“We recently had an interesting conversation with John Seral, Operating Advisor at Clayton, Dubilier, and Rice at our first IndustryNext Conference. Here’s a quick Q&A session around data centralization and how John’s experience as CIO at GE taught him to focus on a 3-year plan for any investment return policies.“
Q1. How do you convince the stakeholders, all the stakeholders involved, that deciding that such projects are business projects are not necessarily IT projects? Right. So it’s an interesting question to ask you as a CIO, but in the end, the business was being driven in terms of results. How do you advise your business partners, John, to make the business case?
Answer: Yeah, you know, this is something we learned at GE. I mean, Garry Reiner was a federated CIO at the company, and at one point, when Six Sigma was going strong, at GE we did a Six Sigma project with the internal audit staff and why IT projects fail and why these big initiatives don’t make it over the curve, don’t produce the results. And a handful of conclusions came out of it. But the biggest one was that we put our kind of A team in it and B or C team in the business on it because it’s not important to me. They think it’s an IT project. Well, that changed. We made it a mandate to kill the project, if you don’t have the A talent from the business and as well as A talent from IT on the project and don’t have it properly funded, I carried that mantra into the portfolio companies with CD&R. And that’s why we have IT adviser like myself, we just added another one is to go to the operating partner, go to the CEO. If the CIO is having trouble getting the support they need, CIOs are always trying because the project’s success is directly tied to your business involvement and business ownership, in some cases funding as well. If you don’t have that involvement, you elevate and get people to support you in this. And in our structure, we have those people, myself and the operating partner, that can squeeze hard or kill the project because we’re not, why waste the money if that’s not going to be successful. And we’re seeing that every day.
Q2: What type of people would you typically need to involve across which functions in an organization to really get this data-centric approach moving forward?
Answer: Well, you know, typically when we close a company, the first thing is the finance. Finance, you know, we will have different charts of accounts across companies that have been acquired in the past or different regions. They typically want to do a quick project, several months to centralize internal accounts or map it to one and get a shadow ledger going and then bring in a tool like One Stream or Hyperion or even Tableau and get the financials lined up.
They have to know what’s going on with the business. You have to have the pulse on the business because again, we don’t hold it a long time. It’s a short-term goal. And you have the numbers have to be there. They have to be accurate. Then they move right out to the customer data and sales data. And we tend to really focus on what our customers are spending. Like I said in the example where Entytle helped us, we found out what customers were good customers and used us properly, which ones weren’t fully optimized. And you got to find out where the easy hits are in sales and generate those leads, put them into your CRM, and just go after customers that exist and just can be doing more business with you. And then usually from that sales, we start getting into more customer transactional type experiences and product data if we have products or services data and try to understand the journey of the customer and how much of that is digitized. And obviously, we’re private equity. We look at cost pretty hard. So how can we take costs out as well as generate new leads and insights into what we can do with the customer and how we can grow them.
Q3: So, John, we see security as a mandate and we see SACE as well as we know SACE. Most solutions are based in the cloud, which means the data is probably maybe moving from your on-premise systems to the cloud with these systems. How do you sort of go about evaluating and feeling like you can trust some of these SaaS solutions before really moving all your data onto them?
Answer: Well, you know, the one thing we just started mandating is that we have a full-time CSO in every business reporting to the CIO and we ask that CSO go in there. We also have a CSO council of all 30 companies CSOs, and they talk every two weeks and whether that CSO needs help or could just start out with an email saying, hey, I’m moving this product. Has anybody else done any security research on it? And look at the quality of their security, on their data, and their platforms. And nine times out of 10, somebody else has already looked at this or done a deep dive and they’ll share that where they can, and otherwise, they get involved. And I’ve done it myself at the CD&R level where they digitize their own processes at the headquarters. And I’ve sat down with our CIO there and gone through each and every product that was contending to come in to make sure they are secure. They’re hiring the right people. They’re not outsourcing too much that they do lock up and retain and encrypt data. All the things in this data that we go through with each of these. Every company goes through this data, every company goes to a third party. This data, when they bring vendors in like that, we take this seriously. Like everybody else, we’ve had our incidents where we’ve learned a lot from them. And we started out five years ago doing this data and we were one of the first and in the private equity, world to do that. Today, that’s ramped up to it’s done every year to 18 months, depending on how you score. We rack and stack each one. We do follow-ups and three and six months to make sure all the deficiencies have been corrected. And now, as I said, we have just gone to mandating a CSO and mandating insurance. So if you do get hit by ransomware, anything has to be paid or there’s an abnormal cost, we can cover some of that. But this is real security and is number one nowadays. And going forward, we don’t want to build any more platforms in-house. We don’t even want what they have in-house. So if there’s ever investment into a platform, we tell them, go to cut a low move it out, get rid of the equipment, get rid of the space, just get rid of it just so much easier when you’re a smaller, you know, maybe one to three billion dollar business not to have the data center problem, not to have the audit issues that you have with it. So we’ve been we’ve learned a lot and we’ve changed a lot in the last couple of years.
Q4: What would you suggest CIOs of large industrial companies do differently?
Answer: Think like small private companies. I mean, there’s nothing wrong with large industrial companies, but there is a lot wrong with thinking too far out and thinking too grandiose because as we all know, a lot of those plans change because the business change, change because the people change and the three-year strategy and really focusing on how you’re going to impact the business and the customer and that in a private equity world, what I learned is that happens much more efficiently and quickly because somebody can come in after 12 to 15 months and swoop in and pick you up and it happens very quickly. Sometimes it will drag on beyond three years, but get moving quickly and just be impatient as well. And private equity is very impatient. I think that’s a good thing. They want to get it done, get it done right. But realize a return in months, not years, and no longer plans. No. Hey, I’m going to have SAP done in 10 years. The SAP might be done in our company in 10 years, but the next guy is going to do it, not us.
About John Seral:
John is a seasoned Chief Information Officer who spent the bulk of his career in General Electric, in multiple different roles at multiple different divisions. He ended his career at General Electric as Chief Information Officer of the GE infrastructure division, which was a collection of some of GE’s largest businesses such as power, aircraft, and transportation. During his time in GE, John had an unbelievable front seat to the digital changes underway along with some of the investments GE had made. After that stint and tenure at GE, which was indeed a long and very successful tenure, he then moved into a private equity role at Clayton Dubilier & Rice, advising companies as an information technology leader.