When Gary Cantrell became chief information officer at Textron in early 2006, the company was almost three-quarters of the way through a six-year transformation of the information technology organization. Over the years, Textron had become an $11 billion global, multi-industry organization by acquiring aircraft companies and industrial firms. Some of the Textron brand companies include Cessna Aircraft, Lycoming Engines, and Bell Helicopter.

By leveraging formal best practices and governance, Cantrell and his team have continued to streamline the IT infrastructure across all of the Textron companies. He says, "We're doing things faster, better, cheaper."

Recently, enterpriseleadership.org spoke with Cantrell about how the IT organization is structured, what initiatives were key to the transformation, and what were some of the lessons learned from this process. Here's what he had to say:

EL: You've taken a kind of matrix approach to your IT organization. Can you describe it? 

GC: We have a federated model with nine divisional CIOs. They focus on delivering application services and support, but are also accountable for the infrastructure. Our shared services model for IT comprises six Centers of Expertise (COEs) including infrastructure, security, enterprise initiatives and strategic planning, collaboration, SAP, and PeopleSoft. Each COE has a leader. For example, the CTO who reports to me oversees the infrastructure COE. The collaboration COE is working on how we handle virtual teaming across all 400 Textron locations.

EL: How does your governance structure work?

GC: We have two ways to manage the governance process. Our information management council comprises the nine CIOs, all of the COE leaders, and me. This group provides our strategic direction, the corporate business unit alignment, and then our integrated planning activities. Below this group, we have started to organize tactical review boards staffed by people who report to the COE leaders. For example, we have an architecture review board.

The Textron executive management committee has five members, including the CEO. Below that, there is the Textron Transformation Leadership Team, which consists of all the business unit presidents. All IT capital issues, such as deploying SAP, would go through the TLT. If something affects the business, I might go to the executive management committee. I don't have to go to either committee for everything that happens in IT. Neither one of these committees works on IT issues independent of my involvement.

EL: Textron has undergone a six-year transformation in process improvements. Can you talk about some of the key IT process improvements?

GC: We call our transformation process "systems modernization." Like a lot of companies, we've acquired several companies over the years, nine in our case. SAP has been a big part of our IT modernization.

We're trying to clean up the portfolio of acquisitions. Six Sigma has helped us to reduce the variation in our environment, and Lean has helped us to move a little faster. That's where Lean fits in. You still have to deliver high quality and value, but you have to find innovative ways to do it.

EL: Can you describe the specific areas of IT modernization where these best practices have helped you improve processes?

GC: Using Lean processes and with the help of an outsourcer, CSC, we restructured nine different infrastructures and architectures where we took out dozens of data centers. We also restructured our email service from 150 servers in 70 locations to 40 servers in six locations. Now we have the redundancy and backup capabilities we need on the network backbone.

We also put in a new manufacturing system across the enterprise. However, some of our business units use specific applications that complement the manufacturing system. We leverage these applications across the enterprise also.

EL: Do you use the IT Infrastructure Library, CobIT, or the Balanced Scorecard?

GC: We've tied use of the Balanced Scorecards in with our Six Sigma gold deployment that we used in the beginning of the IT modernization. We're now working on integrating CobIT into some of our process maturity initiatives with Six Sigma. We've pretty much standardized on a plan for using CobIT for the next few years. We have a little bit more work to do on our tactical action plan.

Some of the business units have become very advanced CobIT users. We used the Lean manufacturing philosophy of Shigeo Shingo for one assessment we went through. In some cases, we've gone from silver to gold; in other areas, we're at the basic level moving to bronze. We're working aggressively on having a standard implementation methodology and assessment methodology for driving our maturity. Over the next 24 months, we will get the horses all lined up and get the enterprise on the same level footing.

EL: What kind of certification levels do you have in place?

GC: Right now we have two Six Sigma black belts for every 100 people on our IT staff and on the CSC staff. The ratio of Six Sigma black belts is higher on the corporate side. This year, we're pushing to have 60 percent of the first two levels of IT professionals green-belt certified in Six Sigma. The goal for 2008 is to have 100 percent of these folks green-belt certified.

