With 2012 revenues of $4.1 billion, Electronic Arts (EA) is the third-largest video game company in the world by revenue behind only Nintendo and Activision Blizzard. It boasts landmark franchises such as Madden NFL, FIFA, The Sims and Mass Effect. Through its PopCap Games subsidiary it is the publisher of hits like Bejeweled and Plants vs. Zombies. And yet, in June of 2012, EA's chief operating officer compared the company to a burning oil platform.
It was a provocative statement, but the reasons for it should be familiar to most business leaders, even if their industry has nothing to do with video games: Disruptive trends like mobile, BYOD, consumerization of IT and cloud are changing the fabric of business and organizations either need to take the plunge or risk destruction.
With the writing on the wall, EA decided to change its business from the bottom up. In February, the company brought in Mark Tonnesen, formerly the CIO of McAfee, to fill the CIO chair and usher in what it calls a digital transformation.
CIO.com Senior Writer Thor Olavsrud recently sat down with Tonnesen to discuss digital transformation, BYOD, consumerization of IT and the future of IT at EA.
CIO.com: You joined Electronic Arts in February of this year as the company began what I understand is a pretty big strategic course change called digital transformation. In June, EA COO Peter Moore told Gamasutra, "We're picking our way through what 'digital transformation' means. We recognized that we are standing on a burning platform. It's an oil rig in the middle of the sea, and it's exploding. You can stay or you can hold our noses and jump. At least that way, you have a shot."
As CIO, you're one of the guys in charge of enabling this transformation. What does digital transformation mean and what does that transformation entail?
Mark Tonnesen: I think where Peter's going and what I would probably say is that where it's going is survival. As a base starting point, we believe, we see in the numbers, we certainly see it just intuitively: Almost every part of our lives is going digital. It's all online, it's mobile. Everything we do, we want to do at our fingertips when we want to do it and where we want to do it. It's multiple platforms, Internet-enabled and mobile. Gaming is no different. For us it starts with survival.
Clearly there is a place for the heavy-weight console business and market, but more and more of today's gamers, more and more of the demographics are changing away from consoles, away from the typical teenager, 16- to 24-year-old. They're moving more and more to casual gaming, more and more to interrupt-driven games, more and more to free-to-play models. That is all Internet-enabled and not enabled through a console business. So we had to think about reinventing our business, our business processes, how we do things. It's also causing us to take a look at how we do things internally.
CIO.com: What are the things that you are looking at internally that need to change?
Tonnesen: Today we have a very broad network of game products and a very broad network of game providers. We own a lot of intellectual property and capital. We also use a lot of game partners and partnerships. We collaborate quite a bit and quite directly with them. What it really requires is for us to collaborate not just among employees, but actually outside the EA enterprise. That has become more critical to our successbringing new game titles to the market more quickly and allowing us to do this in a secure way. As you know, if we lose any intellectual property before the release date, there goes our market; there goes our business. It's critical from a security standpoint and, quite frankly, it is all about time to market.
CIO.com: I understand that one of the big decisions you've made to enable that secure collaboration is to partner with Box. What does Box bring to the table?
Tonnesen: You have to continually innovate and innovate in a very rapid way, and Box allows us to do that. It allows us to share content, it allows us to collaborate and it allows us to bring together the game intellectual types with the company to market in a much more quick and seamless way. That's why we chose them and that's why I think in a broad sense we're looking at changing our business. It is not any longer just writing software and building games and publishing a bunch of CDs that are going to get shipped out. It's about collaborating more broadly across our company and outside.
If you look at the broader context, we could talk all day about where the consumerization of IT and bring-your-own-device to work kinds of strategies are. We know the cloud is coming or here and is moving very, very rapidly. I think those are all easy things to jump on the bandwagon, but more to the point we're trying to turn a company and reinvent it, and we're using Box in a big way to do that through all of its processes. Ideation and collaboration on new game intellectual titles is exactly the key area of focus.
CIO.com: Can you give us some perspective on some of the things that make Box central to what you're doing these days?
Tonnesen: There are a lot of things. They go from very strategic to very tactical. I spend an ungodly amount of money just managing content on SharePoint infrastructure that I have no way of managing, no control over. It's just a big mess. We have to relook at that. It is more strategic. It is going to be central to how we leverage our contracts and contract processes.
We have legal teams that are external. We have marketing teams that are external. All of our marketing plans and programs and strategies are now going to be sitting on top of Box. It is going to become a fabric that is going to help us touch and connect enterprises that we use today to run our company.
CIO.com: How easy was it to get Box's solution up and running for various user communities and what's the adoption been like?
Tonnesen: Deployment has been very, very simple. That has been basically self-service. What we have spent a little bit of time on is making sure that the security is in place so we can use it as an enterprise solution internally. It comes inherently with the capabilities to share documents. What we are in the midst of right now in deployment is in the ideation phases with marketing with the studios, and that part has been an easy uptick.
We haven't seen yet the overall transformation in the way those processes work yet today, so I'd say that's still coming, but we've got it in wide use across our back office environmentfinance, marketing and all the technology functions. The engineering groups are where the big push is today. I'd say we're early stages, but we've had a lot of positive feedback and positive returns, but not yet the transformation in process we're expecting.
