ABM Industries: Cleaning Up

 
 
By Tom Steinert-Threlkeld  |  Posted 2005-01-13
 
 
 

In technology for corporations, there is IBM. In window washing, there is ABM.

In an office building, the company established 90 years ago as American Building Maintenance can function almost like an operating system. Need janitors? Got 'em. Engineers? Got 'em. A parking garage operator? Coming up. Someone to manage your heating and air conditioning? On the way. Lighting? Security? Facilities management? Check. Check. Check.

But getting a landlord to buy all those services from a single sales rep remains a tall order for ABM Industries, the San Francisco company that brings in $2.4 billion a year and aspires to be the "blue chip company of a non-blue-chip world," in the words of its Danish-born chief executive, Henrik Slipsager.

But 16 years after creating its Facilities Services division to sell multiple services in single contracts, the company's still trying to figure out how best to support a sales force seeking to sign up one-stop shoppers for everything from trash pickup to mechanical engineering.

"It's easier for an engineer to sell janitorial services than for a janitor to sell engineering services," says Slipsager from his company's offices in midtown Manhattan, near Grand Central Terminal.

Making it easier for anyone in the company to cross-sell ABM's palette of services was supposed to be a benefit of radically simplifying the company's information infrastructure, a task begun six years ago under current chief technology officer Anthony Lackey and project leads Sean Finley and Bill Huff.

In November 1998, the company operated 35 different sets of billing, payroll and general ledger applications, including eight systems in janitorial services, which constituted half its business; 16 in its elevator business, since sold off; five in its parking business; and one each in lighting, mechanical services, security, engineering, facility services and corporate headquarters.

Lackey's goal was obvious: Streamline to one set of applications every ABM business would use. Make it easy to share data. At the least, the company would be able to consolidate financial results easily. At best, it would be able to improve those results with a unified set of reporting systems, making it easier to cross-sell services. Any business would be able to sell any other business' services to its customers.

But the one-system goal presented challenges. ABM used four different systems to keep track of its operations. Its four enterprise resource planning systems included an in-house application developed in the out-of-favor Cobol programming language; a system based on the Santa Cruz Operation version of Unix, employed by its elevator business; a system based on Infinium products from a company once known as Software 2000, used in the lighting business; and the OneWorld software of J.D. Edwards, later absorbed by PeopleSoft.

All this "spaghetti" had reached the end of its useful life, Lackey believed. The master file for the company's payroll, for instance, was stretched to its limit. Each record could store only 512 letters or numbers about an employee. That meant workarounds, if the record involved much beyond the person's name, pay rate, Social Security number, gender and other basic information.

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When 'Dumb' Is Smart

Huff led the project that would give ABM a clean start. In mid-1998, ABM engaged Cambridge Technology Partners to analyze its operations and determine if all its disparate businesses could in fact operate off a common software base. The answers from the consultant's three-month study: Yes, the company could operate on a single platform. And, yes, it would have to be a new platform.

Next came a bake-off between three contenders to supply that platform: J.D. Edwards; PeopleSoft, which had a competing product at the time; and Lawson Software.

J.D. Edwards won, Lackey says, because it had superior functions for measuring the costs of the jobs the company would perform for its customers, and for billing. And even though ABM had many different businesses, adopting J.D. Edwards companywide would force the least amount of change. "It all boiled down to how close a fit the vanilla product was," Lackey says.

Meanwhile, in preparation for Year 2000, ABM took stock of the equipment it put on managers' and workers' desks. Scores of servers as well as 1,850 personal computers were spread across its operations all over the country. Nine out of 10 systems needed an upgrade of the operating system, or a processor upgrade, or other improvement.

The cost to upgrade would work out to between $200 and $400 per machine, Lackey's technology staff figured. But the real cost would be in communications. Keeping personal computers at each office building where ABM had operations would mean deploying a $5,000 server, and spending $1,800 a month on a connection that would send and receive 512,000 characters of information each second.

A less-expensive alternative? What sometimes are called "dumb" terminals: Desktop screens with just enough smarts to receive information from central servers and display information on screen. All number and word crunching would take place at a company data center.

The approach fit the company's low-tech workforce well. Janitors and lighting repair people don't really need a lot of computing power at their fingertips. Or if they do, they don't care whether the processing power is actually on site or remote, as long as they can see results on the screen in front of them.

So Finley would lead the effort to replace the great majority of ABM's personal computers with Citrix terminals. The displays would cost just $450 each. Right away, communications costs could drop to $900 a month per office. In a year or two, as digital phone lines proliferated, Lackey expected the cost could drop to $400 a month.