EL: You have been quoted in the trade press saying that Textron's IT strategy resembles General Electric's IT strategy. How are they similar?

GC: When I was CIO of Honeywell, I had some first-hand exposure to GE. That company has a core corporate IT function similar to our COEs. GE's IT organization also has a fairly strong presence in their business units similar to us.

On the other hand, GE is larger than us and its business units have more scale that ours. We have a more standardized, rigid infrastructure, which provides us speed and efficiency and a lot of leverage. Also, our architecture review process is more rigorous that GE's. We try to do as much enterprise standardization as we can.

EL: Do you think IT can be run as a business?

GC: We had these conversations at both Honeywell and Bank of America. As far as I'm concerned, IT is a support function, enabling the business units to generate revenue and generate support for their customer. If you're an IT provider such as CSC or IBM, then you can argue about running IT as a business. Internally, IT is a cost center. It might not be a core competency in each business unit, but it's critical to support the work of each business unit. To this end, my charter is very simple -- help give each business unit a competitive edge and to achieve customer satisfaction.

EL: What do you get out of venues such as the CIO Executive Summit?

GC: Venues such as the by-invitation-only CIO Executive Summit give me tremendous network opportunities. That's the most important thing that comes out of it. Second, I get to discuss common challenges or technologies or industry threats. The most common discussion among peers deals with the latest virus threat on the horizon. These venues also expose you to lot of new IT talent or new suppliers. If you select your venues wisely, you can spend several days looking at a lot of new technologies. This process eliminates the need to have vendors parade through your office.

EL: You spoke at the Hackett Group's 17th Annual Best Practices Conference. What did you have to tell attendees?

GC: We've used the Hackett Group to benchmark some of the processes we are doing, as well as to assess how well we are doing with some of our best practices. This year I spoke about Textron's IT transformation and the best practices we deployed. The group of 100 really wanted to know what best practices worked and what best practices didn't work in our environment and why.

EL: So what things didn't work?

GC: We had a strong business case for many of the things we planned to do. Communication seems to be fairly robust. On the other hand, we grossly underestimated employees'

resistance to change. We had to do a lot of front-end work on change management. If I had to do things over again, I would've put more emphasis on this.

EL: What best practices did you find to be ineffective?

GC: Our change management process, which is based on Six Sigma, worked very well. This seven-phase-gate approach requires you to define everything from business case to stakeholder involvement. It worked well for the high-risk, high-changes areas. When it came to routine activities, it didn't hold up for us. That's where we could've done a better job of selecting a better methodology.

EL: One of your IT teams is looking at virtual teaming. What are your thoughts about 3D virtual worlds such as Second Life?

GC: I'm not sure what to do with it. It's not based on reality in the first place. If someone can help me understand the applications for Second Life, I'd be glad to listen.

EL: You were one of the nominees for the Information Security Executive Award from this year’s Northeast division of the ISE. What initiative did you get nominated for?

GC: We've had a comprehensive push on consolidating perimeter security, along with improving other areas of security. The nine acquisitions Textron made presented IT with the challenge of how to handle disparate approaches to security. We also focused on how to extend secure wireless connectivity to all of our Textron locations. Here, we sewed up all of the areas for possible data loss. Next, we overwhelmed our disaster recovery and business continuity programs to focus on our consolidated data centers. We also carried out a program to educate employees about security.

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Elizabeth M. Ferrarini is a writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

The proliferation of the Internet, the pressure of a global economy, and the need to remain competitive have transformed businesses all of sizes into extended enterprises. As a result, many companies have a complex network of matrix relationships with permanent employees, with contract staff, with customers, with partners, and with suppliers. Because customers and suppliers might need to have access to information, such as sales forecasts and inventory projections, companies also need to extend enterprise applications to these constituents, thus creating an interconnected network of information.

