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Newport News Shipbuilding's Digital Transformation

 

“We’re going to run everything out of the box because the TBM practice and the ATUM model have been developed by smart people, people who have done this for a long time. Because of their work, we are able to gain value sooner rather than later.”

Bharat Amin
VP & CIO

Executive summary

The CIO and a dedicated IT team at a 131-year-old company used TBM to usher in a new era of transparency and communication between IT and lines of business. Leveraging a minimal viable product approach, the IT team embraced out-ofthe-box reporting to realize business value from Apptio Cost Transparency in only four months. This has shifted the focus from IT-centric to a business- and finance-centric approach, making it easier for C-suite and business stakeholders to embrace digital transformation.

Newport News Shipbuilding corporate overview

For over 50 years Huntington Ingalls Industries (HII)—formerly a Northrop Grumman subsidiary—has been the sole builder of the US Navy’s nuclear aircraft carriers and one of two builders of nuclear powered submarines. HII is the largest naval shipbuilder in the world; it also maintains, refuels, and repairs nuclear aircraft carriers and submarines. In addition, HII supplies expeditionary warfare ships, surface combatants, submarines, commercial oil hull tankers, and Coast Guard surface ships, as well as provides aftermarket fleet support. Almost all of its offerings are sold to the US government. Northrop Grumman spun off HII in spring 2011.

In 2015, the IT organization at Newport News Shipbuilding, a division of Huntington Ingalls Industries, was a $200+ million black box. Money flowed in, but it was hard to equate those dollars to the business value that flowed out. From basic services like email to advanced in-memory compute platforms, unearthing credible unit cost numbers was hard work plagued with inaccuracies. For newly minted CIO, Bharat Amin, this situation was untenable.

“In my mind, I’m saying, ‘If we don’t know what our unit costs are, how can we map ourselves to the industry? How can we get better? And how are we demonstrating to our business that our IT services are competitive?’ That’s where we started,” he said.

Fresh off his tenure at fellow defense contractor BAE Systems, where he leaned on TBM and Apptio to help drive major changes to that organization’s IT department, Amin knew those experiences could apply to shipbuilding as well.

“Within the first six months, we laid out our Vision 2020 plan, defining where we wanted to be in five years,” he said. “We made a strong argument that we are in a digital economy, and digital is here to stay. The vision was to ‘be the differentiating force’ for the company, to grow the business and sustain our competitive edge.”

Transformation starts with trust

The key to the digital business transformation at the heart of Vision 2020 is trust. And to achieve trust you must have transparency—without it, trust is just a slogan. That is where TBM first began paying dividends for Newport News Shipbuilding.

“This is not IT’s money. This is the business’ money we’re spending,” said Amin. “So how are we going to be transparent about it? We want to be held accountable. We want to make sure that when we say we are going to do something, the business can count on us.”

But trust goes beyond just accounting. Trust starts with understanding. As the first outsider to be hired as CIO at Newport News Shipbuilding, Amin set out to learn the shipbuilding business from the ground up. He went through the same 10-day entry level night course every employee attends and even learned to weld. He also spent three nights at sea helping the in-service sea trials before the ship was turned over to the Navy.

“The real trust I gained was when I asked our president to go on a sea trial,” said Amin. “And he said, ‘Really, you want to go on a sea trial?’ And I said, ‘Yeah. How else can I gain trust from my peers about the product and how it performs?’ So, I went underwater for three days. I was one of only a few vice presidents in the history of this company who’s gone through a submarine sea trial.

“When I came out of it, I think that was the moment I became ‘the CIO who wants to help the business.’ That’s because it’s not about technology. It’s about creating and maximizing business value. That’s how I gained trust.”

Big changes, big responsibilities

Since the introduction of Vision 2020, the company has embraced digital in a big way. And, because of the trust they now have in IT, they expect IT to lead this effort.

“We’re on the edge of a major, major investment in digital shipbuilding that’s going to change the company,” said John Ord, Director of Technology Business Management. “And the business is looking to IT to lead that effort. Our CFO has said that this investment over a few years is going to be twice what we’re spending annually right now. Mike Petters, President and CEO of Huntington Ingalls Industries, has told USNI News that the company is already investing $1.5 billion in technologies and processes that will ‘reset our efficiency and our competitiveness.’ A large percentage of that will be in IT.”

Ord continued, “HII’s Newport News shipyard has already taken the lead on this initiative, and we’ve estimated that creating an integrated digital shipbuilding environment could generate more than 15% cost savings on the third Ford-class aircraft carrier. But our budget won’t double, so how are we going to achieve that? Apptio is going to be our primary tool, the backbone of how we drive costs down and investment up. We’re really becoming more efficient, which allows us to reinvest the savings we reap into the business.”

By using Apptio right out of the box, for example, IT was able to identify approximately $7M per year of IT spend for applications categorized “migrate” or “eliminate.” Savings associated with retiring these applications will be reinvested in a digital integrated shipbuilding program that’s going to be “as big as going from diesel to nuclear 50 years ago,” said Doug Copeland, TBM Analyst.

