Digital transformation is more than replacing paper with zeros and ones. One of the most critical elements of success is establishing a cultural foundation so that everyone in the business has a common understanding of how the organization works.
A business operating system (BOS) is the means to a cultural foundation. A BOS puts everyone in the company on the same page, with the same vision, working towards the same goals. Clearly defined expectations, processes and accountability allow the company to achieve its objectives and achieve its strategy, like a well-oiled machine.
Johnson Controls and its strategic partner Infosys have successfully implemented a BOS on top of a very heterogeneous set of systems acquired over many years. Against this backdrop, I was thrilled to have the opportunity to speak with Diane Schwarz, Chief Information Officer at Johnson Controls, to hear the success story.
From “data puddles” to a Data Lake
Johnson Controls is a 136-year-old global leader in smart, healthy and sustainable buildings. A Milwaukee-based company that develops building products and services such as fire, HVAC, security and building control products for predictive analytics and smart facilities. To quote Diane, “Johnson Controls’ IT infrastructure has more ERP systems than you can count on your fingers and toes.” A situation that many of you can relate to, I’m sure.
Enterprise Resource Planning (ERP) consolidation began in two parts of the business, with installation and service going to OracleFusion and manufacturing plants moving SAP. This is the first time I’ve seen an ERP split between two vendors and I thought that was interesting. Honestly, this is the first client I’ve heard of who hasn’t gone “all in” with a single supplier.
Before achieving the results of the ERP consolidation transformation, had no impact on the BOS project which requires retrieving data from various systems, what Diane affectionately calls “puddles of data “. Johnson Controls selected Microsoft Azure Data Lake as target repository.
Systematic business management
Johnson Controls needed a systemic way to run the business, to avoid surprises. Initially, it started with a handful of key performance indicators (KPIs). The first task was to extract data from legacy ERP systems into a data lake. A standard set of dashboards followed by training across the organization. Each branch manager and sales manager used a standard dashboard to conduct weekly operations meetings.
The dashboard has become more than a record of numbers. If a KPI did not meet the target, each leader had to introduce countermeasures. Countermeasures allowed leaders to be aware of the problem, understand the remedy, and who was responsible – a closed-loop system.
Within a few years, the process matured with more metrics developed for different people covering all aspects of the business, such as sales, service, and supply chain.
The BOS is now a strategic platform at Johnson Controls. Data comes from 30 sources with over 400 KPIs that cover the different areas, with many more on the roadmap.
19,000 users now use the system with over 1,200 standard operating procedures.
The BOS has become the tool that promotes a predictable and consistent way of working, measures progress and generates financial results. Johnson Controls can point to areas where BOS has improved resolution time and sales margins. As one manager noted, “BOS helps leaders lead.”
The BOS Dashboard is a record plan ensuring the organization is on the same page. New tools reveal a better understanding of risks and opportunities. Going forward, it will be less about looking in the rear-view mirror to find out what happened with KPIs and more about understanding anomalies and using analytics to predict future outcomes. This will change things.
Meet challenges with a good dose of perseverance and tenacity
The cultural challenge of aligning everyone on the standard dashboard was a significant hurdle. Think of a branch manager who has been asked by company management to change a system that he says has worked well for him for decades. The answer is typical “it’s extra work”. The task was to convince the organization that this was not extra work but replacement work to operate cohesively across the organization and stop local practices.
Over time, Johnson Controls has rooted out local practices, with the leadership team reinforcing appropriate practices. Not weekly, not daily, but at every meeting! “Where are your countermeasures?” “Who is responsible ?” Diane jokingly noted, “Change management is easy, as long as someone else is changing!”
The result? PowerPoint is over! Tools and KPIs drive operational reviews. It’s very powerful – a gold standard by which to measure business.
A second challenge was that it took time to build the foundations, and people didn’t immediately see the results. KPI development took time to connect 30 systems with several hundred data points.
Diane aptly put it, “You have to be persistent and diligent. Sometimes it feels like you’re using a sieve to feed data into the data lake. But the data that’s left is worth it.”
Infosys: strategic partner and extension of the technology team.
Infosys has been a Johnson Controls partner for many years, from both an operational and delivery perspective, with the institutional knowledge to keep legacy systems running. In addition, Infosys has played a crucial role in the transition to new ERP systems.
Infosys has helped align and standardize definitions across different business areas. Infosys also helped extract information from back-end systems and consolidate it into a standard model using Microsoft Azure.
The key takeaway from this analysis should be that understanding the human side is key to realizing the benefits of digital transformation and preparing your business to evolve.
In this brave new world, organizational silos can be costly, putting organizations at risk of failure or, at the very least, a challenge of scale.
A BOS is an essential tool for establishing control throughout the organization. A BOS is a handbook for leaders to run the business and a set of expectations for every employee. Its absence can lead to miscommunication, individual agendas, and team conflicts that derail your business success. To avoid frustration, waste of time and energy as you grow, I encourage you to seriously consider the options for a BOS.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.
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