One of the largest privately held companies in the United States, Day & Zimmermann, which has annual revenues of $2.2 billion, provides government agencies and 60 percent of the Fortune 500 with contingent employees and services in the following areas: engineering and construction, security, information technology, office administration, architecture, maritime, reprographics, and munitions.
Handling the paperwork to pay 24,000 employees who work for 1,300 customers at 150 worldwide locations can stretch the muscles of most IT departments. However, Anthony J. Bosco, Jr., the CIO and a 28-year veteran of Day & Zimmermann, has managed to outpace his competitors by using technology to automate a lot of employee paperwork, to speed up cost accounting of projects to customers, and to collect monies from customers sooner. Bosco also spearheaded a system consolidation using SAP, which dramatically reduced overhead and interest costs. In fact, the Yoh Exchange, a portal Bosco's group built for one of the company's operating businesses, received an Impact Award in 2004 from the America's SAP Users' Group.
Enterpriseleadership.org recently sat down with Bosco to talk about how the e-commerce initiatives have driven the company forward, and how the company has become more agile and innovative. Here's what he had to say.
EL: Can you describe some of the IT initiatives that are making your company more customer centric?
AJB: In 2003, we built the Yoh Exchange, a SAP-based portal that exploits the entire supply chain and supplier management process. It allows customers to see what's happening with their existing workforce in terms of time, expense, recording, and approval. It also delivers specific content to the workforce that may be particular to projects they're working on, or the location they're working at. We've been doing well for many years.
We've automated, not only the transaction flow between the customer and us, but us and the management of a number of subsuppliers who provide talent to our customer. We act as a clearinghouse. With one push of a button, we now disseminate information, everything from invoices to talent requisitions to a number of sub suppliers. The subsuppliers can only see their information. It is from our perspective all within the same portal so the customer can see the activity, and we can see the activity. We've taken the management of the entire contingent workforce out of the email box, and put it in a portal that gives customers end-to-end transparency based on who they are, and where they are in the staffing process.
EL: Can you be more specific about the role of the sub supplier?
AJB: Subsuppliers can be competitors of ours. Large companies have a very diverse and extensive contingent workforce. One of our lines of business manages that contingent workforce on behalf of our customers. About 20 years ago, many companies decided to go with vendor consolidation. The process involves one key vendor entering into contractual relationships with the other suppliers, and thus eliminated the need for customers to deal with many subcontracts and subcontractors. As the managing vendor, we deal directly with all of the administration of the other contingent labor vendors that supply our customers. By negotiating the price, we enable customers to control their spend.
EL: How have you automated the requirements and approval process for getting talent?
AJB: A major customer might have anywhere from a dozen to 50 other staffing companies competing to fill that role. When we first built the Yoh Exchange, we provided a consolidated invoice. However, the requirement process and the approval process were still decentralized. In fact, if a customer got a huge invoice, department managers often argued that a purchase order hadn't been augmented. We enhanced the portal to enter requirements gathering, candidate sourcing, both from our internal database as well as our subsuppliers. We also disseminate the appropriate information back to the individual department managers.
The most important thing is that we put the best people in front of our customers quickly, and we can start evaluating how well our vendors are performing. For example, vendor one provides a customer with three resumes within a day, and each resume meets 90 percent of the customer's requirements. Meanwhile, within two hours, vendor two provides 10 resumes, which meet 20 percent of the requirements. It's obvious who is the better supplier. We track all of those types of statistics so we know who's performing and who is just throwing out resumes to customers.
EL: Can you customize the Yoh Exchange portal for specific customers?
AJB: We can customize the customer's view of the portal to go beyond transaction processing to include services that empower the contingent workforce. For example, we supply contingent security guards for one of the largest petrochemical companies in the world. Safety is the number one concern of the guards who staff the company's refineries, plants, and office buildings. The guards use the portal to process all types of OSHA violations and other types of security incidents. Depending on the type of issue and the location, the information flashes in a real time across the dashboard of key security personnel.
