As CIO for ATK, Jeff Kubacki has instituted a rigorous benchmarking approach aimed at delivering world-class IT at continually improving cost. Kubacki has built a strong rapport with his CEO and other business leaders because he runs IT operations like a business and speaks the results-centered language of his peers at ATK.
In this installment of the IDG Enterprise CIO Interview Series, Kubacki talked with Chief Content Officer John Gallant about the realities of moving to a metrics-driven IT operation and how it has paved the way to more trust and visibility for IT. Furthermore, this discipline has freed IT to focus more on the innovations that are fueling the $5 billion diversified company's growth.
Kubacki is a member of the CIO Executive Council -- IDG's peer-based global community of leading CIOs. For more information on the Council, click here.
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CIO.com: Jeff, let's start by talking about the business opportunities and challenges facing ATK.
Kubacki: ATK is a little over a $5 billion company focused in three main areas: aerospace, defense and our commercial sporting business. That provides some unique opportunities for IT when we look at the needs of an aerospace and defense company vs. the needs of a commercial sporting goods company. That makes our IT strategy a little more complex than the typical company.
From a corporate perspective, it provides great diversification of our portfolio: as one business may be leveling off another one is growing.
I've been the CIO for now almost four years. Market conditions are changing, certainly in the aerospace and defense business and even in the sporting business, which has driven us to look at more international growth. We've been primarily a domestic company for a long time but now we're focused on international growth, certainly in the defense business. It caused us to take another look at how we use our cash and to create a more balanced capital deployment strategy, so we've done a lot of work around what types of targeted investments we want to make in IT and other areas of the business.
Do we want to do acquisitions to help grow the company and what are we going to do around the dividend payments to our shareholders? We've looked at capital deployment every which way you can and, I believe, have come up with a pretty balanced set of strategies there.
Lastly, driven by the changing market conditions, our aerospace group has really focused on enhancing our position with commercial opportunities. We were big with NASA, providing solid rocket boosters for the Space Shuttle program for many years. That program ended and you have to find ways to replace that revenue. We've focused on commercial growth in our aero-structures business, as an example, with products and programs that we're working on now with Airbus, Boeing, Rolls Royce and some others. We've changed our strategy when we need to, to meet the changing market conditions.
CIO.com: How does all that translate into your strategy for IT?
Kubacki: When I started as the CIO, almost four years ago, Mark DeYoung, our president and CEO, asked me to do two really basic things.
One was to create, in collaboration with the business, an actionable and affordable IT strategic plan. We didn't have one for a while and it [couldn't be] just any old plan. It had to be actionable and affordable, one that was developed with the business and was clearly focused on the things that they needed to drive their businesses forward in these changing market conditions. He also asked IT to transition from being tactical, keep-the-lights-on operations to being strategic business partners and to come to the conversation with new and innovative ideas on how we could use technology more efficiently to help us meet not only the IT strategic plan but the goals as articulated throughout the business plans as well.
CIO.com: Let's drill into that. What are the key elements of the strategic plan?
Kubacki: We've had the same basic objectives since I presented the first plan to the board way back in August 2011. There wasn't a CIO here for quite some time and we were very decentralized. The divisions had a lot of autonomy in making decisions around applications, infrastructure and security. We were running email at 17 different locations. We had five service desks, eight ERP systems. It was a hodgepodge of different things. We had to create a new ATK IT culture and bring all these disparate, decentralized business units, groups and corporate into a common way of doing things.
I felt the best way to do that was to move forward with the implementation of a world-class IT framework. I chose one developed by Peter High, who has written a book on this topic. I had Peter come in and assess the organization against the five principles of world class IT and the 33 subprinciples. We had our scorecard of reds, greens and yellows and we created action plans over the past three years to get us closer to world-class IT. It's certainly a journey. It's a destination. I don't know if we'll ever get there but we're a lot closer now than we were three years ago.
I visited as many of the manufacturing sites as I could when I joined the company. I wanted to see how we used technology in manufacturing across the supply chain, in finance, the back office, etc. What I found was that we used technology differently in every business. So one of our strategic objectives was focused on increased automation and integration across the supply chain and getting to a common ERP system and doing the same thing around supplier portals and those types of things with the goal, obviously, of helping to drive cost out of the business and improve our overall EBITDA performance.
There was a lot of opportunity. We had some aging equipment and data centers. We had too many data centers. We really wanted to run IT like a business and have increased cost discipline across the IT infrastructure. Drive out cost and centralize and consolidate as much as humanly possible and leave the competitive-differentiating applications down at the division level.
