Strategic planning moves IT from old world delivery to modern value
Tim Niewczyk has 18 months under his belt as director of enterprise business technology strategy at Moog, and 17+ years managing enterprise technology systems. Here, Tim shares how pointing the spotlight at enterprise IT budgets is helping his organization find the investment dollars they need to fund innovation.
To support a business with a hold on a variety of markets across the globe, from industrial to aerospace and defense, an IT team at a company like ours must break old world IT patterns, where IT was a commodity service for fixing PCs, in order to fund, plan, and execute a more innovative, industry 4.0 type of digital technology strategy.
Moog is an international organization spread across over 100 different locations. Our motion control technology enhances performance in a variety of markets and applications, from commercial aircraft cockpits, to power-generation turbines, to Formula One racing, to medical infusion systems. IT is one of our biggest functions outside of operations, with a significant amount of spend supporting a global organization.
Despite our oversight of a large budget, in the past, we had very little visibility into what our spend was on or what our allocations included. Our enterprise IT function is 100% allocated out to the groups yet they had very little visibility into what we were spending money on and could not provide a relevant level of detail down to the groups to which we were allocating costs. We also didn't have global visibility.
To move forward, we needed to first understand where we were.
Diagnosing the problem
Lack of transparency had led to IT constantly being asked to “cut, cut, cut.” When you can’t explain spend in terms of services the business understands, IT becomes a gray area to the rest of the company. It's always, "We need you to take 5 percent out of your budget” or “You can spare 10 percent.” The business felt we needed to lower our costs, we needed to produce better results. IT was viewed as a burden or a tax on the business and we were told, “We MUST reduce that cost.”
IT decided to focus on providing a better service by running more efficiently at a much cheaper cost. If we could do that, we might gain the investment funds we’d need to transform IT. We could begin to explore the innovative things a modern IT group can do and the value IT can bring to the end customer via revenue growth or improvement down to the shop floor. Those are the reasons to transform our IT function while the business itself is transforming in an ever-competitive type of environment.
Utilizing the power of people and technology
Technology's not going to do this all by itself—you need people and processes too. Moog’s budgeting cycle traditionally happened once a year and was predicted 9 to 12 months in advance, all based on the previous year’s data. We realized that if we could align our IT resources more with business priorities, we had the potential to change our allocation model to be more transparent. User departments would have details down to the exact spend. In the past, the IT budget was essentially a single gray bubble of overall costs, where charges were made based on devices within operating units.
It became very clear when I first took on this role that as the head of our office of the CIO which includes IT Finance, I was expected to find a way to increase our cost visibility and improve the way we manage the budget. We were using an antiquated tool and a whole bunch of spreadsheets to report on the data in that tool. The solution didn’t have the best reporting capabilities, nor did it have any roll-up capabilities; it was very cumbersome to use for data entry and the software itself wasn't very stable. The entire system was based on-premise and was largely customized over time, and we knew we wanted to move our data into a SaaS-based model based on industry standards. I went looking for new capabilities and that’s when we found Apptio.
We implemented Apptio’s ITFMF tool as a standard to capture all our data in a usable format and then transform that data into actionable information. Being able to show and demonstrate the capability of the tool helped it sell itself basically.
We also established an IT finance function with global representation from both our IT and finance departments to support the transformation. From a finance perspective, we have people and templates that support the organizational structure of not only the enterprise functions but also our global IT and group functions.
Our corporate finance function previously only had visibility into the corporate IT spend, not into the IT spend on a global scale for each group. This solution gives them that visibility. It has also reduced the amount of effort needed to be able to support the IT function from a corporate finance standpoint.
All budget managers now have access and visibility into their data in real time because we use a single tool. Instead of exporting data, putting it into spreadsheets, and producing manual reports on a weekly or monthly basis, we now have predefined reports all consolidating our data into one place and offering complete visibility.
Finding early success
We’ve shifted most of our focus now to implementing technology business management (TBM) practices. We have another three to six months ahead of us in this IT financial management transition and we’ve already found success along the way.
