Case Study: The CIO of $5 billion Standard Pacific Homes concludes that one can be too nice when letting acquired companies do their own thing.
As one of the newest members of the Fortune 500, Standard Pacific Homes has seen more than its share of growth and, accordingly, small companies that it acquired to fuel its growth.
When Rob Kelle, the CIO of the $5 billion home builder, began his CIO tenure about 18 months ago, he says he knew the company had a California culture and that acquired companies needed to be left alone as much as possible.
Acquired businesses were certainly forced to use Standard Pacifics chosen applications, but were given the freedom to choose how they did it.
"We actually replaced their systems with ours, but we set them up to support their processes in the way that they were already running it," Kelle said.
"At the heart of it, we told them, Were standard, but how you get to it is different. In an industry going through consolidation, its attractive to the seller to know that I get to stay with the company, and Im not going to be told how to do things."
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Today, Kelle says he regrets that position. "We should have developed a standard methodology and rolled it out," he said.
That has given Kelle a major headache in terms of process standardization, data consistency and problems with delivering practical business intelligence analysis.
Various Standard Pacific units "look at data differently, which is a maintenance nightmare. We have to pull data from 26 different systems. If the definition of that data is different, youre not really getting apples to apples comparisons," he said.
"This is why all of the business intelligence vendors are banging their heads against the wall wondering why we wont buy anything."
One example is that sales data is not consistent.
"Its not tied into our ERP system. Well, ultimately it is, but its done through manual reconciliation," he said.
The ERP system itself is also hampered by the varying data procedures and processes.
"Everyone has ERP access, but they are using it to varying degrees. Some divisions do it all manually in Excel or some little database theyve created but they dont use the ERP system to its full extent," Kelle said.
"Culturally, we wont do anything that is a top-down push. We dont want to get too deep into how they run their business."
The CIO has been trying to work with employee groups to customize the applications to deliver more of the information they want, in an attempt to persuade them to use the systems more consistently and more frequently.
Kelle said that much of this is the way people tend to react to any new technology.
"If the new technology doesnt work quickly, they default to the old," such as using Microsoft Word or Excel, said the executive who worked as an Ernst & Young consultant before taking over the CIO job at Standard Pacific.
Kelles IT budget is small (about $20 million with 90 employees) given the $5 billion 2,700-employee companys size, but its triple the size of the companys IT budget when Kelle started about 18 months ago.
Another critical change that Kelle is championing is updating enterprise systems.
The current network is heavily Cisco networking equipment (including voice over IP) with Microsoft running on HP servers and an EMC SAN. Theyre using an Exchange Server with an SQL backend and lots of .Net development work.
The ERP currently sits on an AS/400, but Kelle is moving it onto SQL on Wintel servers.
The AS/400 change is being done for several reasons, including reducing development languages and making recruitment easier.
"Most of our engineering staff is comfortable with the Windows platform," Kelle said, adding that potential job hires are sometimes scared off by the AS/400.
"You get a kid out of college whos never seen a green screen and he comes into our environment and looks at you cross-eyed and asks why [programmers] have to hit function 3 to do something. Theyre used to using a mouse."
But the easiest reason for the AS/400 replacement is that the company has maxed out the storage capacity and they would need to replace the systems anyway.
Attempts to move forward.