I wanted to make sure that we had a very formal IT risk management program in place, with one of the goals being to improve our maturity around information security. I'm talking in our unclassified environments, not the classified environments. We identified our risks, our mitigations and have a very formal program in place now of assessing risk and that really drives a lot of our investment decisions and priorities each budget cycle. It fit in nicely with the overall risk management program that the corporation has.
Our last objective was: What things could IT be doing to help improve employee performance and productivity? Were they entering the same data into two different systems? Did they have the tools that they needed to do effective collaboration on programs and projects? We emphasized providing better tools to our office and technology workers so that they could improve their own performance and productivity, so that we could perhaps design new systems or new programs for our customers faster. If we can get more productivity out of our engineers, that's a huge advantage to this company, since we do develop a lot of pretty innovative things for our customers.
CIO.com: I want to dive in on this world-class IT model. How did you get this started? What had to happen in changing the mindset and getting people to support it, number one?
Kubacki: There are a couple things I had to do there. One is I reviewed the leadership team that I inherited when I first got here and I reviewed the leaders and the managers down at the groups and the divisions. Frankly, we had to make some changes. If I aspired to move us closer to being a world-class IT organization we needed to have great leaders in the organization that could create that vision and motivate everyone in IT to move towards this.
I wanted the CEO of the company, my boss, Mark DeYoung, and the board to understand the model and why I felt it was important and the benefits to the business because it did require division IT and group IT folks doing things differently and in a more standard manner. There was going to be cultural change and I needed the entire executive team and the board to be supportive of the direction and the vision.
CIO.com: At the outset, how do you determine what the key things to measure are?
Kubacki: Peter has done a great job in his book and he articulates five key principles of what a world-class IT organization should look like. It all starts with people. Do we have the right programs in place, clear titles, roles and responsibilities? Do we do performance reviews? Is there a culture? Do we do workforce planning? There's a whole set of subprinciples under people, but people really drives the rest of the model.
Principle two, infrastructure is broadly defined as infrastructure applications, information security, your service desk. Do we have a roadmap in place, a lifecycle? Do we have enterprise architecture standards? Do we have a common service desk and processes around information security? There was a lot of work for us to do there because we needed to retire some older assets, which was going to help us drive cost out of IT.
The third principle was around common project and portfolio management processes. Do we do every project -- or the large ones, at least -- the same way?
Principle four focused on IT and business partner communications. With the amount of change that we wanted to implement in a pretty short period of time, communications was critical. We did a ton of work improving internal IT communications so that the 400 folks in IT knew exactly what we were intending to do, the impact on them and how they could help.
Lastly, it's helpful that a year into the role I also took over responsibility for our corporate supply chain management function. It was great timing because principle five in the world-class IT model is all around external partnerships and doing vendor segmentation. [It's about] setting expectations with the vendors and how they can transition to become partners. We hold an annual vendor day, as an example, and go through our objectives.
Those are the five key principles. Again, [there are] 33 subprinciples. We measured all of them and we focused on the ones that were the bright red, which was significant opportunity for improvement. That was how we chose to prioritize.
CIO.com: How long does it actually take to change the culture, to get people around that metric-driven approach to IT?
Kubacki: The good news is that ATK is a very metrics-driven organization. We have metrics at all levels of the organization. We all have metrics that we share with the CEO and our peers on the executive team each month and they're either red or they're green. We got rid of yellow and said: If it's red you have to show your return-to-green plan and we want to hit those metrics every month. It was really in the DNA or the culture of the company since Mark took over as CEO four or five years ago.
Having metrics in IT and demonstrating that we were, in fact, running IT like a business is pretty darned important. You measure unplanned outages on a manufacturing line. Well the same thing is true in IT. I have operating availability of our key enterprise applications. It's not that I'm measuring whether the server or the network is up, but can the users access the enterprise applications whenever they need to? We do a lot of things to measure our operating availability and we call it that so that the business knows exactly what we're talking about. They don't care if my server is up. They care if their application is available when they need it.
The business cares about on-time delivery, they have on-time delivery metrics. Well, no surprise in IT we have an on-time delivery metric. We measure our commitments on key milestones of projects and if we are hitting those commitments or not. I tried to make our metrics very much sound and act a lot like the metrics in the business so that we were measuring things that were important to the business. It probably took 12-18 months to really get that program going and being consistent across the company but it was certainly well worth the journey.
CIO.com: That's been in place for how long now, Jeff?
Kubacki: We've been doing that for the last two, almost three years. It's part of what we call our strategy deployment process, which is how we take high-level objectives and cascade them down throughout the organization. We use this thing called the strategy deployment process. It has your objectives, but it also has your key performance indicators and that's been something the CEO has expected to see over the last three planning cycles.
CIO.com: Where would you say you've made the biggest gains? Where was this most important in driving change?