Host Intro (Gene Kim)

[00:00:02.200] Next up is Fernando Cornago. He is the Senior Director of Platform Engineering at Adidas. I had the pleasure of meeting him last year when he presented with Markus Rautert, his VP, about a group of rebels who bravely sought to create a better, faster, safer, happier way of working within the organization.

[00:00:21.900] They had regular meetings at a place called Caffe Intenzione, where they made and executed their plans, eventually leading to pitching the CIO at 10:00 PM at a leadership offsite, which led to the creation of this new platform team. This year, he's presenting with Benjamin Grimm, Senior Director of .COM, who drives the product vision for the e-commerce channel that generates billions of revenue annually.

[00:00:49.060] They will be presenting on the continuation of the Adidas journey, including being responsible for one of 23 board-level initiatives and how they've educated people across business and technology on creating world-class practices to help them win in the marketplace. And before they come out, just know that they will be mentioned in the BMW talk later today as well. So come on out, Fernando and Benjamin.

Adidas Brand Video

[00:01:17.120] If we can see things for what they are. If we can see what they could be. If the plastic we use, we never throw away. If the end of one thing could be the beginning of the next. If we know that less can create more. If we can return, we reciprocate, we regenerate. If we are here for others. If we can work as a team. All we have to do is connect, and the world opens up. The future is about giving back.

Fernando Cornago

[00:02:17.440] Wow. So hello, London. Hello. It's a pleasure for me to be here another year.

[00:02:25.260] My name is Fernando Cornago, and I'm heading up the platform engineering practice at Adidas. Last year, I came here with my boss, hi, Markus, to explain a little bit what was the history of software engineering in Adidas, and how we really convinced our CIO to bring him on board in the boat with the final creation of platform engineering.

[00:02:43.880] This year, Gene asked me, "Okay, as your goal is to really enable these autonomous teams, can you bring someone from these teams?" And as I will never in my life disappoint Gene, I brought the chief product owner of the fastest business in Adidas, our .COM.

Benjamin Grimm

[00:02:59.300] Hi. I'm Ben. Nice to meet you. I joined Adidas last year in January. I'm working with my teams on the experience of adidas.com and reebok.com globally. We have shops in Asia, in Europe, in North America, South America, Russia, in these regions.

[00:03:17.360] We're working basically every day on these experiences based on the platform that Fernando and teams are building. A little bit of background and context about the organization: Adidas has net sales revenue around 22 billion, an operating profit of 2.3 billion, and net income of 1.7 billion. Our goal for 2020 is to do 4 billion in revenue in digital.

[00:03:43.620] Basically, the platform and the experiences we build based on this platform are a significant accelerator and driver for our growth in general, for the whole business of Adidas. We have 57,000 people employed. Our gender split is around 50/50.

Fernando Cornago

[00:04:06.200] Thanks, Ben. At Adidas, we really believe that through sports, we have the power to change lives. Certainly, there is no question that software is changing sports: not only how we practice, nowadays no one is going running without a watch to check the performance afterwards, or even to a certain social network like Runtastic or any other platform. It's also changing the way that we consume sports. Nowadays, watching a game on TV is a full new experience. You only need to see the NFL or any soccer game.

[00:04:39.160] The challenging question is, are we a software company? I don't think we are, but we need to start operating like this. We heard yesterday Mik Kersten talking about how 50% of the companies in the Standard & Poor's 500 will be replaced in the next 10 years. But also, if you take a look at the 15 or 20 top ones, either they are technology companies or big companies mastering software at scale, and this is where we want to be. We already have 2,300 people committing code in our code repositories and more than 8,000 builds monthly in our platforms.

[00:05:16.100] What is the role of technology and IT in all this? Basically, it is providing speed to our counterparts: speed to innovate, speed to succeed fast, but also to fail fast and recover from the failure. And also doing it in a sustainable way, with the right quality so it scales in our regions and is sustainable in the long term.

[00:05:39.180] What we chose for that is DevOps. It's the only way to go there, and it's clearly accepted throughout the whole Adidas technology workforce. I need to thank Jez Humble because two years ago, he gave me the best definition. Sorry to disagree with John, but my best definition of DevOps is CALMS, and it's the one that we use for everything that we do across Adidas with regards to DevOps. It's culture, automation, lean, measurement, and sharing, and you will see later how we use all these words.

