the moment — to make sure that technology investment comes with process adjustments, with structural adjustments, and with a different way of working.

VentureBeat: What drives your technology decision-making process?

Voegele: We don’t always need the latest and greatest. We don’t need to be at the bleeding edge, but we have to have a forward-looking element in there and know that the providers we’re working with are still innovating. Do these companies actually want to be partners with us and not just suppliers? We look at our partners and we hold quarterly strategy sessions, where we share our ambitions and they share their ambitions. We share ideas on how we can move PMI forward.

VentureBeat: What does this partnership approach mean for PMI and its suppliers?

Voegele: It’s fundamentally shifted the relationship that we have with our key partners. The relationship is not just about the next negotiation on the contract anymore. It’s about how we as two companies can actually come together for the benefit of both and to drive innovation. And this has led to a lot of fantastic conversations with our strategic partners about where we can engage deeper than just on the contractual engagement that we have on potential licensees or consulting services.

VentureBeat: How do you decide on the build versus buy question?

Voegele: You have to find the right balance between what are your core activities, what can you take off the shelf, and what are the components where you want to differentiate, or build a different model, and how you connect those systems at the end of the day. One of the key issues of software as a service is that it can become cost-prohibitive the moment you go into scale. For some of our global markets, where orders are smaller, we’re thinking about creating specific capabilities ourselves. We believe that the upfront cost will be a good investment in the context of the scale that we will deploy for those markets.