“We’ve invested a lot of energy going through each of the applications and identifying them as, ‘Okay, are we investing in this going forward, or do we need to migrate off this?’” Copeland said. The team implemented TBM in order to understand the impact of these changes. “And that opened our eyes a little bit. That’s real savings for operations. We’ve also powered off certain items. So there’s some real savings opportunities right out of the box here.”

A big part of those technology reinvestment dollars will also come from the business. Like most TBM practitioners, Amin and his team use showback to enlighten and inform; to show the business how consumption drives cost and, more importantly, how they can impact savings by changing their behavior.

“In a recent meeting with all the vice presidents,” said Josh Koziel, TBM Manager, “we presented a showback invoice to each of them. It was eye-opening. They were looking at the list of applications and you could just see the light bulbs going off: ‘Why do I have so many engineering applications performing the same function?’ or ‘Why do I have 2,800 employees and 3,600 devices?’ Prior to Bharat joining, we used to get this glazed-over look in some of those meetings, but their engagement in this meeting was exciting.”

Having used TBM principles before, Amin knew he could use Apptio right away to create this kind of transparency and connection, proving to skeptics that IT could be run with a business-focused mindset. The resulting trust stems from creating defensible, repeatable facts about cost, consumption, and value.

“I feel proud of my team for implementing this much faster than a lot of companies,” said Amin. “In fact, because I had some experience not doing this, one of the principles we established here at first was to run everything out of the box. And that’s where I believe we’ve been able to gain value sooner than later compared to my prior role.”

An early win came in the form of an upgrade to an in-memory database. By using Apptio to drive the business case, Amin was able to obtain same-day approval for a rather large sum—at a time when he was still relatively new and untested. Because the numbers were trusted, the conversation was far more productive, shifting from a cost to a value proposition.

“In 2015, we were going to ask for a $3 million investment to do a SAP HANA database upgrade,” said Amin. “But, before we did that, we actually used Apptio to show the business how we were spending their money and what value it was going to bring. And, right after we did that, we got the approval on that day to go make that investment.”

Driving towards innovation

Because Vision 2020 is all about IT enabling business change and innovation, Amin has rebranded his Business Relationship Managers as Business Change Managers and founded the Business Technology and Transformation Group to serve as a bridge between IT and the business.

“It takes seven years to build an aircraft carrier,” he said. “That ship will last for 50 years. The life of our submarines is about 35 years. So our focus has to be on planning, because if you don’t plan well, you can’t build efficiently. I use the same concept for technology planning.

“We used to have a PMO, a program management office, which was driven more from a ‘tell me what you want and I can provide it for you’ perspective, versus really being part of the business planning process. We now have a group that actually focuses on business planning, not just IT planning; on working with the business and their plans so we can articulate how IT can bring value to those plans.”

Like many IT organizations today that are adopting TBM, the goal is to move from order-taker to change-agent, working in tandem with the business to achieve shared goals. Rather than relying on intuition or questionable data, Business Change Managers now have the facts about consumption and cost they need to help business partners drive faster decision-making. This is how Business Change Managers are changing the conversation with the business from cost to value.

How transparency empowers innovation

One of the digital initiatives underway today is shifting everyone in the organization from paper-based 2-D drawings to a digital, 3-D model-based process. This requires many of the shipyard’s 10,000 tradesmen to move away from blueprints to embrace 21st century innovations, such as 3-D modeling and even augmented reality (AR).

“We are a 131-year-old company. Why this change and why now?” said Amin. “Previous leadership would tell us that Noah’s Ark was built with 2-D drawings and that we had just delivered the latest and greatest Ford-class aircraft carrier— all designed and built with 2-D drawings.”

All true. But even though the ship was built using blueprints, it was designed digitally using 3-D modeling. Because their processes only could handle 2-D drawings, they had to take the 3-D models and convert them back into 2-D drawings that workers could use to actually build the ship. That process is definitely not the future. The toolbox of a shipbuilder will look different in the future. It will include a tablet to allow them to capitalize on technology advancements.

“We have a new president, Jennifer Boykin,” said Copeland, “and she just laid out her vision and four priorities for our organization. Two of the four really revolve around what we’re talking about here: one is introducing more technology into our current business to become more efficient. And the second one is to use technology to transform the business, especially around digital shipbuilding.”

Tomorrow is here today

Regardless of the industry, there’s no escaping technology. Management can try to ignore it or marginalize it, but you can bet their competitors won’t. Ultimately, customers are demanding that all businesses embrace and use it to improve engagement in new ways, using new channels, and that they leverage technology to improve quality while lowering costs.

Said Amin, “As technology continues to transform our business, our customers are pushing us to transform how we build our products and what we deliver to them. It is critical that we get a handle on what our IT costs are and have a level of transparency that allows everyone in the organization to make better business decisions. In my opinion, that’s what TBM with Apptio brings to the table.”

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