[00:06:13.080] This is the formula. It's easy. Why do we need this conference? Why does Adidas need our team? If it's so easy, why go to conferences? We also have a lesson learned during the last year and a half: certain platform capabilities really boost DevOps practices.

[00:06:32.264] It doesn't mean that you cannot go DevOps and make some steps with an ERP or commercial off-the-shelf. But really, if you are designing a platform from scratch like we did, these capabilities help the teams. Basically, your platform needs to be on-demand and self-service, ideally ramping up by code or configuration, so the state of the platform is managed by the team, not by the platform team.

[00:07:00.024] Scaling up and down on demand, depending on the usage that's needed, and ideally, you pay per use. You get rid of all this long budgeting and capacity planning that everyone hates because it's like lottery. It must be transparent and measurable in both directions. The teams need to know what is happening in the platform and access real-time logs and platform behavior. But it is also helpful for the platform teams to know what the observability is on the teams. It helps us a lot, because sometimes the platform looks like it's running, but the teams are really suffering from it.

[00:07:35.144] Last but not least: open and inner-source. Nowadays, if you don't use open-source technologies, you are already late in the innovation funnel. But also inner-source: if you don't want to become the bottleneck as a typical infrastructure team from the past, you need to open your platforms for others to contribute to them so they can go fast.

[00:07:55.384] How are we boosting all this infrastructure job in Adidas? Basically we have this year a lot of focus, and the board team set up 23 clear projects that are board-relevant. You can see here from our colleagues in gray: how we sell, run by Ben's team; how we engage our consumer and all our membership program; how we really create our product. We are shortening the life cycle of our physical product through engaging with our wholesalers and our consumers in a digital way. We shorten all these lead times for product to go from creation to shelf, and omnichannel on how we deliver.

[00:08:32.124] All these digital initiatives are running on top of two initiatives: data, because we need to become more data-driven; and Data Tech Foundations, the initiative that we run in platform engineering and architecture. It is super cool that we present this to the Adidas board, the CEO, and executive members. It is helping us in two directions. One, they get trained in concepts like test automation, DevSecOps, shifting left. Imagine the Adidas board a couple of years ago: they didn't speak about these kinds of things. Also, it helps us link every small thing that we do with the business outcome. That is super important to not create another wall between business and IT.

[00:09:18.764] Everything that we do within Data Tech Foundations is split in four buckets. One is getting closer to the consumer. Our platform and our technical capabilities need to be wherever the consumer is. Right now in Adidas, the focus is clearly on the U.S. and Asia. Our platform needs to be there.

[00:09:33.104] Smarter and faster data usage. We have numbers from last year: even for the fanciest UI experiences, 70% of the building time of a new system was spent digging into old-fashioned systems and getting the data. Making that easily consumable is key for going fast.

[00:09:52.464] Leverage efficiencies is where we bucket everything that we do with regards to improving our efficiency and automation: test automation platform, CI/CD platform at scale, consumer-driven testing, and robotic process automation for our back-office centers. Change management is where we put all the effort that we do here, but also internally, in boosting all these practices in the delivery teams and upskilling our business in technical practices because, as you say, DevOps is not a problem of IT anymore. It's also a problem of the whole company.

[00:10:26.144] The result of Data Tech Foundations is Adidas Digital Platform. We call Adidas Digital Platform a set of technical capabilities that, without knowing it, we had created following the Adidas DNA. The Adidas DNA was created by Adi Dassler, our founder, in 1949, 70 years ago, and this DNA has allowed us to be at the forefront of the sporting goods industry during these 70 years.

[00:10:51.244] Let's walk one by one through these capabilities, and you will realize what I'm talking about. Open Digital Platform first, our computing platform. This is where our interaction with consumers happens. Have you ever queued up in a retail store? It's very frustrating. You would love how cool it would be that the store assistants pop up magically when the queue grows, and the store assistants shrink when the queue disappears. We can do that thanks to our 29 Kubernetes clusters around the globe. Now with serverless capabilities, they scale down to zero, zero cost whenever there is no usage.