Those were pretty compelling direct savings. But even more important, the change in infrastructure meant that only one set of software—at the company's data center in the San Francisco Bay area—would have to be updated as time went by. Neither managers of local offices nor employees would have to worry about installing any applications on servers or desktops, because there wouldn't be any hard drives to store or run applications. Only a few exceptions, like salesmen who needed to use laptop computers on the move, would be able to store any information or software on their personal machines.

This was a momentous choice. "If we had gone to the traditional deployment process," where every machine in every office had to be individually loaded with software and synched up, "we would have been out of business," Lackey says.

Now, the company can update its J.D. Edwards platform three times a week, add patches and other enhancements, and maintain one fundamental copy of its software in-house. With personal computers instead of these terminals, the company would be pushing out billions of characters of data every night and the PC network "would have collapsed upon itself," Lackey says.

The $12 million changeover has resulted in at least $19 million of savings, Lackey figures, with fewer devices and fewer servers to support, and fewer people on payroll needed to support them. Instead of updating 1,850 desktop machines and servers in 220 local offices and 20 data centers, ABM now has only 220 devices in its single data center to worry about. "When Bill Gates issues another security alert, ABM is totally protected" by this central control, Lackey says.

The applications live in a software and hardware facility run by a local San Francisco co-location service. In effect, ABM is an application service provider to its janitorial, heating, parking and other businesses that operate in cities across the country.

Each office pays only for the use of those portions of ABM's standard software set that each terminal can access, plus Internet access and storage. The cost per terminal comes out to around $85 a month.


Spotting Problems

Now there is a companywide credit collection process where the company had none, so unpaid bills can be pursued in a uniform fashion, and there's an automated means of processing cash receipts, so amounts can be applied quickly against unpaid bills.

Plus, there are productivity gains in the executive and managerial ranks. The approach "provides great means to provide access from home or any location," says chief financial officer George Sundby. "You get your desktop ... from anywhere."

In addition, compliance with the strictures of Sarbanes-Oxley financial reporting legislation has not been a backbreaker. All changes to systems are made in one place, saving time and making it easier to certify that the proper processes are in effect. Audit trails are easy to pursue.

But the biggest benefit comes in daily operation of its "non-blue-chip" business. "The key thing in the service business is speed and accuracy of information at the point of decision making," says Slipsager. "You don't want a flood in the basement and four-and-a-half hours later, a reaction."

A standard system of communicating makes such service more rigorous and routine, he says. Each night, an inspector in a given office building that ABM serves can collate issues that need to be corrected and provide a clear set of instructions for a cleaning crew. "The key thing when people come in the next morning," he says, "is to know whether you forgot [to clean] a floor or a carpet or what have you."

Managing that "list of deficiencies" is key to keeping customers satisfied—particularly in unusual circumstances, when reputations are made or broken.

"You can't go out, see there's a flood and say, 'We'll be back Monday,'" he says.

But there are limits.

"I don't think you can see a spot of coffee on the carpet and say it's because the information system didn't work," Slipsager points out.

The changeover has not, by itself, turned around ABM's bottom line. The company's income from continuing operations peaked at $46.7 million in the year ended Oct. 31, 2002, according to an ABM financial filing. In the year that ended Oct. 31, 2004, income from continuing operations is expected to come in at $41.9 million, the company said on Dec. 14.

Nor has there been a discernible impact on the top line: sales. Neither Slipsager nor Sundby has seen signs that ABM's different businesses have used the new system in any concerted fashion to sell services from other business units.

As Sundby says: "I don't think we've gotten the benefit of cross-selling just yet."


ABM Industries Base Case

Headquarters:
160 Pacific Ave.,
Suite 222,
San Francisco, CA 94111

Phone: (415) 733-4000

Business: Janitorial, lighting, engineering, parking, security and window washing services for office buildings and other facilities.

Chief Technology Officer: Anthony Lackey

Financials in 2004: $41.9 million in income from continuing operations, pending changes in accounting for workers' compensation insurance. Revenue of $2.4 billion.

Challenge: Provide a single, easy-to-use and easy-to-maintain network to serve a variety of largely independent business units and non-technical employees.

Baseline Goals:

  • Reduce technology costs by $3 million to $4 million a year.
  • Serve 3,600 users in 2005, up from 2,100 in 1999.
  • Keep network running 99.98% of time, while cutting support personnel to 16 from 23.