IT Consolidation at Textron: 41 Business Units, 9 CIOs, 1 Standard

CIO — Like many companies today, Textron is undertaking a consolidation. And as with all such efforts, it is fraught with political risks and leadership challenges. But at Textron, a $10.7 billion global enterprise with 41 business units under its roof, the difficulty of balancing the closer alignment of IT services systemwide with the disparate business needs is truly daunting.

The Providence, R.I.-based conglomerate is spending approximately $320 million on its IT shared services organization, which it established at the start of 2002. Such centralization efforts are nothing new. For decades, the IT community has gone through waves of decentralization followed by centralization. Right now, consolidation is the buzzword. "Most com- panies are looking at this because, as a general statement, the more you centralize the more you can manage costs," says Michael Gerrard, vice president and chief of information technology management research at Gartner.

Textron is no different in its reasoning. But where Textron does diverge is in the scope. Founded in 1923, the company went on to become the first modern conglomerate, as founder Royal Little snatched up more than 70 discrete businesses, from aircraft and golf cart manufacturers to tool and fastener makers.

Today, each Textron company has its own IT management processes, pet applications, disparate technology standards and concerns about centralization. Nine business units have their own CIOs. And after years of operating independently, changing course is tricky. "To take this whole flotilla of ships and turn them all around so that we become a networked enterprise is something that’s very difficult," says Phyllis Michaelides, chief technologist in charge of promoting technology standards. "It’s not just about the number of data centers you have. It’s a mind change."

Though it may seem counterintuitive to move away from having distributed IT to supporting diverse business units, Textron CIO Ken Bohlen says that his own research into IT best practices dictates otherwise. "All the data suggests that the way to the future is through common and standard processes," he says, adding that the new shared services department will take into account differing business needs. "The rule is start small, get successes and build in shared services only where appropriate," Bohlen explains. "There will be business-specific things that we won’t touch. But the competitive advantage is not the systems you use but the agility and speed with which the business can implement the necessary technology to keep growing."

Thus, Textron’s new shared services department is focused not so much on technology, but business alignment. The ultimate success or failure of consolidation hinges on putting three important pieces in place: good governance, solid relationships with the businesses, and leaders who support the vision. And that’s exactly what the shared services organization spent its first year creating.

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