Selling the Strategic ImportanceBy Evan Schuman | Posted 09-03-2005
Emcor CIO Upends 'Traditional IT' Goals
When Emcor Group CIO Joe Puglisi recently decided to upgrade his company's version of Lotus Notes, he quietly "pre-deployed" it with a cross-section of his company's business managers. He plans, he said, on using the favorable comments from that group to act as a sort of viral marketing to make the upgrade come as more of a customer desire than an IT demand.
Shortly before the Notes effort, his department recommended and then negotiated extensive cell phone vendor consolidation, saving "a couple of million dollars." And yet, the IT department has no jurisdiction over cell phones or telecommunications.
When the company was looking at better ERP hosting options, Puglisi's department was expected to add resources and handle it internally.
Instead, he declined the additional people and argued to outsource it, which was done. The project came in $300,000 under budget and was delivered 30 days sooner.
None of these moves is what would have been expected from the CIO of an almost $5 billion facilities and construction company. But then, that was the whole point.
Puglisi has made a career of going into large organizations and creating traditional technology infrastructures. Today, though, the veteran IT leader is trying to change the corporate culture of Emcor Group Inc., which is an amalgam of about 70 different companies.
The bulk of Emcor's revenue has come from traditional construction, which Puglisi readily concedes is not an especially tech-friendly environment.
"On a job site, if the computer goes down, someone is bound to notice within three days," Puglisi said, adding a quip that the last major tech advances in construction came from a pharaoh.
But Emcor is starting to change, with less growth coming from the construction side of the business and more coming from facilities management. The facilities management side uses a lot more technology and is likely to see huge growth, as companies try to cut energy costs. If those efforts work, Emcor could quickly morph into a company that needs to rely very heavily on IT.
Jeffrey Beach, an infrastructure analyst with Stifel Nicolaus & Co. Inc., tracks Emcor's stock and financial performance and said that energy control is crucial to Emcor's growthand IT is crucial to energy control.
"They're saying, 'Let us come in and manage not the real estate but the systems in your building: mechanical, which includes air conditioning and heating, and the electrical and energy," Beach said.
"The energy portion is going to be growing, with energy prices moving significantly higher for heating and probably inching up for electric as well. Emcor would try to control operating costs for a building, and IT is going to become more important, too."
Beach said technology will figure critically. "The IT is absolutely part of it. It's a crucial part of their pitch to get in front of someone at the multibillion-dollar corporations," Beach said.
Puglisi agreed. "From a technology perspective, we're a company that is very much in transition," he said. "Today, IT is not considered something that can drive the business. In facilities, we absolutely can be a driver."
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But because of Emcor's traditionally non-tech culture, Puglisi's IT department today is much smaller than many similarly sized counterparts. To support 26,000 employees worldwide, Puglisi has about 75 IT people. For a corporation that reported almost $5 billion in revenue last year, its IT budget was small, just $3 million. That amounts to a little more than one-twentieth of 1 percent of Emcor's total revenue being dedicated to IT.
To put that into context, InfoTech Research Group has reported that banking and finance companies tend to spend about 7.5 percent of their revenue on IT and construction companies spend about 1.1 percent. Gartner Inc. has reported that "leading-edge" technology adopters spent about 11 percent of their revenue on IT, "mainstream adopters" spent about 5 percent and "conservative adopters" spend about 3 percent.
To be fair, though, Emcor's IT budget may not be as tight as it appears, because Puglisi is also trying to liberalize what is considered an IT project and paid for by IT.
"We don't believe in 'IT projects.' There are no IT projects here. We don't own anything, nor should we," he said. "For example, we did an enormous forecasting and tracking system this year. It was funded by accounting, not using IT dollars. If you go to senior management and say that you want to spend a million dollars on a forecasting package, you have to be realistic. I'm hesitant to say that we should rush in with some new technology and say, 'This will solve your problem,'" he said.
Puglisi is tackling what the industry calls IT alignment, as he tries to prove that IT can be a strategic focus for a company that never before needed to make it a priority.
Selling the Strategic Importance
of IT"> Citing the Lotus Notes rollout, the cell phone consolidation and the backup outsourcing as examples, Puglisi argued that IT executives must take the lead in getting business and technology people to work together.
That means that technology leaders must start pushing the financial and other business advantages and not wait for their business counterparts to start appreciating technology.
"We don't really connect with management. On both sides, we don't speak the same language," Puglisi said.
"We want to bridge that gap. We want to change, which means we have to crystallize our own thinking about what we have to offer."
That's what prompted him to push for changes on cell phones, he said, which were outside of his jurisdiction. It was a dramatic way to show that IT cared about improving profits and was not solely focused on bits and bytes.
"If the value of what we do isn't embraced" by line-of-business managers, he asked, what's the point? "'Why are we giving you this database?' Are we pushing technology on people who aren't ready for it and maybe it isn't appropriate?"
The perception to be overcome is that an IT department is just a functional support unit, he said.
"Yes, we make sure that the computers run and the latest patches are applied to the applications, and we might even facilitate training, but no one expects us to do debits and credits," Puglisi said.
"IT is sort of becoming like the furniture. You kind of expect there to be tables and chairs and lighting systems and staplers. We don't want to be considered a dial tone. There are certainly ways investing in IT can get us closer to the customer."
The way to get around this perception, Puglisi said, is to prove that IT is there to boost everyone else's profits, rather than simply making changes for reasons such as, "'We're upgrading because the vendor has upgraded.'"
"This is a whole different perspective. We're not going to try pushing it out," he said. "I don't accept that we have to move because Lotus is killing support for an existing version."
Puglisi also has his team write application user manuals before writing any application code, so that user needs will be better thought out before coding starts.
Puglisi said he hopes for coordination between operations and the IT department.
"Changing the business process and embodying this change in various ways fixes the problem. The process is what needs to be improved. We won't say, 'We track our customers so we need a CRM.' That's a recipe for disaster."
Puglisi said he wouldn't propose a CRM package unless marketing and sales said they wanted it. However, explaining the benefits of a package to sales and marketing is allowed, and "You may need to create some incentives" for them to use it to deliver the benefits, he said.
The problem, Puglisi said, is typically not technological nearly as much as it is a question of mindset and resistance to change. "Reorganizing is a walk in the park compared with trying to make management understand" that IT employees are not just technology-loving programmers, he said.
"You have to talk a whole different language. You have to be a politician. My job's about 95 percent politics and 5 percent technology," Puglisi said.
"You can't mandate that people are going to think smart to leverage a hardware or software investment," he said. "You have to make people understand that something is good for them and why it's good for them. This is an issue on both sides of the table. What's fatal, and what's typical, is you go in with the solution and then you try and figure out the problem. We have to listen more."
By expanding the definition of a traditional IT project and by focusing on ways the company can use technology to save money and improve services, Puglisi said, he is trying to make his department a profit center instead of a cost.
"We do represent a national service organization. If there's a problem with a building, you can go to the Web site to report the problem and, through technology, we find the intersection of [that customer and vendor] and the vendor is alerted through phone, E-mail and fax, all at the push of a button," he said.
Building technicians are now equipped with PDAs that allow for real-time wireless communication. New energy audits and improved energy efficiency systems can generate both cost savings and potentially huge revenues, if they can be made to work well and interact with other systems.
"This all has the potential for being very strategic," Puglisi said.
Ziff Davis Internet's Evan Schuman can be reached at Evan_Schuman@ziffdavis.com.