SMC Pneumatics European head of IT John Lang is driving a digital transformation project that will help the manufacturer boost its worldwide market share.
Formed in 1959, the Japan-based company is the largest pneumatics manufacturer in the world, with more than 50% share of its home market and an average of 38% in its other regions.
Its culture of fostering employee development and investing in new product development initiatives has helped it grow to become an organisation with a turnover of $4bn (£2.65bn) in 160 countries with a 1,500-strong workforce, according to the company.
SMC’s ambitious growth plans required a complete IT overhaul, and it was this challenge that attracted US citizen Lang to the job.
“I had planned to take a year off and focus on home projects in the UK with my British wife, following a role involving a heavy travel schedule where I woke up and didn’t know which city I was in,” says Lang. “But when the unique opportunity came up with SMC, I felt compelled to take the job.”
Lang’s experience was instrumental in helping him make the decision – in particular, his time working for clothing retailer Gap in the US, where he helped the catalogue division develop the online side of its business. In 2000, Gap was the first e-tailer to break even, and this successful transformation gave him the confidence to know he was up to the mammoth task ahead at SMC when he accepted the job in 2012.
Ambitious growth plans meant a complete overhaul of IT infrastructure: “It is a very big challenge and the reason I knew I could bring more to the table was my experience in retail, which is a fast adopter of technology and is prepared to push boundaries compared to manufacturing, which is not even a fast follower,” says Lang.
A central approach
SMC needed to centralise 18 separate IT departments across Europe into one single team, and merge a multitude of technologies and approaches into a single IT strategy.
The disjointed IT team was creating inefficiencies, says Lang. Gaining greater control of the complete environment and centralising IT allowed SMC to benefit from economies of scale and to develop a clearer technology strategy.
“SMC had not invested in technology, and this had to change. I spoke to the main board and the director in Japan and knew there was tonnes of potential to reap, similar to what had been achieved in retail through business transformation, in a manufacturing environment,” says Lang.
ROI in deploying workspace as a service is 28% based on the five-year scale of the project John LangSMC Pneumatics European head of IT
To have the backing of the board was crucial to the success of the transformation, so Lang had to demonstrate at each stage how the technology would produce a return on investment (ROI).
“Everything we chose to do with technology had to provide value. Business strategy had to be woven around IT strategy to deliver, and there was no technology for technology’s sake,” he says.
The systems already in place, however, demanded a complete refresh and more efficient technologies, such as virtualisation.
“SMC’s technology estate was made up of isolated infrastructures, with little virtualisation, and the technology organisation had to be streamlined with every person a 100% contributor, so that IT became part of the business strategy and not just a cost centre,” says Lang.
Many IT chiefs would be daunted by the prospect of so much change, but Lang says the way he tackled the task was to listen. “I spent the first three months listening to managers in every location – their complaints and what they liked. I met with the heads of marketing and finance divisions, took what I heard and made it into an opportunities list and an issues list,” he says.
Lang adds that this period of discovery allowed him to identify the pain points in the organisation, what caused them and why.
Loyalty pays
The Japanese work culture of commitment to a company and investment in staff meant that the newest general manager had a tenure of 18 years. This allowed Lang to gain a unique perspective on historical decisions because the people who understood how they were made still worked for the company.
“I talked to the business first to find out problems from their perspective, before I asked IT, to ensure I was attuned to the business issues. The business talked about service level agreements not being met and not understanding IT issues. When I talked to IT, the complaint was the business never listens and won’t get on board. The complaints were not aligned,” says Lang.
The corporate culture of longevity, which helped Lang to understand historical problems, did not bode well for replacing outmoded technology. “Many employees hadn’t seen technology, such as touchscreens, which most of us take for granted,” he says.
An earlier attempt to centralise the company’s enterprise resource planning (ERP) system was undermined by subsidiaries making changes so that very few countries used it in similar ways, making consistent support difficult, says Lang.
“It was frustrating for the IT side and the business, with a backlog of requested modifications. It was an unbelievable mess. We needed to change how we managed that to ensure the ERP system was not pulled by different subsidiary heads, but used in the same way,” he adds.
Each subsidiary did its own thing and this applied to every aspect of technology. “There was no standard laptop equipment, which meant there was no centralised contract. There were data rooms instead of datacentres. The first thing the strategy did was to identify internal and external risk and what changes needed to be made,” says Lang.
