Communication, Communication, Communication
9 October 2008 Steve Bandrowczak
Since joining stricken Nortel as CIO last summer, Steve Bandrowczak has boosted the company’s recovery in the telecommunications market, writes Jamie Oliver.
Steve Bandrowczak joined Nortel in July 2007 as chief information officer, when it became clear from the start that he is a man who likes a challenge. In the previous ten years, Nortel experienced the heady highs of a telecom bubble and the lows of a share price crashing from C$124 to C$0.47. More than 60,000 job losses followed, as did accusations of serious fraud and mismanagement that saw senior figures depart.
Today, the business is seeking to regain is position as a leading provider of communications equipment and Bandrowczak is part of the team attempting to make that happen through rationalisation and strategic outsourcing. It is a case of, so far, so good.
Nortel is a multinational telecommunications equipment manufacturer headquartered in Toronto, Canada. It is a global supplier of networking solutions, serving service providers and enterprise customers. As chief information officer, it is part of Bandrowczak’s job to lead Nortel’s IT business transformation efforts and to fully integrate IT priorities into corporate strategy.
In other words: he needs to reduce costs and increase efficiencies. When Bandrowczak took the job in July 2007, he had one 30- day target, one for 90 days, for six months and one year. "I spent the first 30 days evaluating," he says. "By 90 days I had a vision and strategy in place. I brought a lot of my own ideas with me but also had to look under the bonnet here to see what the company was already doing. We’re halfway through the two-year plan and we’re on track. If anything, we’re slightly ahead as the first steps are what I call the "heavy lifting" part."
Bandrowczak has a budget of $350m and a staff of 750. He’s also in charge of other areas of the business, including indirect procurement worth around $1bn. His first challenge was to reduce the number of applications Nortel operates from 1,100 to 100. This rationalisation, says Bandrowczak, is intended to allow huge savings and means the current situation, where 85% of IT costs go into operations and just 15% into new projects, changes so that 70% of IT costs go into operations and 30% into creating new value for the business.
With Bandrowczak’s background, he knows all about the value of integration and building a global template for a business. He says persuading the senior management was easy. "When you tell the CEO you’re going to free up 10-15% of the budget to invest in new innovations, he pays attention," he says. "When I came here I presented a vision. Of course with any change comes resistance, but I’ve done it before and my track record gives me credibility."
Bandrowczak says anyone new in an organisation looking to make big changes needs to keep one eye on the long-term strategy and the other on short-term 'wins'. He says there must be a balance and that it is important to keep as many people as possible on-side. ‘To do that,’ he says, ‘it’s about communication, communication, communication. Of course when anyone new comes into an organisation there is trepidation. People are nervous and that’s natural. What I did straight away was set timelines and targets for everyone, and gradually people could see that the targets were being met and the changes were improving the business."
One thing Bandrowczak did was rationalise the number of data centres operated by Nortel around the world, from 15 to just two – one in North Carolina and the other in Ottawa, Canada. Yet despite reducing the number of centres, the company remains committed to outsourcing and Bandrowczak is clear about what and when to outsource. "It must make sense and must bring value to an organisation," he says. "For it to do so you must understand your organisation and the costs. A lot of businesses outsource functions they either do not understand or which are in a mess, and that’s a huge mistake because the third party will not sort out the mess."
Bandrowczak also warns about the perils of thinking that, simply because a manager is good at running a division, he or she will be good at managing an outsourced business.
"Motivating an internal workforce is one thing, doing it in a foreign territory, with different working practices and culture, is another. So it is very important to look at the leadership of the team and get it right," he says.
He also believes that, when outsourcing, management needs to be clear that one day it will be brought back in-house. "The contract will one day run out and business priorities will change," he says. "So with that in mind the third party must keep on top of the paperwork and procedures so that bringing it back in-house is as painless as possible."
Bandrowczak says that he is constantly keeping on top of the latest developments around the world and making outsourcing decisions accordingly. "For example, Bangalore used to be an excellent place to outsource to but the circumstances on the ground have changed and now it’s perhaps not the case," he says.
Bandrowczak keeps a network of contacts around the world, as well as relying on sources of official information in his efforts to keep on top of the global economic picture. "The most important thing to do when outsourcing, though," he says, "is to go there in person. Don’t rely on the media or third party recommendations. You must feel comfortable with the place. Landing in China for the first time can be overwhelming.
On the other hand, arriving for the first time in Prague might feel like you’ve come home. These are important considerations for any business when considering outsourcing to a new territory."
When it comes to China, Bandrowczak says the thing that makes it stand out as a place to do business is the incredible willingness and desire of its people to learn and become part of the global working world. "The number of graduates coming out of China is absolutely incredible," he says. "When it comes to the under-35 age group, China is on another level when it comes to the number of keen, bright, graduates they can offer a company."
But be aware, he says, of cultural differences. "I was out there with a previous company some years ago and we were talking about how we wanted to empower the Chinese workers and they didn’t know what we were talking about. They wanted direction, and any lack of direction was seen as a weakness."