My name is Keith Barthelmeus. I’ve been a Technology Business Management (TBM) executive advisory board member for about six months and the global VP and CFO at Brinks. I recently spoke on a TBM Tuesday Roundtable about our digital transformation journey and would like to share a sampling of the insights I presented. You can see the rest by watching the on demand video here.
First, let me start by telling you a little about Brinks. Brinks is the global leader in total cash management, route-based secure logistics, and payment solutions. Our customers include financial institutions, retailers, government agencies, mints, and jewelers, to name a few. We have operations in 49 countries and serve customers in more than 100 countries. Brinks is ultimately focused on the safety, security, and reliability of our customers’ most valuable assets, mainly cash and precious commodities.
I've been with Brinks for about three and a half years. My responsibilities include leading finance, strategic sourcing, transformation, and innovation for both IT and product. I report to our EVP CIO/CDO and our corporate CFO.
The TBM journey at Brinks was initiated because our company needed a turnaround. As a leadership team, we had previously done a successful turnaround at a company called Recall. At Recall, we had a similar focus on providing margin contribution and driving top-line benefit. That's where I launched a technology business management office (TBMO) for the first time. We had a lot of success, so when we joined Brinks, we had a playbook we could build on. It was really a matter of right sizing the organization, driving operational excellence through financial best practices, and understanding our total cost of delivering any solution.
So, when I first came in, I was given a very high-level target: Reduce technology costs as a percentage of revenue by 30 basis points over the next three years. I gladly accepted that challenge even though I had no transparency yet into our technology spend. I also had no idea of the organization’s perception of IT.
My first task was to meet with the business leaders across the organization, and I learned that for many years, a lot of business leaders in the organization were not getting the value they expected from IT. We were known as the department of “No.” The black box.
That sounds pretty daunting, but I felt like we had a pretty easy task. Those challenges are often overcome by having some hard conversations (and providing the data to show how IT supports the business priorities) and then delivering with transparency. I also needed to create a more efficient cost model for IT. TBM was absolutely the guiding principle to do so.
How to identify areas to reduce IT costs
We are a 161-year-old company, so, we've got a lot of legacy technologies. At the same time, we were actually under invested in technology. This is a very physical company that had not yet really met that digital inflection point. So, even with the goal to reduce overall technology spend as a percentage of revenue, we knew we'd still have to make room for investments to drive operational improvements and new revenue opportunities.
We decided to tackle this in two slices. One is our traditional IT costs – those are the “keep-the-lights-on” needs. The other is our total technology costs, in that we have a chunk that we’ve internally labeled as business technologies. For those two slices, we want to provide operating leverage to really drive margin contribution. Our plan was to limit IT spend growth to roughly 50% of the rate of revenue growth. That would help us meet our goal of reducing spend 30 basis points in three years.
And then we wanted to provide business leverage by way of saying, “Let's also shift our spend in technology.” So, while we're reducing the overall costs as a percentage of revenue, we're increasing our percentage of spend that drives revenue.
We were able to achieve immediate results through a series of exercises that started with benchmarking.
Benchmarking: The first step to changing behavior
Benchmarking is intended to provide a directional pointer; it's a compass. It gives you a baseline for where you are compared to the industry or other IT organizations within your company.
Because we were such a traditional physical legacy company, we chose to benchmark ourselves against a peer group in the transportation space. As a company, we are offering more services that align to the banking and finance space, so we always kept in mind the difference between the two and directionally set it on transportation. The benchmarking exercise helped us find areas we needed to focus on first and gave us some low-hanging fruit to work with.
Now we're at a point where we've done a lot of that initial cleanup work and we're starting to look at our digital investments and where we need to move more toward banking and finance. Based on our percentage of revenue as it's distributed between our transportation services (i.e., armored truck services), money processing, and payment solutions, we now are looking at benchmarks that are a combination of those two peer groups to reset for the next three-year plan.
