Jeremy King, VP of Technology Business Management, and Michael Kruse, Director of IT Finance, together cover a wide portfolio for Globe Life’s financial management of IT. Jeremy is responsible for creating opportunities to leverage innovation while overseeing all IT financial management (including mergers and acquisitions). Michael is responsible for all financial activities for the IT department (e.g., OpEx and CapEx budgets, forecasting, and invoice processing). They started their roles at Globe Life at around the same time and were set on wresting control from chaos.
Jeremy King: Globe Life is one of five companies under the umbrella of Globe Life Inc. We just recently rebranded from a company called Torchmark and these companies all have a little bit of a different flavor. One thing that ties them together is that we put our focus on working-class families, which is unique for life insurance – we are aimed at the middle-class.
I joined the company in the middle of 2015, and Michael joined right after. The first question I asked was, “Can I see what connects our actual spend with our forecast and what we're spending things on?”
Though some people were keeping a pretty good tally in their area, others weren't. There was nothing pulling it together to say what we were spending on and how spend patterns would continue.
We had spreadsheets with a lot of guesstimates. They were probably directionally correct but didn't really have any real actual data.
Michael Kruse: It was a mess from a financial perspective. There were no controls in place, no formal budget/forecast process, no accountability, and no formal management reporting or variance analysis. We pretty much walked into unchartered territory.
“Before Apptio, it was spreadsheet craziness. We had the ‘monster spreadsheet’, that was 24,000 rows long and we were tracking every cost with 41 different data points, and only one person could be in it. Every time we went to save it, we would get the big circle for minutes at a time. We knew we had to do something because it was dying a slow death.”
- Michael Kruse, Director of IT Finance, Globe Life
Michael: It was very much a company with its IT financials in its infancy. We basically built the financial organization within IT from the ground up. For the first year, we spent a lot of time just getting our hands around IT spend, identifying vendors, and calculating what our actual OpEx and CapEx was. It took us about a year for Jeremy and I get our hands around that.
We started with a large Excel file to track all our expenditures—CapEx, OpEx, forecast, and budget. It was very much out of control. The spreadsheet was twenty-four thousand rows of data and only one person could be in it at any one time. We knew it wasn't efficient, but we had to do something.
Because we're in the insurance business, the accounting treatment gets quite complicated. Expenses for single invoices can be split up to 10 different ways (e.g., one invoice can be charged to five different companies charged between administrative and acquisition costs). We deal with 300 vendors and have 20 new IT development project requests a week, and we have two different general ledger systems.
Historically, we have not been focused on departmental accounting. We were asked to forecast and explain certain GL accounts (e.g., hardware depreciation, software maintenance, hardware maintenance, software costs). Anybody in the company could hit these accounts and my team is accountable for explaining them. Here’s the analogy: you're in charge of balancing a checkbook but someone's gone and handed out checks to random people.
Today, we have put more formal financial processes in place. We are going to departmental accounting where everyone will have full accountability for their cost center P&L.
Jeremy: I had come from a previous company where we had a similar situation, so this was not the first time that I’d seen this.
But at Globe Life, it was the first time that my team and I had sat down to say, “How do we fix this and can we come up with model for it?” And building a team was a key part of that.
Jeremy: We called it the “Inception model.” Move away from a decentralized manual model (a.k.a., chaotic, reactive, standards-free) to a decentralized, automated, and efficient model.
We took an incremental step by first adopting a centralized manual model. I’d recommend others try this approach.
Put a team or an individual in place to give it the proper attention. It will still be a manual process, and you might be on a spreadsheet, but you're more than likely not going to have technology in place, and that's where you start looking to put standards in as well.
From there, roll out a centralized automated model. It’s the same as a central team but you're going to take your manual process and put it into technology. Use an RFP-type process choose that technology and then figure out how to take it off spreadsheets and put it into the technology.
“We could see the slow Circle of Death with a spreadsheet as we loaded more and more data into it and see it really struggle to handle it.”
- Jeremy King, VP of Technology Business Management, Globe Life
Jeremy: We are in the centralized and automated model right now. We are trying to move to a decentralized automated model in 2020—where we are leveraging robotic process automation (RPA) or artificial intelligence (AI).
In a centralized automated model, teams are working on things in an efficient manner but when that team goes home no work gets done. When you apply RPA or AI, there's an ability, after the team leaves work, to still get work done. That’s where Globe Life is moving. You'll find with this model, that you can't always move to the next stage as fast as possible—sometimes things outside of your control holds you up.
In 2017, we moved to a centralized, automated model with the implementation of some of Apptio’s modules. In 2019, we got our procurement vendor contracts sourcing to a maturity where our company took it to an Enterprise level—that function now resides outside of IT.
Jeremy: We centralized and we right-sized. The centralization started with Michael I and we expanded from there. I know work environments are different for every company and it may take years to bring on one resource. It was obvious from the get-go that we needed more resources, so we brought in another resource to focus exclusively on the TBM arena.
Jeremy: We were able to really start looking at our vendor contract spend, get ahead of some of the re-ups on the maintenance, and negotiate better. Variance reporting, budgeting and forecasting are a lot better.
Michael: We have put good process and structure around finances. There are four of us handling all IT finances, and though we aren’t perfect, we are ahead of where we were four years ago and we're on the right path.
As we were able to get the tools in place to help us to get us off spreadsheets, we were able to deal with our finances much more proactively and track actions better.
“Our financial reporting, budgeting and forecasting are much better.”
- Jeremy King, VP of Technology Business Management, Globe Life
Michael: We looked for a well-established industry leader in this arena with a standard taxonomy (Apptio TBM Unified Model (ATUM)) which basically allows us to map our costs in to Cost Pools, Towers, Products and Services.
We wanted good modeling capabilities for mapping cost allocations from Cost Pools to Products.
We needed data quality control points that, as we mapped headcount into a labor bucket, or hardware maintenance into a maintenance bucket, ensured data was not falling through the cracks.
Michael: We started with Apptio IT Planning which basically allows us to do our forecasting, budgeting, and tracking of actuals.
We have Apptio Cost Transparency which allows us to do a lot of cost analysis, vendor analysis usage, and a lot of different canned reports as well as custom reports.
We have Apptio Vendor Insights delivering vendor spend analysis.
We're in the process of getting ready to purchase Apptio Apps & Services and Apptio Business Units which will allow us to continue moving up the ATUM model to get us into products and services and show back or chargeback.
We have mapped our costs to Cost Pools and IT Towers—the first two layers. The implementation of services and business units will allow us to move up the stack to get to show back and chargeback.
We're going to be working heavily on showback, and if we want to, the ability to do chargeback. It's a big step. Compared to where we were four years ago, we have made major progress.