CIO.com: What does it look like for you, given you're trying to do this whole transformative move for EA, not just modernizing systems but basically changing the game? What does success look like a year from now? How do you know you did it right?
Tonnesen: I think the simple answer is we improve both quality and time to market for getting games to the market. I think that is the big thing. I'll give you an example: We'll do FIFA [EA's massively popular soccer video game franchise]. FIFA 13 comes out in a few weeks, and that particular build of software is I think between 75 and 90 gigabytes. It's huge. So what we do is we ship that to 18 or 20 locations around the worldand, by the way, we ship many, many versions because we have 18 to 20 different languages to shipand we do testing and we do thorough testing. And then we do write-ups and then we do modifications to the software. Then we send out a new set of builds, and so on.
This process has required millions of dollars of private network equipment to be put in place, monitoring tools, mastering tools to be put in place to ensure not only the privacy of the build but that the build performance is where we need it to be. And let me tell you, it is a mess. I believe what we could do in the future is change the entire process where instead of shipping 75 or 80 gigabytes of build software, we can change the testing process and we can actually provide a better method not only for sharing but bringing our testers, our external partners to the software, rather than shipping software to them. It is just so much more effective to be able to do that.
And, by the way, in our release cycle I want to say that six to seven weeks is just spent moving software around. So we can save huge amounts of time. For us, in a tight market where we're trying to compete with a few big companies, that's a big deal to us.
That's just the build move process. Then you talk about the ideation phase and collaborating and where that happens. It's global. Every studio has people all over the world. Now you're able to see that if you can embed this into every stage of that process, that game development process, it is going to take many, many cycles out of the process and improve our time-to-market. FIFA, to develop and build, is probably 10 to 11 months. As soon as we finish the release here in a few weeks, we take a breath and then we get started on FIFA 14. It's constant, so anything we can do to take time out of that cycle, we save engineers. We can either bring new capabilities to market faster, or we can move people onto different titles and different products. This could be a game-changer if we do it right.
CIO.com: What are some of the other key technologies that you've elected to employ as part of this strategy? Clearly mobile is a huge deal here both internally and for your customers from a gaming perspective. Are you using anything like a mobile device management solution? What kind of other cloud, SaaS, mobile things are top of mind for you?
Tonnesen: Beyond content, all of our contract management systems, legal document signatures, we're looking at all of the typical kinds of sales and planning systems, all our financial planning systems are all moving to the cloud. Of course, all of our human resources systems, all of that is going to be connected, not just with Box. In general, they are all moving to the cloud. I think all of those are going to be mobile in nature, and it is part of our strategy to mobilize every part of our enterprise.
If it doesn't work on a mobile device, it's likely not going to work in our enterprise at all.
CIO.com: Do you have a formal BYOD policy or do you provision all the devices for your employees?
Tonnesen: We have a BYOD policy. We don't have a BYOMDif you want to call it that, mobile devicebut that is coming. Today, we essentially support the iPhone and iOS, and we're moving to Android and we're allowing that to just become a ubiquitous choice by our employees. But the first step was really to get the BYODthe computer, the tablet and that device to be much more ubiquitous.
CIO.com: Are people bringing their own laptops, or is it primarily tablets and phones?
Tonnesen: Yes. They're bringing both. They're bringing their own computersthe vast majority are Macs, iBooks or some variation of MacBook Pro or what have you. On the tablet side it's primarily the iPad, but we are seeing some Samsung product being brought in as well. It's interesting: We thought this was going to drive up cost, but it's actually turned out to be much cheaper. We're seeing more employees decide to bring their own computers, their own devices and so it's saving on a lot of capital for us as well. So the more we can mobilize our applications and infrastructure across the board, inherently I think that's going to drive down costs and create more freedom in the enterprise.
CIO.com: Have you run into any serious challenges as you as you embrace this BYOD culture? Have there been any roadblocks you've had to deal with?
Tonnesen: I think some of the roadblocks have been largely legacy decisions on some of the technologies that we've chosen in the past. I'll give you an example: We use an old OCS platform for calendaring and conferencing, and it doesn't work on a Mac platform, an iOS platform, so we're having to do some upgrades there. We have some old web applications that were written for IE and weren't written for Safari or Mozilla, Firefox, what have you. So we have to do a few retrofits of some things, but quite frankly, they were probably long overdue, and the demand from our employees was strong.
I wouldn't say that we've run into any real blowback from anybody, either at the executive level or in finance or legal, and certainly not with our employees. Most of our employees are actually saying, "It's about time. Let's go. Speed it up."
CIO.com: I know that as part of this digital transformation, one of the first steps was to move IT out of the finance group and into technology operation. Why was that an important first step?
Tonnesen: We, for a number of years, reported into the finance organization, and, of course, as you can imagine, two things happen when working for finance: One is that finance, of course, becomes the number 1 priority and every other organization becomes second priority or beyond; number 2 is that the number one objective that you have as an organization is cost and managing cost.