Having a centralised IT team was another goal, and the team increased from 25 to 44 people, bringing in most of the localised IT teams. However, some countries chose to keep their local structure.
“We showed what we could do with a centralised IT team – for example, how we could take advantage of buying power. It was a deliberate approach because the gains of centralisation would have been undermined by the fallout created in the subsidiaries through enforcing the strategy,” says Lang.
Virtual desktop infrastructure (VDI) is one of the foundations for the technology transformation programme. SMC’s key partner is Colt, which is integrating the network, datacentre, voice and IT services. SMC is investing in cloud-based desktop and mobile virtualisation, also known as workspace as a service.
Lang chose a softly-softly approach to demonstrate the advantages of VDI. He got a key region – Switzerland – on board to pilot the technology.
Reaping the benefits
The scale of the project is immense and cannot be rolled out all at once, he says. But so far the network redesign with Colt means there is better user experience and efficient new systems to manage and control.
It is already paying dividends. SMC has reduced risk because it has greater central control of its technology, and licensing has been simplified. With a consolidated platform, SMC has gained further benefits from customer relationship management (CRM) technology, which has provided it with a single view of its customers.
Read more about virtual desktops
SMC will not take on any project unless the return on investment is at least 21%. The ROI in deploying virtual workspaces is 28% based on the five-year scale of the project, beginning in 2013, says Lang.
In fact, VDI underpins the whole project. “VMware Horizon Suite is not as expensive on VDI, virtual office apps mean reduced storage costs and Colt has redesigned the workspace infrastructure and the network,” says Lang.
Lang had first-hand experience of Colt in a previous IT management role. When there were problems with another supplier, Colt stepped in to resolve them. “Colt was 100% positive about any issue, whereas our previous supplier didn’t care and got to it when it got to it. With the SMC project, Colt was a good candidate too because it was the only provider to deliver to all the countries in which we operate,” says Lang.
Through the contract with Colt, SMC now has a robust virtual workspace infrastructure, based on two datacentres, an enterprise-grade network instead of multiprotocol label switching (MPLS) lines, and most countries have VDI.
“The VDI project is the first bite of the pie. Staff saw the performance gains with VDI as all processing and updates are on the server and not on the thin client. Productivity and efficiency has increased,” says Lang.
From desktops to workspaces
At a company meeting in Japan, with no Wi-Fi available, the only option for many general managers was to use a 3G connection to a phone, but the Swiss general manager was able to use VDI at the same speed as at his desk.
SMC is in the process of replacing all laptops used by sales executives with iPads, through a contract with Vodafone. “VDI sits well on iPads and there are no boot-up times and little bandwidth necessary. It’s a win-win [situation]. We currently have 1,100 iPads in use and it makes the executives’ jobs easier,” says Lang.
Because the iPads are an integral part of their lives, sales staff are less likely to lose them, he adds. “We had laptops left on car roofs and dropped in the ocean.”
SMC’s commitment to investing in staff means that employee numbers have remained constant. “SMC is not a throwaway company; we have invested in educating staff. It is different from many US companies, where the first step with any transformation is to flush out half the employees,” says Lang.
Colt is running VDI as a managed service because the internal skillset is not in place. “I have three more years to get VDI rolled out, and if we have VDI in 18 countries in that time, we are doing well. We are only looking at western Europe, but we will evolve into eastern Europe,” says Lang.
There are plans to link Europe and the US, so communications will be improved between the different global markets. “We aim to improve communication between subsidiaries not just on the IT side, but for the business to increase participation globally,” says Lang.
Another key long-term aim is to capitalise on data and forge closer links with distributors as well as users of SMC products. “We are looking at how data is compiled and managed. Tracking user information requires a lot of storage and we need to combine information from disparate systems to gain a better picture of what users do with our products,” says Lang. “This will have a direct impact on how products are designed and delivered,” he adds.
IT plays a leading role
SMC is optimistic about the future of IT and the business. “IT is not an unwanted child of the organisation; it is a main player at the table rather than a cost centre,” says Lang.
He is pleased with current progress. Despite having to travel more than he anticipated, he is finding time for other projects, including woodwork and studying for an MA – testament to how smoothly the transformation is progressing at SMC.
“I had never flown with British Airways before SMC, but within three months of taking on the job I had Gold membership. However, I have managed to sort out the house, build beds, a dresser and a Virginia tallboy, and study for my MA in theology,” says Lang. “With such a huge project, I need to do something different in my spare time where there are immediate results,” he adds.
