Macromedia’s 100 Weeks of IT Transformation

By Robert Urwiler

During the Fall of 2002, Macromedia began a journey to bring their internal IT systems to a new level of effectiveness and scalability. Most of the systems and infrastructure in place at that time were aging and deemed incapable of supporting the company through its forecasted growth. If this was not enough, the IT spend was at a level significantly higher than industry averages. As the new CIO, my broad mission was to modernize the IT portfolio and improve the overall performance and credibility of the IT team without breaking the bank in the process.

In this brief article, I’ll outline the management approach that we took to transforming the IT portfolio into a modern and scalable ecosystem that successfully supported the company’s rapid growth through the years following. I certainly don’t claim to have accomplished this feat on my own. In the end, many very bright and dedicated IT and business resources worked long hard hours to make it all possible. What I can describe, however, is the management process that we applied which ultimately provided the foundation for that success.

Starting with strategy

Shortly after arriving, I worked with the executive team to identify the key business consumers of IT in order to form a Governance Council to help craft and validate our strategy. After talking at length with members of the Council and IT Leadership Team, it was clear that resolving the broad problem was not going to be simple. Reaching a solution would require a multi-tiered process including changes at all levels. Additionally, this journey would have to be largely “self funded” since IT expenses were already beyond reasonable levels. After much discussion, the IT Leadership Team and I developed a dual strategy consisting of initiatives to attain a higher level of operational efficiency while investing in the re-building of our core systems using the operational cost savings we believed we could achieve.

Achieving operational efficiencies

One of the first tasks in the quest for drastically improved operational efficiency was to review the top IT hardware, software, and service contracts with which we were currently burdened. We found during the analysis that most of the communications-oriented contracts had been negotiated during the technology boom period of 1999-2000 and were far from being favorable for the current environment. We chose to bring in a specialized consulting firm to assist us in getting the communications contracts in order quickly. With their aid, we were able to bring these costs down by more than 25% annually while migrating to what we felt was a much more robust and resilient global network. This phased multi-million dollar cost reduction brought immediate credibility to the team and started the momentum that carried us through the transformation process.

The next significant item we went after to bring down operational costs and reduce scalability risk was the data center. There were actually several data centers operating in the company at the time but none was what I considered appropriate to accommodate our long term scalability needs. Working closely with our new IT Operations Director, we planned and executed a data center consolidation and migration to a robust co-location facility which not only saved us money, but also provided a level of resiliency that far surpassed what we had experienced in the past.

With these successes behind us, we began going after more subtle items that would bring our costs down. The rollout of standards for items like PCs and cell phone plans as well as the implementation of policies and procedures for everything from procurement to support slowly began to increase our internal productivity levels and help further reduce costs and complexity within the environment.

As our operational efficiency initiatives began to yield significant positive results, we turned our focus to addressing our aging business systems.

Investment in the business application ecosystem

In a company whose mission is to improve digital experiences in all types of electronic media, it was incredibly important that our web site be a reflection of that mission in practice. To that end, the company had already hired an experienced engineering leader to bring Macromedia’s web site to the next level. Working closely together, we annexed several existing web development / management functions from other parts of the company and built a comprehensive team composed of creative, engineering, operational, and QA talent that was second to none. The team delivered a completely re-designed and re-architected site, using the latest versions of our own products, and produced a proud representation of what the web could be. During that period, long-lasting bonds were formed between the product development community and the IT web team that led to improvements in both areas. The corporate web site ultimately became the final proof point for many of the company’s server products and the web team became the embodiment of IT’s value proposition to the company. From an ecosystem point of view, however, the web addressed only a part of our problem.

Many of the core internal systems in place were in dire need of replacement or re-structuring. Our finance and accounting system was based on green-screen technology, the service organization was struggling with outdated and unstable applications, and the emerging direct sales team desperately needed a system to manage their business. With the momentum of operational success and the credibility of the web team behind us, we moved on to the daunting task of addressing the core systems challenge.

One of the more significant issues before us was that our existing IT staff had little or no experience with the type of integrated ERP/CRM systems that we were exploring as alternatives to the legacy environment. The team, although very good at providing support for the existing systems, just did not have the background that we needed to be successful going forward. We couldn’t just send them to a training class and expect that they be able to select and implement a complex commercial software package with which they had no prior experience. In order to address this, we chose to bring a new kind of talent to the IT Leadership group to drive the desired initiatives and build the right kind of teams for the future.

