Eric Hanson, VP of Information Technology and Business Optimization at Milwaukee Tool, joined the company five years ago to help rethink IT as the company was remaking itself. Cloud ended up playing a critical role, especially when it came to the launch of a new product development tool that let’s employees collaborate from locations on opposite sides of the world. Hanson recently shared the story with Network World Editor in Chief John Dix.
Can you give us a quick thumbnail of Milwaukee Tool. I’m familiar with your tools, being a Home Depot addict, but give us the big picture.
We were founded in 1924 and today we’re part of an organization called Techtronic Industries, or TTI, which has a lot of other brands you might be familiar with, including Ryobi, Hoover, Dirt Devil and Oreck. Europe features AEG and Vax. So there are several brands under TTI, and Milwaukee is the professional-grade tool brand. Milwaukee is about a $2 billion organization with about 4,600 global employees. We have two major data centers and some smaller centers, and we have manufacturing in both the U.S. and in Asia.
Does TTI leave IT up to each of the various business units?
They do. There is an IT steering committee across TTI, which I’m a part of, but it is generally directional. Our goal is to leverage synergies where appropriate but to allow each major business unit to leverage IT in a manner that promotes success and growth.
What brought you to the company?
I was brought in for a clear turnaround assignment. And in the five years I’ve overseen IT we’ve contributed to 400% growth. We’ve had to get better and change rapidly at the same time. Since we were in this hyper growth mode, we knew we had to focus our IT staff on strategic delivery and remove what I call the distraction of commodity IT.
We used a number of different principles for removing that distraction, but a couple keys were outsourcing — things like legacy application support, IT service desk, level two desk-side support, mobile phone provisioning and support — and embracing cloud services where appropriate.
We also wanted to consistently reduce our commodity IT spend so we could help self-fund strategic initiatives. That was one of our major strategies. We had some others around enabling an agile organization and enhancing IT skills, methods and processes.
What was the hyper growth attributable to?
When TTI bought Milwaukee a few years before I arrived they went through the process of revitalizing each of the different areas, but IT was left largely unchanged. Maybe that is a commentary on the value IT was offering at that point in time. It probably wasn’t deemed that critical.
I was brought in to turn around IT and at the time we were in a terrible economic downturn. Of course, construction was way down, housing starts were way down, and those are things that drive our business. But Milwaukee had just started to significantly invest in some new technologies in the midst of that downturn, making a bet that when we came out of the downturn it was going to position us for success.
And I’m pleased to say that the growth we’ve seen, which is 20%+ year-over-year, has been vastly organic. We are simply taking additional market share. We’ve done some small acquisitions, but it’s been largely organic, market growth based on disruptive innovation and superior go-to-market strategy.
Being a tool connoisseur, I’ve noticed the Milwaukee line being revitalized.
Absolutely. Our rate of new product development has significantly increased. Every year since I’ve been here we’ve created more new products than the previous year. Just in the five years I’ve been here we’ve created over 500 new products. In 2015 we’ll deliver 124 new products. Not only have we made a significant investment in the technologies that make our tools superior in the market, but we’re getting into new segments as well.
So you outsourced some stuff, but were there core things you kept inside?
We knew that if we were going to be more successful and help the business down this growth path, we had to significantly improve our business alignment and our business partnership, so one of the most important things I did was to launch a process improvement organization that acts as an internal consultancy for both IT and non-IT issues. They may go look at a manufacturing issue, a supply chain opportunity, or it could even be in finance. They’re not purely IT people. They have a Six Sigma black belt-type skill set.
That group was created while we were improving project management and business analysis, which were targeted as key competencies. We felt that being close to the business, understanding the business, being in the business was one of the more critical levers in our success.
We also kept application development here and things like business intelligence, which, again, helps us be closer to the business. We do have a core infrastructure and level three engineering groups for the infrastructure side, but we’ve tried to abdicate those day-to-day support issues to outsource groups that we then oversee.
You mentioned cloud, are you taking a cloud first approach now?
I wouldn’t say it’s exactly cloud first, but every time we have to make a solution decision, we are absolutely going to include cloud in our evaluation process and we are probably going to have a preference for cloud because we have found it absolutely is beneficial to our goal of focusing IT staff and dollars on strategic delivery and business agility. It helps in both places.
We’re obviously not going to use cloud if it’s the wrong fit just because we believe in the principle of cloud. There are certain situations where it’s not appropriate, but those situations, as you know, are becoming less and less frequent.
I understand you even use cloud for some storage needs?
