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CIO Leadership Series: Snap-On's Moreno offers lessons in IT change

Kenosha, Wis. - Jeanne Moreno joined Snap-On, Inc., two years ago, but it didn't take long to understand that even a successful global company could benefit from information technology changes.

Moreno certainly isn't the first chief information officer to join a large, global business organization and find herself in charge of a large portfolio of aging and obsolete business applications, but compounding the challenge were unsupported platforms, under-managed data centers, and no discernable IT strategy.

Yet, Snap-On's IT transformation strategy is well underway.

Before Moreno's arrival, the manufacturer of auto repair tools and automotive diagnostic systems was profitable - it reported $100 million in net income in 2006, just as the IT transformation was beginning - but it was hardly maximizing its earnings potential. Moreno, who was brought on board soon after the company hired a new chief executive, is leading a corporate information technology transformation that is part of Snap-On's “profitable growth strategy.”

For Moreno, executing this strategy hasn't always been a snap, even at a Standard & Poor's 500 company that generates more than $2.5 billion in annual revenue. Snap-On, which sells products through a combination of franchisees, direct sales, and distributor channels, operates in 150 countries, and employs 12,400 people worldwide, including about 100 IT staffers at its corporate headquarters.
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However, the company had more than 100 Enterprise Resource Planning (ERP) Systems, more than 120 financial systems, and aging servers.

“We didn't even know what information technology was costing Snap-On around the world,” Moreno recalled.

On the people side, the major focus of the previous technology management team was operating the current environment and putting out fires. For every problem that was resolved, three more reared their ugly head.

Unfortunately, the focus on operating the IT environment took away from attempts to add even more business value. Case in point: Even though the company also sells products over the Internet, new orders were not even being tracked, and the company's order fill rate was unacceptably low.

Beginning at the end

How did Moreno get her arms around all this? With more than a little help from her staff, and memories of lessons learned from previous career stops.

In her first year, she established a three-year plan (since updated in a mid-project report card) with annual timelines. In the past, the company had not done sequencing in the right order - “jumping the Grand Canyon,” Moreno explained - so she devised a point-of-arrival transformation map with different “waves” for each part of the transformation project, including ERP integration, field stability through remote wireless connections, updating sales and credit processes, and establishing new call centers.

Each segment has its own strategy, business unit sponsorship, and detailed sequencing - all leading to that single point of arrival with realistic change-absorption rates.

The transformation design rules followed by Moreno, a former senior vice president of corporate services and operations for Citrix, where she also served as CIO, reflect her background and experience: Remove complexity and get back to the basics. Understand what is critical to operating the business and what is critical to its competitive advantage. Show when project teams are crossing key “mile markers.” Never customize. Vendors are partners, so make them part of your transformation team. Stock your internal team with a core group of employees who understand the business and crave a new direction.

Her plan was ambitious because it had to be. The strategy is to streamline the more than 100 business unit ERPs into one end-to-end process per logistical structure, and merge to one set of financials.

“I had to understand those ERPs,” Moreno said of the multiple ERP systems. “Every department looked at it differently, and we had to stop that.”

The game plan featured several “what if” questions that seek to track key metrics and make Snap-On easier to do business with:

• What if we can identify and market to our end-customers (blue-collar technicians)?

• What if we can see inventory flow from order to shipment?

• What if our business reporting is good enough to ensure that operating metrics drive decisions?

• What if we established credit programs that assisted with or actually drove sales?

• What if we had consistent and stable wireless field technology and support?

Not custom made

Among the transformation plan's various software pieces, SSA is the enterprise software player of choice for the ERP consolidation in the United States, and Hyperion was chosen for the financial application, but customization is not an option.

Moreno was at Kimberly-Clark Corp. in the 1980s when the company built a custom enterprise system that never met expectations. There is a measure of IT arrogance involved in the desire to customize, Moreno acknowledged, and it's an impulse she's learned to resist.

With Snap-On's IT transformation, the focus is configuration, not customization, and SSA comes pre-configured. Some of the old software applications have been retained while IT develops the new core, but for the most part Snap-On is turning the page.

Systems desegregation

A pooling strategy was used to foster integration and merge 700 point-to-point connections into 21 “pools.” Building those pools is a challenge for Snap-On, and one integration point - the Canadian supply chain - caused a temporary project delay. All U.S. and Canadian plants are to be completed in 2007, and four U.S. distribution centers will be completed in 2008.

“The integration strategy, getting to a pooled structure, is important because then we can add new sites relatively easily,” Moreno explained.

To extend its transformation team, Snap-On aligned itself with key vendor partners. The systems environment partner is AT&T; the hardware partners are Sun and Dell; the applications partners are SSA and Hyperion.

The IT department was able to identify and resolve business gaps in two months, a task Moreno thought would take years. Canada was selected for a pilot of simulations that identified functional differences and then tested them to close the gaps.

IT support

Moreno, who holds bachelor's degrees in business information systems and business administration from the University of Wisconsin-Eau Claire, and an executive program certificate from the University of Tennessee, freely admits to some good luck at the onset of this transformation.

She joined the company at about the same time as its new chairman and chief executive officer, Jack Michaels, who is driving a back-to-basics brand of corporate change to drive continuous improvement, improve product delivery, and reduce cost structure.

It also was her good fortune that Snap-On's technology employees didn't need a lot of convincing to become change agents, which enabled her to assemble gung-ho teams to execute various aspects of the program.

The metrics and dashboards for success have been established, but except for the new call centers, which will be evaluated by the success of the company's pull marketing initiative and the extent to which calls are handled correctly, they won't have much meaning until the new processes and IT systems are connected to supply chains and purchasing.

Seeing is believing

By 2010, the company would like to “see” its operation independent of business unit or region, and get a better picture of the customer. To get there, technologists are helping to establish customer and supplier relationship management across all business units and regions and understand costs across all business units and regions.

“It's all about what you really need to know,” Moreno explained. “There's something about information technology and the need to know that really go hand in hand.”

Comments

Jim Cunningham responded 6 years ago: #1

I thought that this was a great article and gave a lot of insight into where the company was and where it is headed.

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