Engineering services firm Worley Parsons has slashed millions from its technology budget by introducing a new model for IT cost management underpinned by a single piece of software.
Worley Parsons has spent the past few years embedding the technology business management (TBM) discipline - which aims to maximise the business value of IT spending - via the Apptio cloud-based TBM platform in an effort to bring the business in on its IT cost reduction agenda.
The firm - like all in the oil and gas industry - has been working aggressively to cut costs thanks to the global downturn in resource prices in recent years.
But a lack of transparency over what IT actually had, where the technology was located, and who was using it made reducing expenditure difficult.
The problem was exacerbated not only by the speed at which Worley Parsons opens up and closes offices - and the technology needs that come along with that - but also by the 35 businesses it had acquired over the past decade, “with no integration strategy”.
At the start of its IT cost management overhaul, the firm had more than 130 offices across 40 countries with around 24,500 workers utilising more than 80 data centres, 350 data links, 8000 network devices, 3900 servers, 3000 software applications and 31,500 end user devices.
However, it had limited available data on this environment, little cost management, and no IT performance management, making reducing its technology spend and strategic IT investment decision-making difficult.
“One of the first challenges we had to get our head around was: where is the technology? What is it? How old is it? Most importantly, who owns it? is it a leased piece of equipment? Is it owned? What is the cost of it? Who’s using it?” CTO Pete Wilson told last week’s TBM Council Summit, held within the CIO Summit in Sydney.
“These things sound pretty simple but .. the lack of a CMDB [configuration management database], asset management system, or any sort of formal IT planning [and] cost management for IT infrastructure - coupled with over 35 acquisitions in the past 10 years with no integration strategy and we were the classic bolt-on organisation.
“You buy an organisation, why change what they do? Just open up the drawer, tip in all the applications, tip in all the data centres, servers, close the door and hope it all sorts itself out.”
Faced with the challenge of reducing its technology costs without impeding the progress of the business, Worley Parsons turned to TBM software provider Apptio.
While its initial goal was to provide basic IT cost transparency and asset management, Wilson said the firm quickly realised about four months after implementation that there was a “much stronger argument about business insights to be had”.
Its IT budget for 2014 was $210 million. In its most recent 2016 year - following the implementation of the new model - that figure came in at $170 million.
“Right away you’ve got a $40 million+ cost reduction. Now that’s not all about Apptio, but what wouldn’t have been possible is that level of conversation the IT teams could have in the fact arena, rather than having the fiction and myth conversations with the business,” Wilson said.
“You wouldn’t think about running an organisation and its financial systems on a spreadsheet. Why are you thinking that way for the CIO? That’s been the gap in the market for several years - the CIO hasn’t had his tool. We’ve finally equipped Brian [Adams, Worley Parsons' CIO] with his own tool.”
Tracking what you use
For hardware alone, Wilson said the new model prompted a $2 million hard reduction in end user computing in its first year.
“And all we did was just track where they were, who was using them, and what we were using them for,” he said.
Properly managing its hardware assets meant the business was able to assess who actually needed a laptop - and who would be fine with a cheaper desktop - as well as where it was paying fees for overdue laptop leases, or where orders were being placed when devices were already sitting in the stockroom.
“The business can now see that it’s actually approving all these laptops, [and ask themselves] 'what do you want to do about it?', rather than me being the bad guy,” Wilson said.
“It’s changed the conversation to being more about how the business influences the way they consume technology, rather than IT coming to the table and saying, ‘we’ve been given a 20 percent mantra cut, we need to take out this many servers and connections’. It’s put it in a language they can understand.”
Similarly for software - one of its larger expenses - tracking who was actually using the licenses Worley Parsons was paying for uncovered cases like Microsoft Project Professional or Visio being opened only once a month for less than ten seconds.
“People clearly saw an icon, said ‘what’s that’, clicked on it, went ‘I don’t use that’ and shut it down,” Wilson said.
“The amount of times we would find Project, Adobe and Visio sitting on a machine only being used once a month to look at a project plan - [when they could] just stick it in a PDF or load Project Viewer...”
But the capability Wilson is most attached to is the newfound transparency over the technology costs involved in shutting down a Worley Parsons office.
“Our share price tracks within 20 percent of that of oil. We’re in in a tough market at the moment, it’s constantly contracting. In an industry as volatile as ours, where you’re opening and closing offices [for projects] constantly, there’s a lot of pressure on cost reduction,” he said.
“I have three examples where the business made a decision to shut a building because they got a really sweet deal on a lease, only for me to give them some really bad news that there was a data centre on the third floor.
“And that $200,000 you’ve just saved, that’s a problem because i need about $700,000 to move the data centre. That happened three times in 12 months.”
So Wilson and his team took all their data feeds - from network providers, infrastructure providers, its asset management system, its HR platform, and general ledger systems - and plugged it into the Apptio platform (which it has rebranded internally as InsightNow] to allow the business to simply punch in a building code to find out what tech it contains and how much it costs to run.
“It’s that total cost view to the business that allows them to then make the decision on which is the right building to move,” he said.
Reaping more revenue
Another way the platform has earned its keep is by giving the firm insight into the costs it incurs for its clients.
“Recharge was important for us because in our previous world we had no digital audit trail,” Wilson said.
“Say we’re working for any of the big oil and gas companies and building a billion-dollar platform - as part of that we are allowed to recover some of the technology costs, provided we are able to prove it.
“When I turn around to the business and say, ‘I can now track all of our technology costs by business line, geography, zone, project, and I can give you a digital audit trail that you can give to the customer that says you don't owe us $200,000 this month for recharge, you actually owe us $300,000’, that’s revenue coming back in the other way'."
Getting the foundations right first
Using Apptio’s APIs to connect into its corporate systems was “relatively easy”, according to Wilson - the actual challenge was in understanding Worley Parsons’ source systems.
“Do not underestimate what it will take you to understand your corporate systems,” he said.
“It’s all well and good to want to go on the TBM journey, but there’s certain foundations you’ve got to put in place first.
"If those core foundations aren’t there, your TBM journey is either going to struggle or it’s going to fall over.
“So as fast as you might want to get there, sometimes you’ve got to take a step back and understand that there’s core foundation pieces that are missing, put those in place first, and then start building on top of it.”
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