Talking Through McDonald’s Digital Transformation

Episode 98

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This special episode of IT Visionaries was recorded live at MuleSoft CONNECT in San Francisco where guest host Vidya Peters, CMO of MuleSoft, connected with Frank Liberio, the former CIO of McDonald’s. Together they talk about the process of bringing McDonald’s through a complete digital transformation, the importance of APIs, and much more.

Best Advice: “Be more patient.”

Key Takeaways:

  • Learn what digital transformation means to a company as large as McDonald’s.
  • Methods for prioritizing projects, and when to bring in new tools or third parties.
  • How to build a roadmap of APIs.
  • Best practices when dealing with legacy systems.

What does digital transformation mean? — (1:50)

At McDonald’s, Frank explains that their digital transformation was about building a relationship with customers. Despite consistent success over a number of decades, the executives at McDonald’s knew very little about customers that would come into the store. By reaching out to them through digital means and forming a one-to-one relationship, McDonald’s was finally able to aggregate data and learn what people liked, didn’t like, and what was driving them to the stores.

“For the entire existence of McDonald’s, we really didn’t know who our customers were. We have a lot of them, they come in every day around the world and 120 countries, but we never knew exactly who they were or what they bought and honestly, how to interest them to buy more, or come more often. So the digital channel finally gave us that opportunity to have a one-to-one relationship with our customers and know who they are and what they like and don’t like.”

How IT moved from back office to front of the office — (3:00)

The transition happened slowly, Frank says. In the past, IT was mostly about driving efficiencies and enabling technology to make business easier. In fact, Frank says that one of his first jobs working for McDonald’s back in 2002 was simply installing credit card machines because it was still a cash-only business. In doing that, Frank says that the higher-ups finally saw that technology could be used as a way to drive sales, and from there tech became more of a part of the McDonald’s story.

Prioritizing projects and building a new tool — (6:00)

When going through a digital transformation, it can be really hard because you’re often starting from scratch. Frank believes in bringing on third-party partners, if you can, but also in doing your own internal testing to see what works, how, and why.

One of the biggest hurdles you have to face when you’re implementing something new is organizing the team to actually put it in place. Training them to use it and then helping others adopt it is difficult.

Frank also said there had to be a culture change within McDonald’s when they were moving over to digital. Not only did they have to bring on new leaders and teams focused solely on digital experience, but they were also facing tough timelines and competition from start-ups like Uber Eats and Postmates. In order to compete quickly, the McDonald’s team had to move away from their past mandate for 100% perfection prior to implementation. Instead, they had to be okay with having a product or technology in place that was 80% of the way there and then tweaking while it was in use.

“It’s about getting your team trained up on how to use these new tools so they understand them, right? They’re all technologists and they can read about them, but reading about them and effectively using them is very different. So the first big hurdle is really having them understand how to use the tool and then effectively reuse.”

Deciding the right API to publish — (14:30)

According to Frank, everything starts with the business strategy and making sure the IT strategy aligns with it. If what you’re doing in IT is not supporting a business strategy or working toward a business goal, you should not be working on that particular thing. Once you know the business strategy, you can build a roadmap of APIs that will support it and move forward from there based on priorities. Of course, sometimes you are working under a lot of pressure and tight deadlines, so you have to move quicker than you’d like.

Dealing with legacy systems — (17:50)

Most companies that have been around a long time are dealing with legacy systems that they either need to update or replace completely. When it comes to sales, though, sometimes you have to figure out ways to make your legacy system work for you so that you don’t miss out on sales opportunities while implementing something new. APIs can certainly help with that. Once you cross those hurdles, though, you have to find a way to modernize.

“Eventually we’re all going to have to address the technology debt that we have in our legacy portfolio. 30- and 40-year-old systems you can continue to hang on to but only for so long. But in the short term, when there are these critical business initiatives that you know are going to drive sales, waiting for a legacy modernization before you can actually execute the new capability you’re building would be silly. You would give up sales that you can get quicker. So the best way to do it is to leverage those legacy portfolios and to get at them. APIs make perfect sense.” 

“I’m not suggesting you never have to modernize. What I’m suggesting is use APIs immediately before you actually modernize to get the value as soon as possible.”

Lessons learned — (21:30)

Looking back at his time at McDonald’s, Frank says there are many things he would like to do differently and countless lessons learned. He admits that performance testing for their app was a bit of an afterthought. And since rolling out an app is never a smooth process — there are always bugs and kinks to work out with performance — not having a plan in place to do consistent and comprehensive testing was a mistake. Frank also explains that he learned that it’s best to bring in a third party as soon as you can when you know that the third party can do something better than you internally. Having the third party there to help will significantly speed up the process.

“We were so busy trying to build the app and get it deployed. You don’t really think about performance monitoring and supportability, but that’s equally as important, right? You can get it out there quickly, but we all know that there’s going to be bugs and there’s going to be issues that you face that if you don’t have the right processes in place to address those, even though you get it deployed, it still may be somewhat of a failure because it’s not performing at the level it should be.”

Mentions:

Articulating the business impact of IT can be challenging. However, successful digital transformation today requires a tight alignment between business and IT leaders. To explore ways that you can structure, calculate and articulate the business value of your IT initiatives, check out MuleSoft’s new whitepaper: How to articulate the value of integration.

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Frank Liberio, the former CIO of McDonald’s, joins guest host Vidya Peters to discuss digital transformation and APIs.

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