Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: HP.
Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast series, coming to you from the HP Software Universe 2010 Conference in Washington D.C. We're here the week of June 14, 2010, to explore some major enterprise software and solutions trends and innovations making news across HP’s ecosystem of customers, partners, and developers.
I'm Dana Gardner, Principal Analyst at Interarbor Solutions and I'll be your host throughout this series of HP sponsored Software Universe Live discussions.
We're looking at a compelling case-study today, Motorola, in the area of productivity, cost optimization, and their IT efficiency efforts -- a winner of HP's Excellence Award this year. We're going to hear more about that from Judy Murrah, Senior Director of IT, at Motorola. Welcome to BriefingsDirect.
Judy Murrah: Thank you, Dana. Great to be here.
Gardner: As I said, you've won an Award of Excellence here at the HP Conference. You have also won a CIO Magazine award recently. Tell us a little bit about your role and, why cost optimization has gotten you these accolades?
Murrah: It certainly was a team effort. My role at Motorola IT is in what we call CIO Operations. I'm responsible for our project management office (PMO) portfolio, quality, communications, and other activities that support our IT operations. Cost optimization is on everybody’s mind these days, especially with the economy the way it is, and with many business initiatives out there.
For us, at Motorola, it really was driven by the pace of change that our business needs to take at this point. You don’t really think too much about change and cost optimization being related, but we have had, over time, a very complex IT environment grow. We have thousands of systems in a company that has grown organically and through mergers, acquisitions, and divestitures.
In order to really be part of the business imperatives to move forward in next-generation business processes, it was too complex to make changes. So, we focused on reducing those systems and doing it in a way that was directly aligned to business change and the directions they would like to go into.
Gardner: What are the requirements from the business side? A lot of people are trying to align their IT efforts with more of what the business is looking for. Of course, that’s also a changing game at this point. Many businesses are dynamic in nature. How does the cost optimization fit in, when you're also trying to align IT with business?
Murrah: That’s the place where we started and where we saw the magic unfold. We sat with our business partners, top leadership on both sides -- our CIO and the business presidents and executive teams -- and talked through every business function.
We looked at it on a scale of business competitiveness and how important that particular business function is to the business. Then, on the other axis, if you picture the famous 2×2 matrix, we looked at the complexity and cost of that business function.
Just to give you an example, if we talk about engineering as a business function, to Motorola, which is a technology company, that’s a critical competitive differentiator, very important, high on the scale of competitiveness. If we look at the complexity and cost of running that today, in Motorola, we have a lot of systems and it’s a high-cost area.
We did that for every business function we have. We laid it out and then talked through where we would like those functions to move in the future. By mapping it out visually, it helped us to know that some areas were just costing more money than the value they brought to the business. When you see that, you put data on a piece of paper, and you have a visual, it is a very good way to align business and IT around a common goal.
Gardner: Do you have any numbers; perhaps numbers of projects or applications that give us the size of the scale and scope of what you're managing?
Murrah: We have somewhere in the neighborhood of 1,800 systems in the company. We manage about 1,000 projects per year that flow out of these decisions. We have about 1,500 employees in the IT organization and are very heavily outsourced in some of the functions. So, we have another few thousand folks who we consider a part of the team, and that’s who have all made this happen.
Gardner: We've been hearing a lot here at Software Universe about automation and simplicity, when it comes to the management tasks. Many organizations are dealing with huge scales, as you are. How do you view moving toward the visibility and then into automation, and then into some simplicity?
Murrah: You're talking about the IT tools and the management of all this process. The only way we could have managed this is our implementation of one tool and one process, that’s used across the whole Motorola IT environment -- HP’s Project and Portfolio Management Center (PPM). It gives us one place where we contain our "source of truth" for our investment dollars, for the priorities of the business request coming through, and for the things that we've decided to work on.
In that tool, we have every one of our people resources named, as well as what they're working on, and we look at their utilization and movement to the most critical areas. We also manage our project execution to the timelines, schedules, and budgets that we commit to our business partners.
What’s very important then is that all of this underlying data and management process that we use can be presented back to the business in very good dashboards and reporting, so that we all stay on top of where we are and can be proactive on change, if it’s needed.
Gardner: So, the system of record is what’s working for you. We've had this in business, in other areas, around finance and ledger and so forth, for years. It’s just amazing to me sometimes that we are moving to this in IT, maybe 20 or 30 years behind where business was. Is that how it strikes you?
Justifying the investment in IT
Murrah: That's exactly right. I always talk about how IT is sometimes like the cobbler’s children, as the old saying goes. It’s very difficult to justify the investment in IT tools at some points in time, unless you have ones like this, that are showing payback to the business and you use them in a way that everyone is now depending on it. It does become the enterprise resource planning (ERP) system of the IT organization.
Gardner: Do you have any metrics of success? Do you have some sense of any cost savings, either qualitative, quantitative, what did you get from going through this?
Murrah: Well, in the last two years we have reduced our cost structure by about 40 percent. That is a big number to do while the business is operating. We have also, on our large projects that we run through the system, shown about a 150 percent payback or return on investment (ROI) for those. That means that the value of the investment for us was placed in the right places.
We've been able to reduce IT support costs by about 25 percent. Previous to this more consolidated system, we were operating in such silos that there were many people doing the same things. So by consolidating, we eliminated about 25 percent of the wasted work.
Gardner: That’s quite impressive. Now, I know that HP PPM is accessed on-premises and/or as a service. Did you experiment across sourcing options?
Murrah: We did. About a year ago we moved from a hosted environment, internal to Motorola, to the HP software-as-a-service (SaaS) environment. It works like a charm. No issues with performance. We have had great responsiveness from HP. It does help reduce our support cost, somewhere around 40 to 50 percent.
Gardner: Was there any indication that the SaaS model helped in terms of adoption, participation, from the user perspective, did they seem to benefit?
Murrah: Moving from hosted to SaaS didn’t affect usability, adoption, or anything. That really was almost seamless. We were using the same application before and after.
Gardner: Same application, lower cost?
Murrah: That’s right.
Gardner: Can you offer us perhaps some look into the future of what you're planning and managing your ERP for IT, as you termed it. Are there some next steps that will perhaps win you the next award?
Murrah: Yeah, we'll keep our eye on that for the future. I think a couple of areas that we need to work at going forward are more on our application support area. That's bringing the tool to manage resources and activities and support operations, tying it a little more tightly into our financial management, and getting a little more granular on the skills and our ability to move our resources around from place to place.
Gardner: Great. We have been talking about managing complexity and projects with Motorola, which has won an HP Award of Excellence for their efforts. We've been talking to Judy Murrah, Senior Director of IT for Motorola. Thanks so much.
Murrah: Thank you, Dana.
Gardner: And thanks to our audience for joining this special BriefingsDirect podcast, coming to you from the HP Software Universe 2010 Conference in Washington D.C. Look for other podcasts from this HP event on the hp.com website, as well as via the BriefingsDirect Network.
I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this series of Software Universe Live discussions. Thanks again for listening, and come back next time.
Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: HP.
Transcript of a BriefingsDirect podcast with Motorola's Judy Murrah on cost optimization using PPM, recorded at HP's Software Universe conference in Washington, DC. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.
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