John Baschab, the president of TechniSource, says that the key to managing an extended enterprise is good collaboration. Baschab's company provides outsourced IT talent, ranging from CIOs to CISCO networking specialists, to privately held companies with revenues between $50 million and $600 million. Baschab, who also teaches part time at Southern Methodist University, and Jonathan Piot, his TechniSource partner, have written two editions of the 600-page book, The Executive Guide's to Information Technology.

Enterpriseleadership.org recently sat down with Baschab to discuss what companies must do to better manage their extended enterprises and what role collaboration plays in this process. Here is what he had to say:

EL: What types of investments are you seeing in collaboration to  extend the enterprise?

JB: We're seeing much IT investment going into extending the enterprise through collaboration. When it comes to internal collaboration, we're seeing improvements in the various ways people interact with each other. External collaboration looks at ways to leverage technology to bring suppliers and or customers closer together. The big difference here is who are your customers? If you're customers are consumers, then you can deploy social networking to drive more collaboration. On the other hand, if have business customers, then you have to look at how you can create a platform to bring each other's systems together to drive better collaboration?

EL: Why are we starting to see so much emphasis on IT investing  in collaboration?

JB: To understand what appears to be the sudden interest in collaboration, you need to take a historical look at things in IT. In the late 1990s and early 2000s, many companies experienced a wave of system adoption especially with the rapid use of the Internet. This system adoption became a pre-requisite for any type of collaboration. Why? You need to have all of your information, such as transactions, in one place before you can even begin to communicate either externally or internally. Unfortunately, the market took a downturn in 2003 and many companies cut their IT spending. To this end, companies weren't willing to invest in collaboration tools.

Since 2004, we've seen a lot of IT capital spending going into infrastructure build out or audit-related initiatives, such as Sarbanes Oxley. We're finally cycling back around to developing some of the collaboration tools that would've been a natural progression in 2003 if the economy hadn't gone down and companies didn't need to focus on compliance issues.

EL: Besides collaboration, what are  companies doing to extend their enterprise to meet the global economy?

JB: Companies have started to do the things the trade press talked about seven years ago. These things include exchanging forecasts and tracking inventory items. For example, some companies are using RFID to track their inventory. Meanwhile, some companies have started using something as simple as XML to have a common language for people to use to exchange information. Many companies have eliminated internal inefficiencies or improved external efficiencies that hampered working with their customers and suppliers.

EL: Can you give examples of how companies are taking advantage of the global distributed pool or knowledge resources and technology resources?

JB: It's easier than ever before to take advantage of global resources in both areas. If' you're a small business owner and you need some specific and discrete technology task done, then you can turn to elance.com or craigslist.com or a host of other sites to find the talent resources you need. The continued decline in the cost of computers and bandwidth and the proliferation of educated people into IT makes it easy for companies to find well-versed talent in every aspect of technology. We've seen a good example of this trend with large companies taking well-defined discrete IT tasks offshore or outsourcing a good chunk of the IT infrastructure.

The largest pool of technology resources is still in the open source movement. Look at all of the open source projects on a site such as Sourceforge.net. It has an amazing pool of thinkers and interesting technologies that people are doing through collaboration across the world.

EL: Is there any  downside to using some of these global talent resources?

JB: Open source collaborators might not be able to tell when it's the best time to launch a new product. Even elance.com professionals won't be a good source of advice for this. No one can do that thinking for you because it isn't discrete enough. That's why you need in-house technologies and in-house thinkers who can figure out your big issues. In other words, you need someone on your payroll, either an employee or a consultant who understands your business very well, and who can drive collaboration.

EL: What adjustments do organizations need to make to structure and to streamline decision-making in a matrix or an extended enterprise?

JB: The answer is collaboration. You see more and more companies going by design and by intent to a matrix decision-making structure, and you see them going through an extended environment by force. The most difficult thing about a matrix environment is how rapidly can you make decisions and what does it take for them to stick.

