For a company that manufactures products that protect the flow of materials, Flowserve was having a tough time pumping standardised technologies and business processes throughout its 300 global locations. The culmination of a series of mergers and acquisitions, the company, based in Irving, Texas, found itself saddled with a whopping 68 ERP systems, scattered data centre structures, and fragmented voice and data networks. Make money, win customers
Faced with mounting operational and regulatory pressures, Linda Jojo, Flowserve's CIO, knew it was time to simplify the company's entire IT infrastructure--an endeavor that would bring about sweeping changes across an enterprise spanning more than 56 countries. How she accomplished this task helped the company earn a 2007 CIO 100 Award. Applying IT in innovative ways at the enterprise level is certainly no small feat. Implementation headaches, configuration nightmares and employee backlash are only a handful of obstacles that are bound to arise. And for companies such as Flowserve that choose to forgo a piecemeal approach in favor of a complete IT overhaul, the challenges can seem insurmountable.
What's the best way to determine a project's scope? How should investment dollars be divvied up? What steps must be taken to win the support of senior-level executives and frontline employees alike? And how can you even begin to capture the impact of a project that touches every aspect of an organisation? These are questions that Jojo, along with fellow CIO 100 honorees from Delphi, the Air National Guard, Johnson & Johnson, and Merrill Lynch had to ask themselves before tackling one of the largest undertakings of their IT careers.
Transformation is tricky stuff, after all. So it's not surprising that Andy Woyzbun, lead analyst at Info-Tech Research Group, refers to today's expansive IT undertakings as the "Big Bang." "The reason why a lot of organisations don't propose the 'Big Bang,'" he says, "is because they don't feel that they can generate sufficient excitement, belief or faith [among senior-level management]. Therefore, they decide to tentatively chip away at problems a bit at a time."
That doesn't have to be the case though. Translating an IT project into business terms, developing a strategic communications plan, building a solid business case and creating a governance team to oversee change are all steps that can lead to a successful IT overhaul, as proven by these CIO 100 honorees.
Get everyone on board
At Flowserve, Jojo's assignment was heavy on IT change as the company sought to update processes and systems: establishing a common IT infrastructure, introducing global help desk capabilities and cutting dozens of disparate ERP systems. But that didn't stop her from taking a decidedly business approach to simplifying Flowserve's IT footprint.
Linda Jojo, CIO, Flowserve
"The first step was making sure that this wasn't viewed as an IT project," says Jojo. "From our CEO, our leadership team and our board of directors on down, we've made sure that this project is something we talk about in terms of its business impact."
It's a tactic that helped set the scope for a project that could have otherwise become unwieldy. For starters, Jojo helped assemble 35 divisional representatives from across the globe at the company's world headquarters. Here, holed up in a conference room for 17 weeks, these divisional representatives pored over disparate systems and processes, deciding what was--and wasn't--worthy of improvement. Throughout this period, Flowserve also called on internal subject-matter experts, from engineers to sales representatives, to offer their in-the-trenches take on the company's shortcomings.
The result: a blueprint for business standards, the design of a common financial chart of accounts, and the creation of a set of data standards for customers and suppliers. In addition to creating project perimeters, Jojo says that by involving business leaders in the critical design phase, she was able to garner widespread support for a companywide strategic business initiative costing more than US$60 million over four years.
That's not to suggest, however, that IT manpower isn't an excellent source of support when a company is tackling a gargantuan IT project. Just ask Bette Walker, CIO at Delphi, a mobile electronics and transportation systems supplier in Troy, Mich. In late 2005, Delphi conducted a comprehensive global benchmarking of its IT infrastructure, which revealed that the company was in desperate need of rebuilding its IT capabilities.
With the twin goals of managing costs more aggressively and delivering services more efficiently, Delphi orchestrated a plan to move to a managed service environment, cut global outsourcing contracts and reduce IT operating costs to industry benchmark levels. But not before Walker pulled together a special forces team--a cherry-picked, six-person unit of IT professionals adept at working under pressure and able to address the project's most urgent technical issues.
According to Walker, while Delphi's Special Forces unit oversaw uniting employees "around any given issue or initiative that needed focus," she dedicated as much as 80 percent of her time to meeting with department heads every other week to discuss planned actions to the IT operating model. With senior-level management support firmly in place, Walker then went about winning the vote of frontline employees. A long-term communications strategy ensured that IT's goals were communicated concisely and consistently and in a manner that was sensitive to employee concerns. After all, says Walker, "this amount of change creates a lot of trepidation in the employee base. When that happens, you can start to have attrition."
Build a bulletproof case
The 2005 hurricane season played a starring role in the Air National Guard (ANG) Communications and Information Directorate's decision to purchase more than $55 million in IT infrastructure. A comprehensive benchmarking study may reveal the odd shortcoming, but there's nothing like a natural disaster to expose an organisation's IT deficiencies and the need for investment dollars.
