Inteva Charts New Course with SaaS

One of my summer jobs in college was working on a boat that supplied drilling rigs in the Gulf of Mexico. We would set out, often at night, to a point on a map. This was in the pre-GPS days, so our autopilot did not account for the ocean’s currents. As a deckhand, it was my role to watch the helm while the captain got some rest before the real action started. I would have to adjust the autopilot to correct for the drift we encountered.

Fast forward to today. I am again in the position of charting course, this time as the CIO for a new company. And just as before, it requires constant attention to reach our destination.

My company, Inteva, began its life as a division of Delphi Automotive before being sold to a private equity investor March 1, 2008. Our division, which makes automotive interior and door components, was sold since it was not considered to be a core business for Delphi. I came on board September 1, 2007, as CIO for the new company, six months before we were to be spun off. My task was to determine where we wanted to go “after we grew up.”

One thing was certain: We were going to be a much smaller organization than we had been before the spin-off. Yet despite our size, we still faced the challenges of a global organization since the new company has 13 manufacturing and engineering facilities in Western Europe, North America and the Asia Pacific region (APAC). IT would need to offer a level of service that is more difficult to provide when compared to servicing an organization that works within a single boundary or region. To complicate matters, the Transition Service Agreement that was being negotiated gave Inteva just twelve months to migrate the entire infrastructure and application environment away from the former parent. So, we were a startup company with a ninety-year history.

The Need for Change

We faced a complete overhaul of our IT environment. In addition, I was challenged by our CEO to reduce IT costs dramatically (dropping from two percent of revenue to less than one percent). To accomplish this would require a new mind-set with radically different solutions to our requirements. SaaS, NaaS, and AaaS would be the only options we would have to make this type of change in such a short period. We’ve all heard by now of SaaS—software as a service. In some corners, I’ve heard of NaaS—network as a service. Some people go as far as saying AaaS—anything as a service, including communication, infrastructure and platforms. I am working to implement all three.

An AaaS approach frees IT to be a strategic partner—aligning our team with the business units by providing support staff for each function. My career has been built around servicing internal, and occasionally external, customers. Alignment only occurs when you dedicate time and resources to go out and work with the business. It never happens with a skeleton support team that stays focused on technical issues.

Our moves to SaaS for ERP and NaaS for our wide area and local area network functionality allows the IT organization to work on business process reengineering and support. While remaining a very lean organization, our 14-person group can now focus on the various business areas (sales, finance, engineering, etc.) without the challenge of maintaining a large infrastructure. This has changed the face of IT within the organization—moving it from a boxes-and-wires organization to a partner in growing our business.

The greatest challenge we faced was to move off of Delphi’s existing, client-server-based ERP system. We had 15 months to move off of the existing SAP systems. As a part of Delphi, our European and North American operations ran on separate instances of the heavily customized software. Our APAC facilities did not use an ERP system.

The SAP ERP system also did not support all of Inteva’s business processes. We knew going forward that we required a robust engineering release and change management facility, the ability to track tools for reimbursement from our customers, and communicating to our suppliers for orders and quality issues. But we did not want to bring in a large system that would require a dedicated army of programmers to support.

We searched for and found an ERP provider that fit our needs. They provided a SaaS model, allowing us to run as one client among many on a single instance of their software. This would allow us to have customized applications, running within their support environment. This approach will let us beat the transition deadline of July 2009. The provider has a robust, SAS 70 compliant environment that we could not duplicate, and it will have an operating run rate that is 75 percent cheaper than the client server model we were on. IT would also be freed from supporting a large server environment to host the system.

The network migration would be another major challenge. We would depend on this happening before we could begin the migration of our infrastructure services. The initial plan was to stick with the network provider of our former parent. It quickly became evident, however, that this was not a viable option due to cost.

We began looking for a virtual network operator, one who could provide service globally without the overhead of a carrier. We would require a much different environment than in the past. We would use the Internet more for services, so we had to build an environment that focused on Internet access rather than WAN services. We wanted firewalls, filtering, telecom and all network services to be provided by a single vendor. And we wanted to eliminate the need for a network manager on staff to oversee this, again freeing IT staff to focus on business rather than technology.

We found such a provider and began discussing our requirements and negotiating price. In the end, we will cut our network costs in half while replacing the entire network infrastructure from the switches and PBX up. Most of our sites will see a dramatic increase in network capacity, a real bottleneck in the past. Our WAN and LAN migration will be complete by January 2009.

Bumps in the Road

Of course, there were some bumps on the road. One was management’s concerns about the security and viability of running ERP and e-mail as SaaS-enabled functions. These are definitely two of the biggest sacred cows in the mind-set of most companies. Cost was one of the easier arguments for making this move, but the ability to focus the IT group on business transformation ended up being the winning point.

So, how to meet these challenges internally? I had to step back and try to build a complete road map. After a long IT career, it’s easy to jump in and start solving problems. But I knew building a road map was critical to the success of this endeavor. My take was that the first step was to build up the infrastructure and project management organization so they would own the solutions that we sought to put into place. Once we had a skeleton staff for the infrastructure and project management areas, the team could begin analyzing the current structure and cost elements of the WAN, LAN and server environments.

We quickly determined that a basic support plan for each country made better economic sense than the global structure we used as part of Delphi. Between that step and selectively insourcing some functions, we were going to drive our desktop and server support down by 66 percent (and yes, that included the insourced staff). In some low-cost country locations, we hired the support staff that had been onsite. In the US, we’ve gone to a provider than can support us in our region.

We did recognize, however, that we would still have several global needs. One would be the architectural design for servers, network and e-mail. We had also decided that we would be running one ERP with all of the entities connected.

E-mail was the first element to migrate since our goal was to be seen as a separate company on our first day in operation. We found a hosted mail service that would allow us to transition our 1,100 users in a matter of weeks. We now pay for e-mail by the mailbox with the monthly fee based on the size of the mailbox. BlackBerry support has an additional small monthly fee. An additional benefit is that users can check mail directly over the Internet. IT’s only support requirement is to add new users, reset passwords and upload a file to the provider to periodically update phone numbers and other data.

Our plan to minimize the impact of the move is to leverage the existing AD structure, private IP numbering, and file and print naming conventions. As our facilities move to the new environment, nothing would need to change. Our support structure involves our help desk provider also monitoring our servers on a 24/7 basis, freeing IT from providing around-the- clock monitoring.

Measures of Success

So, have we been successful? While we are still working on the process, at this point I can confidently say yes. Our planned systems are meeting the goals of reducing cost and support requirements. We’re achieving that elusive alignment goal, we’ve built our business support team up and have a good working relationship with the business. And our CEO has stated that he does see IT as being a strategic partner with the rest of the company.

As private equity acquisitions accelerate in the current economic environment, more CIOs will face the challenges we’re going through today. Swallow hard and take a long look at AaaS. Invest wisely to achieve your primary goals.

Charting a course in unknown waters is challenging. But it can be done, provided you have both vision and the right tools for the job.

Dennis Hodges is the CIO for Inteva Products in Troy, Michigan.