Chief Change Officer: Managing Change Outside the Box

Sandra Hofmann is used to playing diverse roles. She spent several years teaching children with learning disabilities before putting in 14 years in management at Big Blue. When not gardening at her rural home, she enjoys target-shooting with her Smith & Wesson 686 revolver. And as CIO of Mapics, a $128 million maker of manufacturing software, she has to understand technology intimately, but she also carries a very different kind of title: Chief People Officer.

Before you snicker at this squishy moniker or feel sorry for Hofmann, hear what she has to say about combining technology and HR leadership in a single executive: “A software company’s greatest asset is its intelligence, and that asset resides in people. So HR and IT are really two sides of the same coin.”

In fact, Hofmann earned the nickname Chief People Officer around the office before it ever became official. She attributes her appreciation of the effects that IT—particularly IT-driven change—can have on people to her background in education. “Being a CIO represents being a change agent, being a model for others, establishing infrastructure, challenging processes, enabling people to act—doesn’t that describe every great teacher you’ve ever had?” Hofmann says in a gentle but cheerful voice that sounds just like every great teacher you’ve ever had.

That lesson plan appears to be just what Mapics needed. Hofmann joined the company in July 2000 as vice president and general manager of its Woburn, Mass.-based business unit. But when Mapics stumbled as the recession took hold, President and CEO Dick Cook brought Hofmann down to headquarters in the Atlanta suburb of Alpharetta, Ga., to become CIO of the entire company and help keep the formerly high-flying enterprise aloft. Late last year, Hofmann added the CPO title to her business card. The dual labels reflect her huge role in guiding all of Mapics’ 750 employees through several major changes within a short span of time: reorganizing the company, taking a sizable chunk of the workforce completely virtual and introducing offshore outsourcing.

That’s a lot of change for any organization to digest. Yet at Mapics, Hofmann not only assisted in the transformation but also improved IT service. Her boss credits Hofmann’s success to her mastery of many trades. “Sandy has lots of experience working in a wide variety of functions and acting in a lot of different roles,” says Cook. “As a result, she’s the consummate manager—one who understands the business very well but also has an incredible knack with people.”

Even so, Hofmann had her work cut out for her. She was part of a three-person team charged not only with completely reorganizing the structure of Mapics but also with modifying the way some employees work and deciding whether others would work at all.

Thinking Without the Box

In late 2001, the reorg team began its work. Whereas everything had previously been centered around product lines—with each line of business having its own IT, HR, finance and other departments—the team consolidated functions. The old structure had worked just fine in the go-go ’90s, but the economic downturn had revealed its flaws fast. “We knew [the reorganization] made good business sense and excellent operational sense, but we had to spend a lot of time talking to employees about it,” Hofmann says. After countless meetings, surveys and one-on-one conversations, employees began to buy in. “Developers, for example, realized they liked being with other developers where their line managers actually knew what their jobs were,” she says.

But the changes were just beginning at Mapics. During reorg planning, executives began to think not only outside the silos that had once existed at the company but also outside its physical premises. “We started saying, ’How big an office do we really need?’ and by the end of the day we were saying, ’Why do we need an office at all?’” Hofmann remembers. Closing some offices and sending people home would save $500,000 in real estate costs a year. But even though Mapics was relatively skilled in providing support to telecommuters—every day a third of its employees were on the road or working at home—there always was an actual office to go back to. “There were tons of issues to address, but cost alone demanded that we take a look at it,” Hofmann says.

In late 2001, she announced a proposal to take the Massachusetts office virtual, and immediately afterward she began hearing from all sides. “Talk about a dramatic change in people’s lives! Some of these people had been coming into this office for 10 years,” says Hofmann, chuckling about hearing from as many angry spouses as anxious employees. Hofmann and her staff kept lines of communication open—from setting up FAQs on the intranet to meeting in person for training and orientation—as they began the three-month transition in January 2002.

By March, all 84 Massachusetts-based employees were working at home. Interest in the virtual office program has spread since then. After Mapics’ recent acquisition of Columbus, Ohio-based software company Frontstep, several of the newly added employees asked to go virtual, which Hofmann was only too happy to approve. (Despite the success of the program, there are no plans to shutter the headquarters building; centralized services such as IT, finance and HR require a central office, Hofmann says.)

A third big change at Mapics was already under way. Hofmann had begun exploring offshore outsourcing to address fluctuating development staff needs. It was the most controversial and unpopular proposal yet. “Many individuals in development knew outsourcing’s checkered past,” Hofmann says. “There was a lot of angst concerning what the quality of the work would be and how to manage a process when the team is an ocean away.”

Hofmann tried to address such concerns by conducting two pilots with an Indian firm. The tests went well enough that in January 2003, she announced a deal with Indian company HCL Technologies, which took over all development and maintenance. However, architecture, design, training, information development and quality assurance work stayed at Mapics. The contract lowered Hofmann’s software costs by half.

Yet Mapics still needed to cut more costs. With the outsourcing arrangement in place, the company laid off 12 percent of the software engineering staff. “The world may have gotten used to regular layoffs, but we’d never had to do it. It was very, very, very hard,” says Cook.

Turning on the Tech Channel

While the enterprise was working through the trifecta of changes, its IT department wasn’t faring as well. “I made the mistake of walking down the halls and listening,” Hofmann jokes. What she heard wasn’t good. “My organization, which had been pulled together very quickly, did not have a service attitude.”

In trying to change the mind-set of her staff, Hofmann called on her old teaching skills. “People with learning disabilities are extremely bright, but one of their primary learning channels is not functioning,” Hofmann says. “In IT, you have individuals who excel in certain areas but not in others. Programmers, for example, aren’t always the most socialized; they’re used to being the geeks in the closet. And you may have to capture their attention in different ways.” (Careful not to insult her staff, Hofmann adds, “I’m not saying all adults are children. But sometimes it’s important to look for the child in an adult.”)

So she approached staffers with something familiar to them—data and information. She conducted a companywide survey on the perception of IT and handed the staff the raw results, putting some of her employees face-to-face with complaints that named them directly.

“We got slammed,” remembers Jim Overdorff, director of enterprise technical services. “A lot of [business] people were nervous about handing stuff over to the IT department because they perceived us as having an attitude.” Once the post-layoff staff of 64 saw the problems in black and white, they were more willing to change their conduct, Hofmann says.

Today, Mapics’ reorganization is complete. Even more workers are going virtual. Offshore outsourcing is in full swing. And after two years of losses exceeding $20 million, the company returned to the black in 2002, with profits of $14 million on $128 million in revenue.

The IT department doesn’t get that much attention from its users now—which is a good thing. “It’s like the electric company. When you flip the switch, you expect the lights to go on, and you hardly think about it. However, if the lights don’t go on, you’re not too happy,” Cook says. “IT service is the same. A year ago, it didn’t always work. Today it works.”