Randy Headrick, CIO, Air National Guard
In the devastating aftermath of Hurricane Katrina, Randy Headrick, ANG's CIO and director of communications and information, found himself with a new mandate: to find a way to satisfy the Air National Guard's first-response communication needs in the event of a disaster. So, based on lessons learned from one of history's deadliest hurricanes, Headrick, along with two key IT staff members, developed a list of requirements to supply all 10 Federal Emergency Management Agency regions with the necessary communications capabilities. These include a highly specialized communications suite capable of providing video, Internet access, network and cross-banding to link up to a dozen radio networks; deployable wireless systems; and cellular dial tone restoration.
Upon identifying the investments to be made, Headrick, armed with supporting documentation, worked with other ANG directors to obtain congressional funding for enhanced communications capability during national disasters. "What I told Congress was, 'I don't care how many medical assistants you have, I don't care how many transport air pilots you have, and I don't care how many civil engineers you have. If they can't talk to each other, they're not going to get the job done."
Pinpointing where funding would be most wisely allocated, however, isn't always so cut and dried. Pulling at corporate purse strings means having to craft a strong business case.
Says Info-Tech's Woyzbun, "The big challenge is, How do you create within the senior management ranks an intense excitement and almost hunger for these large projects? Otherwise, they won't go ahead."
Take Johnson & Johnson Pharmaceutical Research & Development (J&JPRD), for example. Bogged down by its dependency on a web of decentralized systems, J&JPRD began production on a grid system capable of offering universal access to regional computing and data across its global enterprise. The plan was to transform a costly environment into a powerful research instrument capable of driving pharmaceutical research.
Today, this grid spans from Belgium to California and includes 1,200 high-powered CPUs from a variety of dedicated clusters, minicomputers, desktops and lab instrumentation computers. But mustering management buy-in for what Karan Sorensen, J&JPRD's CIO, affectionately refers to as a grid with "the capabilities of a big ol' honking supercomputer on steroids" called for cold, hard figures.
"To have the stomach to take on something like this, you first have to look at whether there's a real business value proposition here," she warns.
In response, Sorensen formed a governance team consisting of nearly 20 in-house scientists and IT staff members with the objective of devising a bulletproof business argument. The team started by clearly defining financial targets for investment and desired returns. Next, it conducted a complete inventory of IT infrastructures across the organisation to identify gaps in the company's existing technology platform.
Based on these findings, the team pieced together an investment plan featuring the software, infrastructure and management services needed to fulfill its vision of a holistic strategy for scientific discovery. Carefully collected data culled from a series of investments helped prove that there was a strong value case for J&JPRD's short-term goals, as well as potential for additional future returns. In fact, the company's short-term value case predicted a complete return on investment by early 2007--a financial goal that has since been reached.
But winning management buy-in is as much about speaking the language of C-level execs as it is crunching numbers. Says Jeff Mathers, J&JPRD's director of technology office strategy and delivery, "The team did their homework up front so [its business case] was very thoughtful and looked at the return on investment--it wasn't just about cool technology. We could speak to the project in terms of real tangible results that, from a resource perspective, the head of sciences or head of clinical operations could understand."
Uncover hidden opportunities
For today's corporate bean counters, however, nothing is clearer than the bottom line. Merrill Lynch is certainly no exception. In 2003, the Check Clearing for the 21st Century Act, a.k.a. Check 21, was signed into law, allowing banks to replace an original paper check with a legal substitute of the original if it was cleared using an electronic image. That was good news to Merrill Lynch, whose private client business in the United States currently deposits more than 17 million checks per year for a total of $115 billion.
Ron DePaolo, CTO, Merrill Lynch Global Private Client Technology Group
In the past, Merrill Lynch relied on a time-consuming combination of manual and automated processes for decentralized check clearing and deposits across its 600-plus branches. The passage of Check 21, however, presented the firm with a chance to improve deposit processing with new technology. Today, a small desktop scanner, installed in every branch office, can scan approximately 36 checks and deposit slips per minute. The scanning software validates the quality of the image, and physical checks are stored at the branch office for a few weeks and later destroyed.
But for Merrill Lynch's Global Private Client Technology Group, revamping brokerage deposit processing has never been just about bending to legislation. Rather, Ron DePoalo, the group's CTO, believed that by introducing new technology, the firm could increase productivity, enhance customer service and realize enormous cost savings. "Instead of being a regulation imposed on us, we looked at how do we make [Check 21] an opportunity for Merrill Lynch," says DePoalo.
And it's for precisely this reason that the company has been able to capture such strong ROI figures. For example, the Merrill Lynch branch office workload related to deposits and performed by 343 full-time employees has since been reduced by 50 percent, amounting in an annual hard dollar net savings of $4.2 million. By centralizing deposits, the firm has been able to consolidate its 51 bank accounts at 25 different banks to just a handful. That reduction, combined with the lower fees related to the processing of electronic files rather than paper, yields a $3.1 million reduction in bank fees annually. And Merrill Lynch's bank courier fees will be reduced by $3.6 million per year by 2009.
Not every organisation, however, is able to put a dollar value on its IT endeavor--no matter how wide-scale or business critical. Says Headrick from the Air National Guard, "I can't measure a return on investment like a company can; I can only hope that I'm spending that dollar smartly."
A sentiment undoubtedly echoed by every CIO about to tackle an enterprise-wide IT project.
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