Any global company, even if it's a small or midsize company, must deal with people who are work across all time zones and all geographies. This's true for even national companies. If companies use collaboration tools the right way, they can improve the flow of information in a matrix environment. The information people need, however, has to be easily accessible and always available. It can't be in peoples' heads or on their laptops. The free flow of information can help to facilitate decision-making.

EL: As an IT outsourcer, what have  you done to extend your enterprise to your on-site employees?

JB: Many of the people in my group never come into our office because their full-time assignment is to work on-site for a specific client. To improve communications with our on-site employees, we created a collaboration portal to make them more aware of what's going on in the company, and to get them involved in decisions that affect the company.

The portal comprises Microsoft SharePoint for file sharing, a wiki, a blog, and a bulletin board. We experimented with a mix of both Open Source, as well as proprietary technologies to get this done. Some of these features worked, while some of them didn't. We thought the blog would be the portal's centerpiece. We also considered the blog as the carrot we'd use to draw employees to the portal and to get them to stop using email and voice mail. We asked members of the management team to provide daily blog entries about business-related issues, such as how we solved a customer problem.

I spent much time worrying whether or not employees would read the blog. They came in droves everyday to read all of the blog entries. Eventually, the management blog writers stopped providing daily content. They didn't have the time to devote to the task. To this end, I ran into a content problem, not an interest problem.

Because we didn't get the response we wanted the first time with our collaboration portal, we continued to work on making the tool more compelling and easier to use. If you don't do this, then people will go back to what they've always been using. While we gave them a carrot, we also gave them a stick. We told them to stop emailing people large files. If they wanted to trade files, they had to put them on SharePoint. That's was a tall order for people to handle. Eventually, people saw the benefits of using the portal.

EL: What steps can organizations take to make better informed  decisions about outsourcing?

JB: Regardless of how effectively you apply technology, you always fall back to the need to have a good personal relationship with the customer and to make sure the customer trusts you. During our initial negotiations with customers, we can usually convince them that we have great talent, that we have better access to information, and that we can provide good economies of scale. The real test of our customer relationship comes down to this: Can the customer depend on us to do the right thing when something goes wrong? To this end, we provide customers with much transparency into how we operate. We've carved off a portion of our collaboration portal to give customers some visibility into what we're doing. For example, we put up their metrics about how we're operating their help desk or how we're meeting their service level agreements.

Informed decisions about outsourcing depend on how well you understand which pieces of IT are good to outsource. The more measurable they are, the easier they are to outsource. A problem management area, such as the help desk, has become the most widely IT piece to outsource. It's easy to quantify because you're constantly getting feedback on how it is doing.

We advise customers to look at their IT organization in discrete components. How easily they can measure each component can determine the degree of outsourcing expertise they'll need. Also, looking across the spectrum of IT components will help them to answer questions about measuring the results. Managing the results should naturally consist of the outsourcer providing quantifiable metrics, such as service level agreements. The outsourcer should also have the burden of doing due diligence to report on how they are doing.

EL: Do you clients include you in their  governance process?

JB: We typically run the governance process for them, especially for making strategic IT decisions. We usually establish an IT steering committee that consists of one of our people who is functioning as the CIO and then their senior management team.

EL: What types of processes need to be in place to better manage  an extended enterprise both for IT and for the business?

JB: If you're going to be exchanging inventory forecasts between a supplier and yourself, for example, your systems needs to have specific characteristics, such as reliability, robust processes, and the proper middleware for handshaking between systems. If people can't get into the system, their productivity will go down and so will their incentive to use the system. You need to have all sorts of processes built into the system so if something breaks and the red flag goes up, someone can jump on the problem.

EL: To what degree should you extend the enterprise to say  suppliers?

JB: If you have a good, trusting relationship with your suppliers, then I'm in favor of giving them access to more information than less information. Sharing corporate information about the most common things, such as usually sales forecasts, and inventory positions, can help your suppliers and you make better decisions.

Author: Elizabeth M. Ferrarini - She is a technology writer  from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.