[00:11:32.104] Wouldn't it be cool also that these store assistants are popping up around the world? I mentioned Asia, I mentioned the U.S. We can do this because our Kubernetes clusters are deployed in five different regions of our hyperscaler, by default Amazon. Wouldn't it be cool also if the store assistants pop up in your house? We can do this also for systems that need to be on-prem because of data protection or data gravity with other systems.

[00:12:00.504] We used to say that data is the new oil. In Adidas, you can imagine: we generate a huge amount of data through product ideation, creation, manufacturing, delivery. Making good use of this data is key for us to go fast and succeed. In Adidas, we see data as the baton in a relay race. Each runner is a team, a DevOps team. They need to go fast, but as important as that is that the delivery, the handover, is smooth so they don't mess up the race.

[00:12:31.232] We do this thanks to our fast data streaming platform and our API strategy based on clear contracts between the different teams. Clear confidentiality level on every data is making the data self-service and easily consumable for the teams. All this data flows naturally to our big data platform. We also use the hyperscaling power of AWS to make use of new practices like deep learning and artificial intelligence, to get insights where the normal algorithms cannot get.

[00:13:08.092] So, a lot of different pieces. We want to be fast. We want to deliver continuously business. Nowadays, deploying an application is deploying a set of different building blocks, and they need to work together and be orchestrated to really meet the business value. This is like American football. The team has a mission, to score. But it's amazing how synchronized the different American footballers need to be. They have to do something at the certain millisecond. At the end, the running back is making the score.

[00:13:40.952] We use Jenkins at scale on top of Kubernetes so the teams have their own instance, and we manage things like security, backups, and so on. At the end, we deliver continuously, but you want to deliver continuously something that works and analyze the user. For this, you need to test.

[00:13:58.622] Adi Dassler was really an innovator in his time because he went down to the pitch to test with the athletes. This is what we do thanks to our test automation platforms, where we test all the different levels of testing with agents, or we call them minions, running on Kubernetes in all our regions. This is like our physical product managers nowadays testing our shoes with automatic kickers.

[00:14:24.932] Same concept for robotic process automation. These things that you need to do in your back office but are not taking you forward or differentiating you from competitors, we use UiPath for robotic process automation. Same concept: a platform team managing, and the different business teams can use the platform with a small set of rules.

[00:14:44.812] Last but not least, I said last year, you will never see a basketball game without a scoreboard. The feeling is not the same. Observability is key. We have a platform called Holmes, and basically we apply the self-service approach that we use for our data. We also apply it for metrics, logs, and business metrics. One team can watch or subscribe to a metric from another team because they know that if something is failing, four hours later the replenishment process will not work or anything like that.

[00:15:17.772] All these technical capabilities are nice, but they are nothing without people, especially in software engineering. Open platforms are the key for that. Boosting community events and sharing knowledge is key for success, and your platform needs to be open and appealing. This is the only way for a platform to be successful and to be used by the teams.

[00:15:44.772] Adidas Code. Do you see this T-shirt? Ben, you can also show it. After one year and a half on the road, if I am proud of something, it's about this: around this T-shirt, around this community that didn't exist three or four years ago.

[00:16:03.912] Every single technical person, or any person interested in how we do things technically, comes to Spain, where we have 70% of our developers, and they go through a week of onboarding. In the last two days, they do an application end to end with different microservices, requirements traceability, all the test automation, API published with all our guidelines. It was unthinkable when I joined the company four years ago. We spent six months fighting with different departments to get an application up and running. But the best thing is that they get contact with the different responsible technical product owners of the platforms. This connection is there forever, and then we follow a no-tickets policy. This real-time communication enables them also to want to work with you and to provide new things.

[00:16:52.292] Apart from that, last year we ran more than 100 events internally. But the most special one is happening in two days. We run a yearly all-engineering day. Last year we had 200 people. This year it is the Adidas Tech Summit: 600 internal people. This is amazing because we only have 300 internal engineers. We have 2,000 people deploying on our platforms, but we are still heavily outsourced. God, I hope for that not for long. Basically 600 people, project managers, software architects, joining a full day and a half with more than 70 talks of knowledge sharing. Sadly, I will need to leave the conference today, and that's the pity.