In addition to transaction processing information, the NBC portal provides continent workers with content they might need on the job. It could include the signup to visit a particular studio or particular site, or orientation information for a new employee at a specific site. We can push that content out so when that employee goes to the site, he or she knows what to expect.
When NBC was covering the 2004 Olympics, people found the portal to be a good way to communicate with others working at different location. For some engineering and construction companies, we made certain equipment manuals, drawings, and collateral available through the portal. When an employee goes to work at that location, he or she doesn't have to search the Web or to look internally for specific documents they might need.
EL: Where are you getting this information from for the customizing of a customer's portal?
AJB: Some of the information comes from the customers. Some of it comes from work we've done, such as proprietary designs we've built. We might provide links to customer sites for particular collateral that exits. Again, people can find information on their own. If we know the content they need exists, we'll make it available. We believe that employees should have the tools to work more effectively and more successfully.
EL: Does the portal create more revenue for your company?
AJB: We don't typically charge extra for the portal service. It creates more revenue for us because it enables us to differentiate ourselves from our competitors. When you're competing for a job, you need to present good talent that meets the customer's requirements. We can attract high quality employees who know they can be more successful here than the company down the street.
EL: What changes did you make in IT processes to drive innovation and agility?
AJB: We changed our IT structure from shared services, to decentralized services, back to shared services and now to selective shared services. Because of this process, we've become very mature with a time-tested IT infrastructure. We can retrofit a process very quickly. We can do what is best for our customers or our business during a particular time in the economy or a cycle of a business.
For example, we took the hands-off, forms-based recruiting process and created an online recruiting system where candidates submit their resumes online. As an applicant, you can have an account with us. A manager can see the status of how many jobs have come in, how many candidates have been screened, how many candidates are waiting for interviews, and where we are with background checks or drug screens. We've made this process more transparent.
EL: How are you driving cost out of the organization?
AJB: We don't have a manufacturing system where we can change a process and drive dramatic cost savings. As a service organization, we have to focus on transparency so people act more productive. Our business depends on speed and accuracy of information. We've been able to increase our asset turns by 30 percent where our number of days' sales outstanding has dropped by 35 percent or 40 percent. This decrease has resulted in major economic benefit. By eliminating some departments, we've been able to drive down the cost of our internal processing. We continue to tweak it.
The various improvements we've made have given everyone from business unit managers to project mangers the right kind of organizational transparency into what's happening in the organization. In fact, transparency into everything from an employee-related issue to a supplier matter, not only raises the level of accountability, but it enables us to mitigate issues before they get out of hand.
EL: How do you measure the effectiveness of your organization?
AJB: Our tools and the techniques have helped us to cut the time of customer projects, such as building a refinery. I have a whole set of tools and templates we use. Every internal project has a SharePoint site. We have certain templates we follow. We use project-based tools and techniques that have been around the construction industry for years. All of our projects have critical path methods.
I have a bet with some of our businesses that they can acquire a company similar to us, and we can implement a core ERP system, which goes from core financials to procure, in 60 days.
Our basic business metric is asset turns. We know that our technology enables us to build faster, and to provide more accurate information. If you're accurate, you'll get paid faster. IT is part of our business strategy. Our IT metrics look at how much money we spend on innovation and front-facing issues versus how much it costs us to operate and keep the lights on. In 2008, we cracked the 55 percent level of how much goes for innovation and front-facing business support of the customer. I won't be happy until we get to 60 percent. Business transaction processing has nothing to do with keeping the lights on. It's about creating customer value beyond what you think of for IT.
We spend less than one percent of the company's revenue on IT, but we have a 55 percent level of spend for innovation and the like. I challenge my CFO colleague to spend less on financial processing in the organization than I do for IT. We have an internal initiative where we look at process improvement as a way to exploit some of the features in our technology toolset to drive the CFO's cost down. There was a point in time where our costs as a percent of revenue were at par with one another. The CFO's costs have crept up and mine have gone down.
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Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.
