UPS and ERPBy CIOinsight
UPS' Sutliff: Communication Key to Alignment
Stu Sutliff is vice president of Information Services at UPS Inc. In this role, Sutliff, a 30-year veteran of UPS, coordinates planning activities within IT and provides linkages to the company's core business operations. He is also the IT representative to UPS' corporate compliance committee, its information access and security governance committee, the information and technology strategy committee, and the information technology government committee.
CIO Insight Editor-in-Chief Ellen Pearlman asked Sutliff some questions about alignment upon presenting UPS with CIO Insight's Partners in Alignment Award at the magazine's September conference on alignment in Chicago. Here is an edited transcript of that interview.
What are the misperceptions that people have about the quest for alignment?
I think some of it has to do with IT people not understanding the business strategy and communicating it to their people. I think that's very important. Back in 1997, when Oz Nelson was chairman, his idea of communicating the business strategy to the management ranks and even to nonmanagement started a communication process and became part of our culture.
We all have pocket cards that we carry with us that spells our mission, our scope and our strategy. And we refer back to it, and that's really kind of how we manage a business, it's how we help pick projects. And understanding that business strategy led Oz Nelson to establish what we call our "point of arrival metrics" in the mid-'90s that ties to IT performance to business goals.
What are some of the lessons you've learned about what not to do in the quest for alignment?
First, there's no such thing as an IT project. You can't have a project that's going to involve business and call it just an IT project. You have to be integrated with the business so business managers understand, for example, why they're not going to get new enhancements to a system as you go through a migration.
At UPS, our last two CIOs were not technologists. They were from the finance and accounting departments. As a matter of fact, of the six of us who comprise IT leadership at UPS, five are from the finance and accounting organization. This says that there's a strong business sense at UPS when it comes to IT.
IT can be expensive, and I think you have to make the right strategy investments and bring a certain business savvy to them, and we certainly see that. But at the same time, a few years ago when I was just coming into the IT environment, I noticed a transition. We were taking people who were purely IT who we hired off the street because we grew from 100 IT people to 4,700 IT people over the last 16 years. But the senior people in ITthe project leaders, project managers, the systems managersstarted talking more and more about business issues than about technology.
So I think there's a transformation at your senior levels of IT management to start thinking more about business strategy and goals. When IT people start thinking about our business problems, they start appreciating and understanding them better.
For example, in our billing operation, we have probably 700 IT professionals who are working on the various aspects of our billing system. At the same time, I have the functional responsibilities for the billing system, so I have 100 business people working with those 700 IT people every single day, whether it's on a problem log or an enhancement. So you get that cross-pollination. I like to refer to it as collaborative management. You've got to bring the knowledge units together and share what they know.
Relating to this same point, if I, say, have problems in a payroll system, my boss on the business side, myself and my application manager will talk about it together because we consider that we fail and succeed together. We've just grown up in that atmosphere at UPS, and that we're together on this. It's not you or me, but more like we're all in this together.
Unlike some other IT organizations, IT people at UPS are kept separate from the rest of the business people. They are in their own facility, in a different location because the culture for the IT organization is different from the culture of the rest of the company. Is this still the case at UPS and if so, why is this so?
Predominantly, our facilities in IT are what I would say predominantly 100 percent IT. But we have 700 IT professionals working in various aspects of billing, for example, and I have 100 business-side representatives sitting in that same building. So even though we're isolated per se from that perspective, we're not isolated from the business because we have the functional representatives in there. And they are in different geographical locations.
Now years ago, prior to our corporate move to Atlanta, our corporate office was in Greenwich, Conn., and our main application development was in the Paramus and Mahwah, N.J. areas. Well, that was only a 35-mile stretch, so we could pretty much do that commute pretty easily. To some degree, we may have the IT people isolated so they're not out there bringing in some new piece of technology that we won't want to try and support.
UPS and ERP
UPS and ERP
Does UPS use an ERP package, and how does it relate to the rest of the company?
Actually, if you were to listen to our CIO Ken Lacy out on a speech, he would call the IT organization a critical enabler of what we try to do from a business perspective, and that's pretty much what we all believe. We believe we're enablers of the business, and that's the role we all try to play.
We have a couple of different ERP packages. We do not have one single one. We have a different one for our HR area and a different one for our financials. We've got one of the biggest Oracle operations in accounts payable, and it's saved us a tremendous amount of money for the amount of goods that we purchase for our hundreds of locations around the globe.
And our logistics network is very, very extensive, as you mentioned, between aircraft and package cars and the tractor trailer units. There's not much we can't move. We've moved an awful lot of different things. Keiko the Whale (star of "Free Willy") is one of the prized possessions that we moved logistically.
We have a very vast network, but the strength of it goes back to that thing about our standards, that the network is very interconnected, and it's all based on the same standards so that as we bring in new functionality, new applications, it fits into the rest of our structure and doesn't cause us to go into an excessive waste mode per se where you've got to build an infrastructure to support something else. We want to make sure everything fits in nicely over our architecture.
You said that you have business people residing with the IT people, and I wonder what prevents them from going native? Do you recycle them back into the business? How do you keep that business focus for them?
We have an annual meeting in the company for all of the directors, and we're not just talking IT, you're talking about the entire company, to roll out the corporate strategic imperatives for the year. And we kind of roll that down into, okay, if these are the imperatives, what does that mean for all the different business lines and functional groups within the organization, and we kind of map the strategies of the individual departments and the metrics of the departments back to that.
We also take certain parts of the IT organization and co-locate them with the business in order to enhance the alignment and other parts of the IT organization and lock them away and keep them removed from the business. And it's really in some senses to get right to that question of not letting anybody go native or getting the best of the attention of an architected and planned environment.
We also have IT folks who are passionate about the individual needs of every single business line and are constantly pushing the architects to say, "Well, why is that the standard? Why can't we do something else? Prove it to me because my business partner really needs this thing to enable them to meet their business goals."