[00:17:39.072] I want to finish the community part with a story. This is my suggestion to all of you, and one thing that I will follow always: whenever you need to implement something company-wide, look in your company DNA. This is a story of the Adidas DevOps Cup.

[00:17:58.352] We were a year ago in our monthly meeting with all the directors of engineering, and we were struggling with how to boost DevOps adoption in the different teams. We had a lot of things, a lot of accelerators, framework, quick start packages. But in Adidas and in engineering, we don't like top-down mandate. It is also against the autonomy from the teams. So we said, what is working in Adidas? Gamification, competition. Let's do this.

[00:18:25.016] It had huge acceptance at the director level, and we said, "Okay, let's open it." The teams would come with a current definition of where they are with regards to culture, automation, measurement, lean, and sharing, and where they want to be in nine months. But one condition: bring your product owner. Bring your product owner because he or she needs to state how this is contributing to business value, because this is one of our biggest struggles of DevOps, delivering the return on investment of that.

[00:18:56.336] The final was last week. The winner is announced in two days. I already know the winner; they don't. Basically, it is going through a world tour in all our headquarters, really to spread the word of how important technology and business working together is. The acceptance was huge: 220 people. We didn't expect that. That made us get all the directors of engineering, and you are a mentor. That's required. The coolest stuff is that they cross-mentor different teams in a different domain, so both got fresh perspectives.

[00:19:34.696] After nine months, the platform adoption and best-practice adoption has ramped up by factors of 10, 20, even 100. We have now 130 projects in the software delivery lifecycle metrics tooling that we have, the Global Metrics Portal, where last year we had 50. We follow chaos engineering and DevSecOps in all the critical projects of the company every two weeks, and it's super fun to go to one of these sessions.

[00:20:02.796] About what we call the golden metrics: we had our e-com team, Ben. They deployed every six weeks a couple of years ago. Now they deploy, basically whenever they want. The mobile team spent three days deploying; now the product owner is doing it in a minute. No meeting us anymore for deployment. The consumer service team on Salesforce had zero downtime, and they have gone from 26 P1s to zero. Zero downtime this quarter, and you don't want to see the numbers of last year.

[00:20:37.836] The most important business value: Adidas app reported 3,700 minutes freed to work on different tasks. They were able to sell 2,600 of our Yeezys designed by Kanye, our biggest hype product, in five seconds. Now they have eight teams when in the past there was only one, and they can have eight teams deploying continuously because of that. They do 500% of the revenue through the app that they did last year.

[00:21:13.616] Consumer service themselves are moving from being a cost driver to a value enabler through interaction with the consumers. In the past, three teams were working in a platform. Now this platform is run by eight teams with different product owners, even from different domains, through enablement. All the KPIs, consumer satisfaction, NPS, have gone through the roof.

[00:21:36.456] The product creation area overall is shortening the lead time of the products. A team of nine soldiers has created more than 75 common services, and their goal is to disappear themselves, because now the different teams are really owning these services. Now they are only six people. They were nine, and they want to disappear this year. 500K savings.

[00:21:58.796] Or the store associate mobile. This is the platform that is giving the mobiles to our store associates in our retail store. They multiplied by more than 20 times the adoption by trust from the markets. Basically, the common theme is that none of these teams would exist if they had not gone DevOps. It's not the return on investment of doing it; it's what happens if you don't do it, what you cannot do. With that said, Ben.

Benjamin Grimm

[00:22:27.216] Thank you, Fernando. What does that mean for the business? It's a fantastic platform that we have here, but at the end, we have to make a lot of euros. As I said before, our goal by 2020 is to make 4 billion in revenue. From 2017 to 2018, we had a year-over-year growth rate of 40% in e-commerce. From 2018 to 2019, 36% growth. So there's a lot of growth and a lot of expectation on the platform.

[00:23:10.896] It's not just only about the tech. The Adidas organization in digital grew over the last three years from almost no teams on the application side to 100 teams. This is pretty significant in that short time, especially in a traditional organization that was not a pure player in digital. That organization needs to learn how to onboard these teams and ramp them up. The platform gives us the chance to ramp up these teams very fast.

