Honeywell IT Executive Says Good Business Practices
Matter for Managing the Infrastructure
by Elizabeth
M. Ferrarini
The Harvard
Business Review article (May 2003), “IT Doesn’t Matter,”
by Nicholas G. Carr, caught the attention of CIOs at Fortune 500 companies,
academics at Ivy League universities, and executives for major computing
vendors. While Carr isn’t claiming that IT doesn’t matter,
he, on the other hand, asserts that IT has diminished as a source of
strategic differentiation for an organization. Carr says that extracting
value from IT requires innovations in business practices. For example,
he says that organizations need to manage large portions of their IT
infrastructures more rigorously to reduce capital investment requirements
and operating costs.
No one
knows the value of doing what Carr suggests than Kin Lee, senior vice
president of IT infrastructure at Honeywell in Tempe, Arizona, and a
graduate of Harvard Business School. Lee oversees the global voice network
and data network infrastructures for the $20 billion diversified technology
leader’s four business groups: aerospace, automated control systems,
specialty materials, and power systems. Last year, Lee reduced IT expenses
for the infrastructure from $650 million to $510 million — a $90
million cost savings.
“IT
isn’t about technology any more. It’s about how do you run
this organization as a business.” Lee says. “If you need
to provide more bandwidth to a business unit, then you have to provide
an expected payback. You also have to sell your ideas, not only to corporate
management, but to each business unit, which might have ideas that differ
from another business unit. You have to know how to bridge these gaps
so you can deploy your agenda.” Lee’s strong technical and
strong business background have well prepared him to run his organization.
He has a technical undergraduate degree, a master’s degree in
operations research from Northwestern University, a master’s in
business in finance from the University of Chicago, as well as the Harvard
credential.
Lee recently
took some time to discuss his organization’s IT model, to describe
the use of best practices such as Six Sigma, and, of course, to comment
on the Harvard Business Review article. Here’s what he had to
say.
Q.
What does the infrastructure you manage consist of?
My organization
oversees and owns 6,000 servers worldwide and five mainframes. Most
of the servers are midrange AIX servers. The rest are either Novell
or Windows servers. We also manage 1,000 engineering workstations, and
85,000 global workstations at 1,000 locations. We manage the wide area
network, the local area networks, and all of the voice communications,
and consumable communications devices, such as cell phones. About 120
employees, as well as employees from our two major outsourcing suppliers
— IBM and AT&T — manage the entire IT infrastructure.
Q.
Tell me why you became a shared services IT organization and how you’ve
driven down IT costs throughout the company?
In 1999,
we began to centralize our services as a result of Honeywell’s
merger with Allied Signal. Before that, each business unit provided
its IT support and its equipment. Our distributed model evolved into
a centralized model, which enabled us to become a shared services provider.
We outsource our computing maintenance requirements to IBM Global Services
and our voice communications networks to AT&T.
The business
units have IT professionals who support business applications, not the
infrastructure. We work with these folks to understand if there are
any unique business reasons why they need to do something a certain
way. For the shared services model, we referred to Gartner Group’s
technology road map, as well as called upon other industry groups.
We reduced costs by re-negotiating our two major outsourcing
contracts based on adding volume, such as the integration and consolidation,
as part of the baseline services, and redefining service level agreements.
Q.
How have you established costs for your services?
We have a very detailed cost structure for our services.
For example, we offer several graduated types of support for servers.
The enhanced support is for servers requiring 7 by 24 availability and
redundancy. The base support is fine for servers that need 8 by 5 support.
Naturally, the enhanced support will cost more than the base support.
The business decides what type of support it will need for each class
of servers and their applications.
Q.
Every aspect of your company uses Six Sigma. However, does your organization
have any experience with the international best practices for delivery
of IT services, called the IT Infrastructure Library (ITIL)?
We adopted many of the elements of the ITIL service
delivery framework, such as the service desk and capacity planning,
and combined them with the Six Sigma discipline as a way to measure
what we do.
For example,
many companies measure performance at a component level — a server’s
uptime. This type of metric doesn’t mean a lot of things to business
units. They want to know if we can get the job done. A lot of components
form the user’s experience. So, we have to monitor the end points
for business computing, and then measure critical business computing.