As it turned out in our case, our number 2 objective was cost and our number 3 objective was cost. So we ended up not doing a number of things that we knew we needed to do because it required an investment. You needed to invest in order to save and that wasn't part of the strategy under finance. We ended up with a lot of pent-up demand but we also ended up with some technologies that were a bit dated in nature and we needed to go back and retrofit.
Since turning that around, though, it's created a big change. Now we work for the chief technology office and the priority is delivering value and results for the company. Somewhere at number 2 or number 3 is cost.
I still have to manage a budget, I still have to come in on budget for everything, but now I can look at what's the right thing to do for the company. What's going to help us become successful in this digital transformation rather than how much does something cost? It changes the whole conversation. It's actually opened up doors that would have not been open before for me and my team.
The difficulty in some of this is I don't necessarily have all the right people. I have good people if you want to cost control and maintain and reduce and constrain and all of that. But if you want to expand and talk about the business strategy and talk about how this transformation's going to take place, you need people to do that. So it is forcing me to go back and look at some of the skills that I have and to either go back and retrain or in many cases really upgrade skillsets. I actually think it's all for the better. It's really where we needed to be as an organization.
CIO.com: A lot of CIOs and analysts I talk with these days say IT really has to become more of a service organization that competes with external providers to serve its customers in the business. Do you see that as your mission, and if so, how far along are you?
Tonnesen: I think you're right on the mark. I think that's what we're really all about right now is to turn ourselves into a service organization. I think of things in three buckets: We need to be better than the alternative, we need to be faster than the alternative and we need to be cheaper than the alternative. Better, faster, cheaper. If I can't be better, faster, cheaper, then my lines of business should actually go get the service from someplace else. It's a free market society. It should be. Within an enterprise, not everything is always free market, but conceptually that's the way I try to operate.
I'm trying to build in the discipline, the behavior, in my team that we are providing a service, and our service should be better, faster and cheaper. If we're not, we should know why and we should be seeking to be. That is the objective so we become the service provider of choice, not the service provider you're forced to use. If I can't provide storage and compute resources to you so you can develop the next game, and do it better, faster and cheaper than Amazon provides them to you, then you should use Amazon. That should be the way it works. My objective is to be absolutely the best, the fastest and the cheapest service that I can be to my customers. I evaluate my team on that and I evaluate their success based on the value that we deliver and of course the satisfaction that we provide those customers.
It's a little bit of a journey. I'm six months into this. I'd say we're making great progress, but we're by no means done. We still have a ways to go. We've made good progress in let's say maybe about 40 percent of our game studioswe have about 42 of them. In terms of the business functionsthe back office, finance, HRI think we're a long ways. We're probably 80 to 90 percent along.
CIO.com: As you make this transition, what are some of the biggest issues you've had to deal with? What's caused you the most trouble in making this change?
Tonnesen: I think the most trouble really comes from the most basic things. You want to make the change as quickly as possible, and you're having to change the car at 80 miles an hour. You're changing tires and wheels and everything else.
That's hard. I've got to change people at the same time we're moving quickly. I've got to reinvent some old technologies, replace some things, like using Box in a lot of cases, and get out from under some of the older technologies. And oh, by the way, I've got to do this by as much as possible staying within the cost envelope, the budget envelop, which by all means is not growing dramatically.
You've got to be creative about what you're going to do and what you're not going to do, where you're going to invest and where you're not going to invest. That's been tough. It's so easy to make a transition if you're being paid to and you're getting the budget to do it. No problem. But when you're not, and you're having to reinvent yourself and change things within the envelope that you have, you have to get very, very creative. It takes a little bit of time.
CIO.com: A lot of companies going through similar changes are really struggling with the perennial security question: control versus convenience and ease-of-use for the end user. You want to control your sensitive data, but you don't want to put up roadblocks that make your customers go around you to get their work done. Is that something you've struggled with?
Tonnesen: Every company and every industry has different views on this. Quite frankly, I really believe that more and more my role is to provision a service. The actual management of that service, the use of that service, the configuration of that service day-in and day-out I really think is the customer's. I want to get out of the way. I want to put Box in place and let our legal team use it for doing great deals with our partners, to let marketing create an ad and marketing campaign, to let our game teams develop and share intellectual property and collaborate and do the ideation they need to do with the technology and let IT get the heck out of the way.
I think the challenge with that, because it all sounds so simple and easy, is that you have historically, in a lot of IT organizations, people that are command-and-control orientedand a lot of times you have CIOs that are command-and-control oriented. Making that change, even when they already mentally know they have to, it goes against for some of us 25 or 30 years of training and behavior. It is not going to be easy. I will grant you that a lot of folks on my team still struggle with this whole notion that we need to provide the technologies, but we're not going to manage it. We're going to let them manage it. But that is the beauty of where more and more of these platforms, like Box, are going: to provide the vehicles and tools for them to do their own jobs without needing IT to get in the way.
A company like Box is very successful in the consumer market, and [the consumers] don't need IT people. I think in the enterprise, that's the sweet spot. If IT can learn to get the heck out of the way and provide the tools for the employees to do what they need to do, great things will happen.