[00:23:46.376] We have every-quarter prioritization processes based on OKRs, and new opportunities pop up everywhere and so fast. No matter if it's a social commerce channel, or an app channel, or .COM and web channel, we need to be flexible. It can happen that we have to shift three teams on this topic and five teams in another direction. This platform gives us the chance to be super flexible, and we don't need to wait a couple of months until the basics are done and they can really create value for our consumers. They can almost start immediately to create value, which is a huge milestone for us.

[00:24:26.860] Especially faster time to market. We can't wait anymore for months over months over months to get to market. We have a very agile, MVP-driven, pragmatic environment where we try things almost every day. This time-to-market time has increased in the last two years significantly. Instead of months, we're talking about weeks, and in the next months, we will talk about days. We can already release every day. That's fantastic. We can also react to the bugs and defects that we have on the system very fast, which is crucial, especially in some high-performing, very demanding time of the year.

[00:25:10.900] Agility definitely has competitive advantage. As I said before, we want to be flexible in terms of how we populate the teams, on which topic they work, especially in this competitive environment where other companies invest also heavily into digital.

[00:25:30.580] DevOps for business stability. We are operating around the globe, especially around the holiday season, starting with Singles Day in China, which is the biggest holiday or sales event in the world. In China, Singles Day is bigger than Cyber Monday and Black Friday combined, which is pretty significant. We have Cyber Monday and Black Friday. As Fernando mentioned, we have hype shoes, so-called Yeezy shoes, in cooperation with Kanye West. They are high-demanding shoes, big sales events with hundreds of thousands of consumers coming at a peak time, at a certain time to .COM, wanting to buy these shoes, and these shoes are sold in seconds.

[00:26:22.980] It is a pretty big challenge for the platform team to make these available. There was a lot of pain, to be really honest with you, in the last years. But now it's getting more and more stable, especially around holiday readiness. Last year, 2018, was fantastic. We had 100% availability. We never had that before. In 2017 and 2016 there were downtimes here and there, sometimes in China, sometimes in the U.S. A lot of people had less check mode, you can imagine. Last year was very good. This year we are very confident as well. With that growth rate, the system is ready.

[00:27:04.440] This availability and this success, especially in the holiday season, goes even up to the executive board. They're also asking, "So how have you done that?" We're working in a DevOps style. We have that platform. They're really interested in how we do that, and it's so nice to see the return on investment in these moments of the year.

[00:27:26.380] Last but not least, I would like to highlight site speed. We are always talking about new features here and there: a new payment, or search needs to be better, and so on. Yes, that's true. But I would highlight that site speed, you don't really see it, you feel it. It's a very technical topic, but this one here was our single most conversion driver in 2018. We went down from around four or five seconds to about two seconds. That was our number one complaint from consumers, and the platform enabled the app teams, the application teams, .COM, and our mobile app, to be way faster on the consumer experience side.

[00:28:14.280] That was a fantastic success for us. Before the holiday period in November last year, we launched the product listing pages and product detail pages based on a new headless architecture. We have the platform, we have an API layer, and then we have React as a front-end layer. It was absolutely fantastic, and I hope you have some good next things in the pipeline.

Fernando Cornago

[00:28:42.580] Thank you, Ben. This year you are not rushing, Gene, so we have still two minutes. That's good. Basically, what's next? Gene asked me, "Please, Fernando, tell what is next. What are your challenges?" It's a pity that I tell you. In two days from now, we have our Adidas Tech Summit, where we are announcing a lot of things that are coming this year, so I cannot disclose a lot of things.

[00:29:09.320] Basically, IT is undergoing a huge transformation. We have a new CIO since January. What is clear is that the way to go is the way that we already started four years ago. This is set in stone.

[00:29:23.800] A lot of things regarding gamification: that's not going to stop. You hear bad words, AI, ML. The guinea pigs of that need to be the engineering community. That is clear. We need to upskill all of them into that.

[00:29:40.600] And skills, working in the skill set of your community. Together with HR, we are creating a huge advanced framework for every engineer joining Adidas, knowing what is expected from them in the different teams with regard to skill set and the trainings to get there. This is how we will mature software delivery at scale.

[00:30:07.070] That's it. Thanks a lot. Thank you, and I hope to see you next year.