Q.
What does the Six Sigma training consist of?
Six Sigma has three levels of certification. Everyone
in my organization must achieve Green Belt certification. Mastery of
this expert level consists of going through the training program, forming
a project team, and carrying out a specific project to demonstrate use
of the appropriate tools and the ability to obtain business results.
The tools consist of a cause and effect matrix, and
a lot of control charts, which we use to report results to the business
units. We use many Six Sigma tools to report our performance measurements,
as well as to show the variation of performance. Perhaps, we need to
reduce some of this variation.
Q.
What projects are you currently working on that concern the business
units?
We’re
still integrating all of our business acquisitions through projects
such as service domain integration, and data center integration. We
have a major initiative to go global by locating many transactional
servers in regions such as Eastern Europe or Asia Pacific. Some of these
servers will be doing network monitoring. We’re increasing the
amount of bandwidth to those areas. To date, we moved several U.S. data
centers to our headquarters, and consolidated two data centers in Europe.
Q.
Can you give me an overview of how your organization manages storage
growth?
Over the
years, we have cut the cost of storage management by consolidating many
storage devices on to highly available EMC Symmetrix systems, as well
as on less expensive types of storage arrays. Identifying critical data
is a key requirement for us. To this end, we work with the business
units continuously to understand which applications are critical and
where the allocated data resides for those applications. If the data
doesn’t need to be kept online, then we archive it either to an
online device or a nearline device. The data is still available as far
as the business units are concerned.
Q.
What does your manpower requirements look like for the next year?
Our headcount
will remain flat. On the other hand, we’re changing the skill
sets to put less emphasis on technical knowledge, and more emphasis
on business management, program management, and supply chain management.
They can demand a 100 uptime for some things, but can they afford to
pay for it?
Q. What
did you think of the Harvard Business Review article, “IT
Doesn’t Matter”?
Any one
in IT would disagree with the article. If you use IT as a commodity,
then the organization will loose its competitive edge. On the other
hand, if IT does not provide the right type of metrics, IT can impede
the organization from staying innovative. For example, we’re creating
a data portal that connects all of the different sets of data —
change management data, service-level performance, capacity, and financial
— onto a dashboard for each business unit.
Q.
This is the sixth year in a row that Honeywell has received Computerworld’s
award for one of 100 Best Places to Work in IT. What’s unique
on your IT environment?
Honeywell
provides a supportive culture that enables IT professionals to have
a very productive, collaborative relationship with the business units.
IT professionals also work with peers from major organizations such
as IBM and AT&T. These companies also have best practices they must
follow. IT professionals can hone their business skills through disciplines
such as Six Sigma. have to change the skill sets because our main function
consists of managing our suppliers. We have a lot of people who have
enhanced their technical undergraduate degrees with a master’s
in business administration.
Q.
Since you service four distinct business units, how do you keep projects
straight? How do you charge for your services?
That’s
always a challenge for this type of an organization. Each one of our
business units has a different set of customers and requirements. When
we sit down with a business unit, we always talk about their requirements
from both an application and a financial perspective. Technology is
a given.
We have
a program office run by 15 individuals. They work as the liaison between
IT and the business for demand planning, forecast of business growth,
and specific business requirements. Once a business unit’s requirements
have been established, the program manager works with the engineers
to create the solutions, and then communicates with the business units
to make sure the solutions meet the agreed upon requirements.
Q.
How is your organization measured?
Our overall
success gets measured based on the aggregate of how well we’re
doing. For example, we measure our performance by service level agreements
or commitments we publish to the business units. We also have financial
targets we need to meet. However, if we’re meeting the service
level agreements but the business units aren’t happy, then we’re
doing something wrong. That’s why were putting a lot of emphasis
on managing the end-to-end user experience and expectation versus the
current service level agreement.
We also
rely on customer satisfaction surveys that allow business units to say
what they like and don’t like about the IT support. We try to
target a rate of eight out of 10 in each of the categories on a customer
satisfaction survey.
“We
measure our performance by service level agreements or commitments we
publish to the business units.”
Kin
Lee, senior vice president of IT infrastructure at Honeywell