Our new ERP Program Director, a former professional services executive, brought to us a significant amount of experience in implementing commercial ERP systems and, as importantly, a keen understanding of business. This broad skill set made all the difference in our success. Under her guidance, we assembled a team, chose a software vendor, selected an implementation partner, crafted a plan, and delivered a new integrated system for finance/accounting, HR, and fulfillment in just nine months. The implementation was so successful that the consulting partner and software vendor both documented our experience as a case study. Amazingly, the program was completely funded by the communications cost reduction that we had achieved earlier. That is, the rate of depreciation on the system was actually less than the amount of savings we were realizing as a result of better communications contracts and architecture!

In the area of CRM, we undertook a ‘best in class’ approach to bringing the systems current but had a similar challenge with the existing support staff. Once again, we brought in an experienced Director with a consulting background to drive the solution and rally the team. Over the course of a year, she worked closely with the marketing, sales, and service organizations to bring an integrated set of systems together that met the needs of the business without breaking the bank. Additionally, she and her team went on to help drive many aspects of our customer support process to the web and improve our overall lead flow process, thus contributing to decreased business costs and improved productivity across the board.

In just under two years, the IT team had brought the infrastructure and business application ecosystem up to the appropriate level of currency and scalability while managing to lower the IT spend as a percent of revenue in the process. Although our initial mission could be considered accomplished, the team had built considerable momentum with the business and was by no means finished making valuable contributions.

Post 100 weeks: Continued success through business partnership

During the year following our initial transformation, the team continued to bring even more value to the company through proactive and collaborative planning with our internal business partners. The web team brought a robust eCommerce system live which replaced a costly and less efficient partner system; the ERP Director took an active leadership role in the company’s Sarbanes-Oxley compliance efforts; the CRM team continued to drive efficiencies into all aspect of our customer and sales management systems; and the IT Operations team brought IP Telephony, better and more secure wireless access, and a superior level of support to our employees around the world. Instead of IT being a back office “order fulfillment” function, we became true partners with the business in every sense. And if that was not enough, we managed to bring the cost of IT down during this period to a level in line with industry averages. Overall, an accomplishment that made us all very proud.

Conclusion

There were many factors that could be cited as critical to our success at Macromedia but none more important than having the right corporate and IT leadership teams both focused on a common strategy. The early formation of an IT Governance process, organizational mission statement, and clear communications mechanisms provided a solid platform from which to launch. Other critical success factors included:

• The presence of an aggressive corporate management team with an appetite for change and a willingness to participate
• The addition of new IT management talent, many of whom had a consulting and business background, to drive new projects and shape new teams
• The partnering with consulting and contracting firms, as needed, to bridge the knowledge gap during key planning and project phases
• The two-prong strategy that included the achievement of aggressive IT operational efficiency goals while investing in people and systems with the proceeds

In addition, we took a rather unique philosophy to managing the IT function at Macromedia that I can highly recommend to my peers in any size company. We believed that IT should be managed as a business rather than just a cost center. Aspects of a traditional business including marketing, sales, accounting, HR, and customer service were all taken into consideration in our IT business model. During the transformation process, we learned that there was much more to IT than just deploying systems. There had to be vision, planning, sound execution, and support with an eye on the customer and the numbers at every phase. Ideas and concepts had to be marketed and sold, people had to be cultivated and grown, and processes had to be transparent throughout. This, I believe, helped to make a significant difference in the way we were perceived by our customers, the employees of Macromedia. In the end, we had earned a reputation as a professional and proactive partner and became a model for effective management practices within the company.

Robert Urwiler is the former CIO of Macromedia and a twenty year veteran of Information Technology. During his career, he has also been CIO of Peregrine Systems in San Diego and has held technology management positions at Scientific-Atlanta, Sprint, and Price Waterhouse. Robert holds a Ph.D. in Information Systems from Nova Southeastern University and is a member of SIM, The CIO Collective, and The Council of Communications Advisors. He can be reached at rurwiler@yahoo.com.

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