Ericsson CIO Johan Torstensson on digital strategy

While Ericsson is 140 years old, it’s anything but fuddy-duddy. In fact, the Stockholm-based company counts itself among the leading providers of IT and communications services. Networks built with its products carry about 40 percent of the world’s mobile traffic. And to stay competitive, the company has invested a reported $15 billion on development of 5G wireless technologies.

Other key components of Ericsson’s operations include digital services, managed services and what it calls “emerging business.” R&D is at the center of it all, staffed by some 24,000 employees — roughly a quarter of Ericsson’s total — and credited with more than 45,000 patents.

Ericsson CIO Johan Torstensson joined the company in 2010 and became its IT leader in 2016. Torstensson discusses the company’s plans, which include an aggressive digital strategy.

Ericsson is in a period of transformation. Give us a sense of where you stand now.

Ericsson is pursuing a more focused business strategy to revitalize technology and market leadership, improve group profitability and enable customer success. After 1.5 years executing on those plans, we can say we’ve turned the corner. Now we’re taking the next step by accelerating our digital transformation journey. We’ve been focused on putting the digital foundation in place, and now we need to accelerate our digital transformation.

What are the main components of that digital foundation?

For us, our digital foundation consists of the technical platforms we need to drive speed and innovation in the company and the enterprise core which hosts the data and connected processes that the company runs on.

Like most large companies, we had a legacy IT environment, including some applications that were not up to date to support our digital transformation. Therefore, we’ve been switching out some of our big legacy systems. For example, we’re finalizing changes to both our PLM [product life-cycle management] and CRM [customer relationship management] systems. It’s about creating a modern kind of architecture. We’re also doing a large cleanup of data to get the quality right.

The systems and the data are the cornerstones in the part of the digital foundation we call our enterprise core. That’s our enterprise data, the processes that are common across the company, and the connected information for those processes. The data we’re talking about in this case includes, among others, customer, product, financial and employee data.

At the same time, we’re building what we call our platform bet in the areas of analytics, automation and the hybrid IT cloud. The purpose is that the IT department becomes the platform broker for the whole company, by delivering cost-efficient, stable and secure platforms that the whole company can develop digital solutions on.

Sounds like a massive effort.

It is a big effort, but I also think it’s necessary. Because we’re an engineering company, people are always creative in finding the latest technologies. But I tell them: you can put any technology on top of the data, but if the data quality is not up to par, the only thing you’ll get is a white lie. You’ll lie to yourself, because it’s not the truth that’s coming through. And you’ll make the wrong decisions.

Once your digital foundation is completed, what comes next?

Our vision of digital transformation has customer experience as our guiding star. If we look at how we work with our customers, we’re working with concepts such as customer journeys to identify their pain points across our touchpoints, and to address those points with digital solutions. Customer experience is No. 1 for driving digital transformation.

After that, we have three supporting areas. One is smart operations; it’s all about how we automate and become a data-driven company. The second is how we engage employees; we want to make sure that employees, when they come to work, feel that they work for a high-tech company and the IT solutions support them in realizing value instead of spending time on unnecessary tasks. And third, transformed offerings; that is, how can we become a company that sells more of our solutions as services? How can we utilize our data to find new business models?

As Ericsson’s CIO, you essentially run technology for a company of technologists. Does that create special challenges?

Yes, I have a bunch of people that want to tell me how technology will work in the future! So my role is different from a CIO’s role in a traditional manufacturing company or retailer. In a technology company, the CIO needs to not get in the way of innovation, but at the same time protect the company from cybersecurity threats.

One way is by providing digital platforms. How can I make sure we have platforms people can innovate on, which are cost-efficient, flexible and secure? If they want to do their own analytics solutions, how can I deliver a data platform with open APIs and data quality? How can I provide a hybrid IT cloud platform, with microservices, which people can use to build their innovations on? Then, how can I help them scale these innovations globally across the company?

Ericsson has ambitious business goals for 2020. What are the implications for IT?

While many of those goals are financial targets, we’ll also be pursuing what I call our digital ambitions. A lot of this has to do with speed, transparency and experience, and the important thing is that these ambitions foster a mindset of radical transformation across the company. For example, one digital ambition can be to cut the delivery time for certain products by as much as 50 percent. Once again, it’s all about the customer experience. If we can deliver things faster and be easier to work with in combination with being the technology leader, then we can win more business and grow with profit.

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