When EMI Music in September 1999 made David Bowies “Hours” the worlds first album available for digital download, it was the first of many digital milestones for the recorded-music-industry giant.
Yet, despite being a recognized pacesetter in the music industry since the companys inception in 1931, London-based EMI Music knew that the digital revolution was hitting the industry more forcefully than any previous technology evolution ever had—whether vinyl, cassette or CD. In fact, EMI Music understood that, in order to seize new business opportunities, it faced one of its most critical challenges to date: reinvent itself or be outpaced by the digital era.
Thats when company executives decided to go back to the future.
“We chose to step back, look at the scale of change and the network of how consumers enjoy, discover and buy music. Then we looked at what we needed to do and how we were going to get there,” said EMI Music Executive Vice President James Anderson, who is responsible for looking at technology and applications worldwide. EMI Music is one of two divisions of EMI Group, the worlds largest independent music company. EMI Groups other division is EMI Music Publishing.
The journey back to the roots of its business made EMI Musics road map to the future clear: transform itself from a manufacturer to a software company.
EMI Music employs approximately 6,000 people worldwide and represents more than 1,000 international recording artists. Revenue for 2005 was about $3 billion, according to the company. EMI Music has more than a dozen record labels, including Angel, Blue Note, EMI and Virgin, to name a few.
EMI Music must now become a company that distributes bits over a network. More important, the music businesss digital age means distributing more information-rich products and more new releases and having the ability to move things quickly, according to Anderson.
“The heart of our business, which is discovering, nurturing and building creative talent—locally, regionally and globally—doesnt change,” he said. “However, the digital age demands that we reinvent forms of distribution to increase choice, convenience and accessibility for the consumer.”
During the past several years, the number of EMI Musics key digital partners has exploded, growing from zero to dozens, and today includes telephone companies, mobile phone companies, digital distribution companies and online stores. In continental Europe, new partners are springing up daily, according to Anderson.
The popularity of digital formats also varies worldwide. In Asia, for example, digital downloads on mobile phones is a huge market, accounting for a 724 percent increase in revenue last year. In North America, digital downloads on mobile phones is a growing market, accounting for a 165 percent increase in revenue in 2005, according to EMI Music.
The bottom line: The digital revolution in the recorded-music industry demands innovative IT and business processes.
Given the depth and breadth of EMI Musics IT objectives, the company worked with a number of technology partners: Accenture; Avanade, a Microsoft technology integrator; Microsofts Technology Strategy Services, or MTSS; and IBM, among others.
While it appears that the digital revolution is taking the music business by storm, the fact is that EMI Musics revenue from digital products today represents only 5 percent, or $67.6 million, of total revenue. Within five years, the company expects that number to jump to 25 percent of total revenue.
When EMI Music executives looked to the future, Anderson said they saw a number of challenges.
Returning to the companys creative core was first on the list.
“Distribution, manufacturing and warehousing are necessary distractions compared to the companys need to refocus and re-energize on true creative talent,” said Anderson.
The second challenge was to reinvent how EMI Music markets and develops an artist brand, moving from dependence on more traditional methods of advertising, such as television and posters, to more modern media, such as mobile phones and the Internet. The bottom line was: How would EMI Music market its products to get consumers to focus on its music.
The third challenge for EMI Music involved assembling and managing its assets—for example, audio files, video biographies and photos—and then selling or distributing the product and collecting revenues. In the digital age, this one-to-many distribution challenge creates a distinct level of complexity compared with physical media such as vinyl, cassettes or CDs, said Anderson.
Going global in the
“The digital challenge is increasingly global in our day-to-day business, which drives the need for greater collaboration within EMI,” said Andrew Hickey, EMI Musics chief technology officer, who is responsible for capital investments in new technology globally.
To help launch its IT initiatives, EMI Music worked hand in hand with MTSS, which helped the company understand and align its business challenges with its IT strategy, according to Hickey.