We do. One example was the result of a strategic initiative to build a world class custom application to manage new product development projects. That had to be a global software initiative because we have engineering both in our corporate headquarters here in Milwaukee, Wisconsin, and in the People’s Republic of China (PRC).
People in the U.S. and in Asia collaborate on engineering diagrams, share key project documentation and even video. The files can be very large so we developed an internal software product that allows us to manage both the processes and project documentation It has visibility and reporting and ties into our product lifecycle management software to create a robust holistic system.
One of the problems we were having was latency. When you have something stored on a file system here in Milwaukee and you’re trying to open it in China, it’s slow. So what people do is make local copies, and then we lose a single source of truth and that has significant implications, even legal implications. We had to stop that. We had to make it so people could more easily share information and stop wasting time on technology issues. We’re growing so fast our focus has to be on what those people’s roles are, which is to create world-class products.
So we built this application and at some point during the project we realized we were really only addressing half of the problem. We have this great system now that allowed us to look at the portfolio of all our new product development projects, see statuses and have clear ownership and links to all the artifacts that go with each one, but it was still too slow. We had been using the traditional Windows file share for years, so the challenge was, how are we going to make this not just acceptable but exceptional?
There have been replication technologies out there forever, and that alone probably wasn’t going to do it. We pretty quickly realized we were going to need to leverage something that was cloud based to solve the problem.
We took a look around, and we consulted with Gartner on what products might fit, but at the time the space was a little immature. Then we found a company called Panzura had this really breakthrough technology that was secure and allowed you to access files locally but keep them in sync across the cloud and we tried it out and the results completely blew us away.
Give us a thumbnail of how it works.
We have Panzura appliances at both key locations, and they replicate files up to an encrypted and secure location in the cloud and push them back down to the any other appliances. This allows us to keep local copies of critical files and to keep them in synch. So ultimately what you have is real time file access like it’s local despite a global file sharing model.
You have to keep versions of the files in both locations, so it’s not like it’s reducing your storage needs.
No, but the storage side is not a factor. The reality is that storage is pretty cheap these days, and for us the performance was infinitely more important than the cost. But let me give you statistics.
We have files that range in size from a few kilobytes to multiple gigs. A 50 KB file used to take about 35 seconds to open if you had to open it remotely. That now takes about one second.
It used to take at least an hour to open an 80 MB file. You’re not talking open it up, go get a cup of coffee. It was open it up, go to lunch. Now that takes just a few seconds. Even video files that are a couple gigs in size or bigger are near instantaneous because it’s replicated locally.
So this Panzura solution really did help us take a global organization and virtually put us all in the same room. We’re all working together now. There are no technology space/time restrictions around file access. It is local. It solved a significant issue for us.
Are you just using the tool between the two locations?
Since we implemented this it’s received attention internally and other TTI companies are now starting to pick it up. We’ve put it in TTI corporate headquarters and we’re using it now for all kinds of file shares and access beyond engineering because it’s secure and the access times are phenomenal.
Does Panzura provide the cloud storage or does it just leverage existing providers?
We are using AWS as the master location. We update the appliance, then it syncs to the cloud which becomes the master and it pushes files down to any other appliances that are targeted.
How was the implementation process?
Probably the most complicated part was just analyzing what was the right data to move. Otherwise the appliance setup was very smooth. When we sent the Panzura appliance to Asia the Asia IT team didn’t have any training or knowledge of it and the company just walked them through it over the phone. I believe it was up and running within an hour.
You said bandwidth isn’t an issue, but what kind of network pipes do you have?
We’re using our Internet pipe versus our internal network, which is one of the benefits of this. We do have significant Internet access, multiple Gig connections for Internet here at our corporate location. Our internal network is 25 Mbps from here to China. But again, we don’t have to use that anymore so that is a benefit.
Does this make you consider moving other kinds of storage to the cloud?
Yes, in fact we have. We use cloud for a number of things now and regularly evaluate new opportunities. . We use Microsoft’s OneDrive for Business, and we have a portion of the business that’s now running email in the cloud. In fact, in the next couple of months everyone will be there. There are other examples, but that gives you a taste.
Any way of classifying what percentage of your total systems are on-prem versus the cloud at this point?
We probably have 30%-40% of our critical systems in the cloud. HRMS is in the cloud, CRM is in the cloud. Again, email is in the cloud, a portion of our file systems are in the cloud. The things that are not yet, and it’s just about ready for primetime, are things like ERP. That’s all changing over time.
We leveraged the cloud because it fits a key strategy to be agile, to be able to grow our business quickly and to be able to remove the distraction of commodity IT. Sometimes we can even do that at a reduced rate, financially speaking, so for us it is a really tightly aligned solution for our strategy.
