Technical Debt - how bad is our tech debt and do we need to embark on an IT transformation

Case Study

Company

Software company headquartered in Redwood City

Publically traded on Nasdaq

Founded 18 years ago

4500 employees in 45 offices around the world

Embracing remote working and therefore closing all offices except Redwood City and Bangalore where they have product engineering

They are closing of offices/year over the next 3 years as office leases terminate

Product - SaaS-based supply chain software hosted at AWS

Function		# of Employees
Marketing		150
Sales
	Quota Carrying	800
	Other	300
Engineering		1485
Customer Success
	Customer Success	400
	Customer Support	700
Finance		275
HR		75
Legal		45
IT		270
	Total Employees	4500

Financials

$1B ARR growing at 14% YoY

Concerned about growth due to the economy/recession

$0 profitability, but investors want more profitability during tough economic times

Marketing

Marketing manages the website, field marketing, demand creation, field training

Customer 360 - cannot get a single view of a customer

Primary applications: Eloqua; Drupal (website)

Cannot track lead conversion as the data from leads to closed sales cant be tracked

We have 5 other websites and domains due to acquisitions that werent integrated.

Sales

Direct sales in 40 countries

Divided into 3 theaters, Americas, EMEA, APJ

Primary applications: Salesforce.com; Clari (forecasting), Anaplan (compensation)

Salesforce was highly customized. The average implementation for tech has 40K lines of custom code. We have over 500K lines of custom code. We custom-built our own CPQ, and tax system in Salesforce. With so much custom code, we are on the legacy Salesforce UI and not their new Lightning UI

Although we have Anaplan for compensation, the finance team needs to manually adjust each salespersons compensation before a rep is paid. This essentially disconnects compensation from any system and cannot show compensation in Salesforce so reps cant see what transaction led to their compensation

Given all of the acquisitions over the years and the systems that havent been integrated, the sales organization struggles to understand the true value of a customer. For example, customers may have purchased products from 5 other companies, The customer data sits in multiple Salesforce instances. Even within an instance, theres been no attempt to deduplicate the customer data.

Customer Success

Responsible for Customer Support and Customer Success (ensuring customers who purchase the product are successful with the product)

Renewal rate - unclear due to systems issues

Primary applications: Gainsight; Salesforce.com

Gainsight is extremely expensive. Our company pays more per seat of Gainsight than they do for Salesforce. Gainsight is useful to review product telemetry, but challenging to understand customer behavior due to the dirty data that its fed from (Salesforce).

We have 3 different customer support systems and the customer data isnt integrated. Therefore, the same customer could be calling for different issues and be highly dissatisfied, we would never know this

Finance

Primary applications: SAP ECC6 on premise (core financials), Anaplan (budgeting and planning)

Current primary ERP is Peoplesoft Financials. It wasnt developed to support a subscription business. Our company products are licensed/billed by users. Our acquisitions have varied billing models. Our company wants to add a new billing model to license and bill by usage, e.g. by how much data is consumed. The company believes this is the future billing model and is losing $100M in revenue/year by lacking this capability. All competitors have moved to this model.. Oracle (the owner of Peoplesoft) has already announced the end of life is this calendar year. They no longer provide any updates for the software, including updates in regulatory requirements, e.g. new tax codes.

With our past 5 acquisitions, we never integrated the acquired company ERPs. As a result, we also have Quickbooks, SAP, Netsuite, Intact, and Oracle ERP. As a result it takes 10 days to close our books every quarter vs the industry standard of 4 days.

HR

Primary applications: Workday

Business Process (end to end, e.g. Lead to Cash)

Business sponsors exist in some functions, including Finance, Sales, and Customer Success

Nobody is responsible for cross-functional or end-to-end business process

IT

IT Budget: https://docs.google.com/spreadsheets/d/1bbhu_KBVZM3jiaF1BaCf9wQqp8g8hYI1OC6iKvqeTzA/edit?usp=sharing

270 full-time employees (FTEs) in IT; average tenure of 3.5 years

Company satisfaction (of IT) survey results (tab 1) and IT employee satisfaction survey results (tab 2): https://docs.google.com/spreadsheets/d/1I1EZuZ9oQYC41T3j-KpbgB99QQx9saMBuVDM1ls8YXs/edit?usp=sharing

45 independent contractors

Budget - $65M OPEX and $6M CAPEX

IT has a poor reputation in the company for delivering good service and their inability to deliver quality projects on time

People frustrated with old laptops as IT doesnt have a formal refresh program to provide replacement laptops every 3 years. IT replaces PCs as they break or people complain.

IT Workload - IT team says they are overworked but no metrics are available to substantiate claim. Further, there is no clear manner in which work is aligned to business priorities

Run/Grow/Transform - Although the CIO cannot quantify the exact metric, the CIO believes that 90%+ of the budget is spent on running IT, and very little is spent on innovating the business. This helps contribute to the broader company perception that IT can barely do their job.

The budgeting process is immature as compared to their peers. Although the total budget amount appears to be healthy, the Finance team simply takes the prior years budget and applies a growth increase in line with revenue growth. This is a clear lack of sophistication. Further, they lack an IT Governance process for teams to propose future projects and make trade-off decisions with other IT investments.

Prior CIO left the role for another company and no attempts were made to retain this person

Primary applications: ServiceNow

CIO

At company for 3 months

Has 4 years of CIO experience; first CIO job at a prior company

Has a Bachelor in Economics from CSU Cal Poly

Good reputation for transforming IT into a high-performing function

IT Organization StructureCIO (270 FTE)VP of IT Applications (109 FTE)

Dir of Marketing Apps

Dir of Sales Apps

Dir of Customer Success/Support Apps

Dir of Finance Apps

Dir of Legal/HR Apps

VP of Infrastructure and Operations (106 FTE)

Dir of Service (helpdesk, desktop support)

Dir of Networks

Dir of Cloud Compute, Storage, Backup

VP of Analytics (15 FTE)

Office of the CIO (15 FTE)

PMO

Vendor management

Budgeting

Enterprise Architecture (4 FTE)

Chief Information Security Officer (CISO) (22 FTE)

IT Landscape

600 apps in the company - SaaS first approach

No large data centers. Engineering is done at AWS

The IT team does not have architectural diagrams or principles