The first step was transitioning to using a single tool with detail behind it that can provide that more granular allocation data for enterprise IT functions. Over the next few months, we'll be working to integrate all our global IT functions within this standard. Ideally, we'll have a complete picture of our entire IT spend and all of Moog’s technology spend internationally.
TBM is enabling our corporate finance function to have more time and resources to dedicate more partnership-type roles for IT. These resources helped us hire a finance business partner to grow these processes and the capabilities, moving us further and further away from day-to-day data entry and clerical type work.
What we're starting to see is the ability to plan more often, with more scenarios in place to load more playbooks into the tool to help us strategize. We're leveraging this capability to influence a decision to go into more of a rolling forecast-type five quarter plan.
In years past, it's always been, “Create the budgets in March, communicate them in April, lock them in place in May, and start up in the fiscal year in October.” It's been very static, based on year-old data that’s locked in for 6 to 9 months ahead of when we go live. There's really been no control and our departments have been held to those numbers throughout the entire next year.
Now, the business culture and climate have changed. Better visibility gives us the ability to influence a much more robust and fluid forecasting process. And at a global scale, even if we're not able to do that from a company standpoint, we can at least do it from an IT standpoint. We can monitor changes over time and make side-by-side comparisons in real time to make budget forecast changes.
We’ve been given additional funding from our executive team to accelerate our transformation. We’ve also been able to grow our budget by 10% instead of having to cut.
Enabling our digital transformation
Over the past year, we’ve taken steps to understand exactly how our IT is operating and modernizing. One area of focus has been on improving our operational efficiency. We’re now running an externally hosted and supported mainframe that has better disaster recovery and capabilities than the previous internally supported system. The new process is completely outsourced and its main ERP application support is a much better, and cost-effective, service overall.
Because we have over 100 locations around the globe and every site seems like they've got their own infrastructure and data center set up, our goal is to migrate as much as we can out of our data centers and into the cloud. This can be managed internally through our support teams, or go through a managed service provider to augment our staff. Regardless, we want the outcome to help optimize those environments by reducing costs consolidating the footprint into the cloud, having cost predictability, risk mitigation and IT / business transparency and alignment and we want to increase our agility to ingest new technologies to keep up with demand.
A third focus point is around our workplace services—providing a standard predictable service across the globe—whether it's from our help desk or our desktop support teams back down to the PC our customers are using.
Today, IT leads transformation by:
- Building a platform for growth
- Shifting the focus to differentiating technology, leaving commodity/run services to outside providers
- De-risking our IT environment
- Building a supportable, sustainable, agile infrastructure
- Driving common solutions that reduce risk, cost, and complexity
- Providing financial transparency and flexibility
Our goal is to be more focused on service delivery rather than addressing a gray area IT finance budget. The IT of old is becoming more of an outsourced function. If we can't be operationally efficient or effective on an IT-service, we look to optimize that capability with a more cost-effective partner. More than anything, TBM gives us back the time we need to stay relevant and current with the technology so critical to all of Moog’s products and services.
We want to work to provide a bill of IT. We want to be able to say, “Here's what it takes, and hopefully, our services are cheaper, deliver what you're looking for, and are more innovative.” We want to be a partner in these IT spaces rather than having the company look externally to provide these services.
From a partnership standpoint, Apptio has been phenomenal to work with. They bring not only expertise with their technology but also the best financial reporting practices in the industry. We've only scratched the surface so far with a very low-level implementation of Apptio’s ITFMF tool, and we're moving up their model. Their future direction and roadmap are exactly where we want our maturing IT organization to go.
Need a nudge?
My advice to other IT professionals is simple: set a goal for your department. Build a roadmap of where you want to go and don’t try to bite it off all at once. We've just scratched the surface. We've got a lot more to do but each incremental step that we take has been transformative for the business and provided opportunities to gain momentum and steer future investments. Each step helps build and clarify the roadmap.
You just need to take the first step.
»Want to learn more about IT planning challenges and best practices? Check out Apptio's ebook, available here for download.
Christina Pastella on Driving Digital Transformation using TBM
Christina Pastella Senior IT Finance Manager Tokio Marine North America Services
Transforming a Company and the IT Operating Model
Jarod Greene VP of Product Marketing Apptio