A key to our success may be our internal benchmarking. As a global company with operations in 49 countries, we have the opportunity to look at our structure country by country and apply some standards. After 160 years of business, with plenty of acquisitions, just imagine the number of disparate systems around the globe. That’s a challenge that internal benchmarking can help us solve.
As we started to track the cost per system and per application, we were able to create standard cost buckets. Then we looked at the total cost of ownership (TCO) for each of those systems and internally benchmarked them against one another to see where we're efficient, where we have strong internal customer satisfaction, etc. and start to say, “What are we doing right here that we can standardize on?” We’re leveraging comparative data internally to see where there are opportunities to rationalize and improve outcomes.
Watch this three-minute video for a demo of interactive benchmarking in Apptio.
Find the low-hanging fruit
We started by identifying our total spend worldwide and by country. We started to use benchmarks from day one to compare Brinks to its industry peers.
Once we had benchmarks, we started looking for low hanging fruit that would allow us to get quick wins and build trust. First, we found that we were under invested compared to our peers in hardware. Now that doesn't mean we want to go out and spend money, but it supported the message we were getting from within the IT organization that the servers were past end-of-life and “being held together by duct tape.” And, we found that our telecom spend was high; we had antiquated T1s in most of our markets still.
Now we had data to drive conversations. We first had to get buy-in from the IT organization. To do that, we needed to communicate frequently about what our strategy was and what everyone's role in that strategy would be. Once they were onboard, we pulled data together to have the conversations with the business.
In the beginning, the strategy was to reduce costs. Once you say you can reduce their costs, you've got their attention. Then you have to back it up with data and delivery. Once we had their trust there, we would move to performance.
Using TBM to fuel digital transformation
Digital transformation projects are on every IT leader’s to-do list this year, but how will you pay for it? Remember when I told you that I’d been given a goal to reduce IT spend by 30-basis points within three years? I’m proud to say that we overachieved on that in the first couple of years. Now it was time to put a digital strategy in place and we had the funds and the goodwill to pay for it.
One of the problems we're trying to solve with technology is getting a better understanding of the cash ecosystem. So, we started to build a digital network from the edges (i.e. trucks, safes, branches, and messengers) back to our monitoring and processing centers.
After our research, we released a digital strategy to the street called 2.0. One piece of that strategy is a very simple deposit box for our merchants. So, retailers that currently balance their cash at the end of the day and walk a check to the bank have liability. The cash that's sitting in their store is at risk of theft and anytime they walk out the door and go to the bank, they've got risk of theft. They also have a period of time once they make the deposit for it to clear their accounts, so they don't have the working capital.
So, 2.0 is designed to reduce risk and give them access to their working capital as quickly as possible by giving them provisional credit. We introduced an RFID-enabled box and a mobile app for our customers to make deposits directly and safely from their retail locations. As they clear their cash registers, they make a deposit through the mobile app, reconcile it through a scan of the box that opens a software-defined lock that opens the deposit box. They drop in the RFID-enabled deposit bag and we now know the box contains a deposit so we can issue a provisional credit.
They have working capital within 48 hours while the box still resides in their location. It also allows us to provide an on-demand service and have less frequent stops and a lower impact touch when on site. Previously we were stopping at their location as many as five days a week to pick up cash because we did not have visibility into the contents of the safes.
My personal TBM journey
I've been in the technology space for just over a dozen years. Prior to that I was in various leadership roles over operations and sales. I’ve led startups and some M&A. I've always been a P&L owner. I was always laser focused on how to improve the top and bottom line. So, TBM was a natural fit.
TBM has been huge for my career in technology. I'm not a technologist. So, it’s really helped me to better bridge the gaps between the business and technology. As you can see from my story today, TBM has helped me contribute to the growth and success of the companies I’ve been with.
If you don't want to miss any of the Brinks story, watch the entire TBM Tuesday Session featuring Brinks. If you'd enjoy hearing other TBM and Apptio success stories, register for upcoming TBM Tuesdays and the TBM Conference, which starts Nov. 9.