“We worked with EMI Music executives on the strategic piece of getting the company and the technology from A to B and creating a road map,” said Michael Vermeersh, enterprise strategy consultant with MTSS and an expert in the media industry as well as Microsoft solutions, based in London.
The music companys next move was to talk about its new business challenges. To morph into a music-business leader in the digital age, EMI Music first had to assess what it was up against. In the 2002-2003 time frame, it convened company executives worldwide, including the CEO and chairman, vice chairman, managing directors, and others.
EMI Music also formed an IT investment committee that included the companys chief financial officer and head strategist.
“Its easier to look at the broad dimension of the challenge and know where you need to go than it is to know how fast you can reach your final destination,” especially when it means making investments in IT, Anderson said.
“We looked at the consumer angle first because thats where the music world is going,” he said.
Company officials examined EMI Musics core capabilities and asked what it could do faster, better and cheaper and also looked at the capabilities the company needed to acquire to succeed in the digital age.
EMI Music had a common approach embedded in everything from strategy to execution, and language linked to both management processes, that is, reviewing and approving investments, and management attention, commensurate to importance.
Functionally, EMI Music developed two spheres: one representing the strategy around direction and execution, the other around global technology investment, according to Anderson.
Along with partners, EMI Music formulated its technology objectives by identifying the key strategic criteria for transformation—the need to consolidate business processes by developing centralized and standardized IT in order to capitalize on investments and operations, according to Hickey. This concept of standardization spread across the four work streams that the company had identified as critical: digital storage, transaction management, management processes and the marketing hub.
“Standardization,” said Hickey, “is key to creating global efficiency and speed.”
Another core transformation initiative that went hand in hand with the four IT work streams was the creation of a new GTA (Global Technology Architecture) that involved processes and technology, according to Vermeersh. For example, the GTA defines the context, support, processes and approach to how each project stream should be carried out.
“We brought in ThoughtWorks, a certified Microsoft technology partner, to support GTA integration objectives and help keep the projects on track,” Vermeersh said.
One of EMI Musics biggest IT challenges was system consolidation, according to Vermeersh.
“EMI Music has grown through acquisition, which has led to IT complexity,” such as inheriting a variety of legacy systems and the need for great amounts of integration, he said.
Historically, for example, EMI Musics local operating companies used individual ERP (enterprise resource planning) systems. Today, working with MTSS and Accenture, EMI Music is moving to a single global platform: SAPs MySAP ERP software running Microsofts SQL Server 2000, Windows Server 2003 and BizTalk Server 2004. Accenture provides the manpower to help EMI Music with new system deployment, according to Vermeersh.
More than halfway through the multiyear project, the transaction management system—which handles finances and sales—is now live in two of EMI Musics biggest markets, the United Kingdom and Ireland, and is scheduled to go live in Japan by the fall. The companys third-largest market, North America, is slated to go live next year, followed shortly thereafter by continental Europe (primarily France and Germany), according to the company.
EMI Music also created a centralized repository with a single global view of the companys artists, music releases and products. The database sits on a single SQL server with Microsofts Active Directory. The digital storage solution went live at the end of 2004.
EMI Musics new marketing hub gives its marketing managers worldwide a coordinated environment for communication. Tapping a Web-based interface, users can access the portal, submitting plans or sharing ideas on the latest version of documents. The hub replaces sending Microsoft Word marketing documents worldwide to multiple parties via e-mail.
With projects still under way, Vermeersh continues to work daily with the GTA team and to meet at least quarterly with Hickey and EMI Musics CIO.
Long term, EMI Musics goal is to lower IT operations costs and create global efficiencies. “Our goal is to innovate one time versus 10 times,” said Hickey. Standardization and consistency, he said, will ultimately enable EMI Music to deliver its product across partners, geographies and markets with the agility and speed demanded by the digital age.
Lynn Haber is a freelance writer based in Norwell, Mass. Contact her at [email protected].
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