Boeing CIO John M Hinshaw knows a thing or two about how to run an IT department.
Hinshaw joined the aviation giant Boeing two and a half years ago as its global CIO, where he oversees all IT, including infrastructure, security, and IT revenue generating opportunities for Boeing's airline and government customers.
The CIO role is one of the few roles where you get to see every part of the company -- every product and service
In 2009, Hinshaw was named CIO of the year by the Executives' Club of Chicago and the Association of Information Technology Professionals, and he was also recently honoured with the Top Ten Leaders and Change Agents Award at the Global CIO Summit. This year, Boeing's IT organisation was honoured by Baseline magazine as one of five leaders in business-technology convergence. Additionally, for the second straight year the Uptime Institute presented Boeing IT with an award for world-class data centre operations.
According to Hinshaw, the scale and scope of the products and services Boeing offers is unrivalled by any other company in the world. The scale and complexity of IT at Boeing is also much larger and more complex than anything he experienced at his previous roles.
With 3500 employees in Australia, including several hundred in IT, Australia is Boeing's largest base outside the US and a large market for the company. Hinshaw describes Boeing’s IT souring model as "balanced", but says services are predominantly delivered in-house because of the nature of the work involved. Boeing’s sourcing ratio stands at about 25 per cent sourced labour and 75 per cent in-house. Hinshaw says others have done more, but it is less so in the defence and aerospace industries.
Recently in Australia to meet with the staff and customers, including the Department of Defence in Canberra and Australian government CIO Ann Steward, Hinshaw spoke with CIO about rationalising IT, surviving the financial crisis, SaaS and cloud computing, migrating 200,000 desktops to Windows 7 and what it takes to be a good IT leader.
What are some of you cost reduction strategies?
No CIO is ever happy with costs. It's a constant mission to get costs lower. Every dollar spent at Boeing on IT could be spent on product development. We spend less on IT every year and get more value out of it.
Boeing has renegotiated better terms with key suppliers and prioritised its IT work. We have tried to balance where the work is done and we are now more certain outsourced work gives good value for the dollar.
With about 160,000 employees in 90 countries Boeing has a lot of suppliers and needs to better leverage 'the one Boeing' across the company. I can buy IT products globally as opposed to in any one country, which saves money.
What are the most pressing issues for Boeing a year after the GFC?
The good thing about our business is there is a $US320 billion backlog of defence and airline orders. The number of orders for new planes has gone down, but we will deliver more planes in 2009 than in 2008. There is still demand in emerging markets and new planes are 20 to 30 per cent more efficient that older aircraft.
We have weathered the GFC well. We are more judicious where we spend IT capital. The Dreamliner had some delays, which put pressure on it, but we hope to fly it this month.
How is Boeing’s housekeeping going? Are you rationalising the number of systems, staff, etc?
When I came on board the number one priority was to simplify IT operations. In 2007 we had 10,000 corporate applications company-wide.
Each business had their own IT shops. We brought them all together and have been rationalising applications at a rate of around 1000 a year, so this year it will be 8000.
We also had about 60 data centres and are down to six today. Our roadmap is to have three, which will save significant cost reduction in the power drain.
Do you find it ironic that increasing use of technology (for example, telepresence) may be reducing the need for flights, thus impacting Boeing’s business?
We use videoconferencing in Boeing and we also travel a bit. There are times where videoconferencing makes sense and times when a face-to-face meeting makes sense.
We want people to travel so there is a little bit of dichotomy, but at the end of the day what is the business need?
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