By Larry Dignan  |  Posted 2004-10-01 Print this article Print

For the last three years, you've been reducing expenses by tackling the low-hanging fruit. Now it's time to get serious. Nuke apps you don't need.

?"> Where Do You Start?

Paul Fritterer, vice president of information technology at Ingersoll-Rand's security and safety division, is in the first fifth of a five-year plan to whittle nine enterprise planning systems to one.

He plans to cut his portfolio of 725 applications, many custom-built, down to 400, with off-the-shelf products from vendors such as Oracle and Siebel Systems.

Fritterer isn't sure how much he'll be able to carve out of his $26 million annual technology budget, but the imperative to slice and dice is overwhelming.

If he can cut unused or outdated programs in half, he gets tremendous breathing room to undertake new initiatives that will help his division of the $9.9 billion tool and machinery company.

"We have to get lean. After that 75 percent goes to maintaining [old] systems, there isn't a lot left over," says Fritterer, who describes his plan as continual management of fringe systems.

"Over time, I.T. has built up a lot of fat and you can't change that rapidly."

Fritterer plans to reach the first leg of his goal—reducing applications 20 percent by the first quarter of 2005—by accounting for current systems, redesigning business processes with business unit leaders, selling the consolidation movement to users and then implementing.

His first move was to give one person, a software architect, responsibility for accounting for applications and laying out a plan to cut them. Fritterer says the application census is important because he's sure that the company is "paying for maintenance and licenses for things we're not using anymore."

When identified, applications are ranked from the latest to the oldest. Easiest to cut are those 10 years old or more.

"After 10 years, vendors stop supporting them," Fritterer explains. "That puts the business more at risk because you don't get things like patches."

For custom applications, Fritterer examines how they're used and whether there really is a critical reason to keep each of them—or decommission them.

Early on, consolidating enterprise planning systems was the most important goal, Fritterer says. The business units comprising the security and safety division—locks and keying systems, electronic security, door hardware, access controls and biometric readers—lack common processes for handling accounts receivable, customer data and invoices, to name a few.

Finding which businesses already have common processes is key, Swanton says. Then, the benefits of consolidation become readily apparent and can be sold to other parts of the company.

Software Licenses: $1 Million a Year
A customer with $10 million worth of software might pay a vendor an additional 20% each year in software maintenance fees—which vendors often add to their software tabs. By cutting its applications in half, that customer can reduce ongoing annual maintenance fees from $2 million to $1 million.

For instance, John Moon, chief information officer at Baxter International, a Deerfield, Ill.-based pharmaceutical company, began cross-referencing his applications and quickly discovered that each Baxter business unit had its own lab information system designed to send data to meet Federal Drug Administration regulations.

Moon consolidated those six systems into one.

"You save on hardware and software, but it was really a controls issue for us and it made sense," he says. "If you validate lab data once, there's no reason to do it six times."

But consolidation means establishing what the new processes will be. That, in turn, means getting business managers and executives involved and engaged. No companywide initiative of this size can survive without the seal of approval from a company's chief executive officer, as well as the heads of individual businesses within the organization.

Fritterer held meetings with business unit heads to map processes and requirements for tasks such as receivables, purchasing of materials and accounts payable in the new enterprise system.

Because Ingersoll-Rand needed to accommodate multiple businesses, the company built a new enterprise system with Oracle and Siebel Systems and rolled it out to one of Ingersoll-Rand's smaller divisions.

The plan now is to migrate other businesses onto the Oracle-Siebel Systems infrastructure. Ultimately, all parts of the company should share a single information system with common data fields for customers, addresses and payment history.

Ingersoll-Rand tried out the new system in its biometric unit, one of the company's fastest-growing businesses. The unit, which makes fingerprint and face-recognition readers, was outgrowing the company's existing systems. Yet it was small enough, with 50 employees, that the new system could give Fritterer a proof-of-concept victory.

Now the rollout to other businesses will start.

"We want to get down to just one application supporting the business on one platform," Fritterer says.

Hardware Costs: $500,000 a Year
Savings result from cutting the number of mainframes needed to run the applications from 10 to five, with each machine costing $100,000 a year to finance and support.
Source: Nucleus Research

Next Page: Avoiding pitfalls.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

Submit a Comment

Loading Comments...
eWeek eWeek

Have the latest technology news and resources emailed to you everyday.