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CIO Q&A: 2010 IT spending squeezed at Welch Foods, but no sour grapes

2010 IT spending at Welch Foods was slashed, and so was IT staff, due in part to a bad blow from Mother Nature. Find out why CIO Dave Jackson is not complaining.

A 26-year veteran of Welch Foods Inc., Dave Jackson did not exactly step into a plum job when he was named CIO in February 2010. The farmer-owners of the Concord, Mass.-based grape cooperative are facing a crop shortage of Welch's signature Concord grape this year, he says.

Dave Jackson
Dave Jackson

So, in addition to having to deal with the challenge of selling a premium product in a weak economy, the juice and jelly maker is seeing Mother Nature put a squeeze on its ability to grow: Welch's 2010 IT spending was chopped, and its supply chain has undergone a major restructuring. As for next year, any nice-to-haves are off the table.

Still, you won't hear complaints from Jackson, who was Welch's senior manager of business process before becoming CIO. One important reason for the lack of sour grapes: IT-business alignment has never been better, he says. Key IT staff are fanned out throughout operations to help with business planning. caught up with Jackson recently, as part of ongoing talks with CIOs about their 2010 IT spending and what they're facing in 2011. What happened to your 2010 IT spending?
Jackson: Our 2010 IT budget was cut dramatically. We came in about $2.2 million less than our original plan, because spending company-wide was cut so dramatically -- by about 10%. Not only was our IT budget cut, our staffing was cut by 18%.

How do you make up for that 18%? That's a lot of people to cut.
Jackson: We have an offshore development team, which augments our onshore staff. We tried to cut services where we could. So, on the technical end, where we had two people supporting the portal, maybe now we have one. Maybe there were three or four on the desktop, and now two.

How lean is that compared with other years?
Jackson: In the 26 years I have been here, it is the lowest we have ever been.

Whom do you use for offshore?
Jackson: We use Oracle for our DBA[database administrator] support. And we use Sierra Atlantic for part of our development support and Fujitsu for the other part.

What is happening in 2011? More cuts for IT?
Jackson: Staffing-wise, we will be stable. Budget-wise, they want us to cut a little more. The IT budget is around $17 million, or about 2.5% of revenue.

Are you planning any strategic changes in IT?
Jackson: We have done most of that already. We went through some of that over the past couple of years, where we restructured our whole application development group and aligned by process. We have a process support group within IT already. They work directly with the business and are basically the liaisons between the business and the application development group. We call them the business process specialists. Out of our 32 people, we have eight business analysts. They do most of the front-end support work with Oracle. They handle most of the testing, the requirements gathering and training.

Anything on the disaster recovery/business continuity front?
Jackson: We are changing our strategy to look at more high-availability options versus pure disaster recovery. I think we have come to the realization as we restructure our supply chain [that] there is going to be a need over the next year or so for 24/7 operations. It used to be acceptable to be down for four, to six, maybe eight hours, if the need arose. Well, that is no longer acceptable.

We have a technology center near our corporate office, about 15 miles from us. We are looking at setting up a high-availability data center over there, a smaller one, and replicating between our main data center and that, mainly for our ERP system.

And we are renegotiating with our disaster recovery site [provider]to change the services which they will provide for us, because we are looking at that more now to use if there were a regional disaster. So, we're focusing more on the high availability because we really believe that that is much more important and much more likely to happen, than looking at full recovery as the only option.

Anything new on mobility?
Jackson: We have revamped our mobile device policy, and kind of gotten away from "the only device is what we buy for you", to opening up and letting users have their own device if it is compatible. We're not guaranteeing we can support it. But if it meets our compliance standards, we are not dictating to people anymore what they have to have.

What about virtualization?
Jackson: We are heavily virtualized on servers. Desktop virtualization is an area we are going to be looking at in the next year. We have done a proof of concept on it already, but we are going to explore that in the next year. It's a pretty low-cost initiative at this point in time. As long as it is not costing much, they will let us do it.

And hardware?
Jackson: Probably like a lot of companies, we have put off PC purchases for the last couple of years. So, we have finally said we cannot wait any longer. We have gone through a massive purchasing spree of PCs over the last month, and we will continue that for the next month, get it in and deploy it. We got to the point where everything is breaking down faster, and we don't have the staff to keep fixing things. We standardize on Dell.

We have a much better business alignment than we have ever had. And with that comes a lot better understanding of what IT is doing.

Dave Jackson, CIO, Welch Foods Inc.

Any other infrastructure spending?
Jackson: We are going to look into some archive and purge software for our Oracle system. We put that off as long as we can -- longer than I would have liked to, and we have got to start doing something in that arena.

Is compliance software on the budget?
Jackson: We just completed an encryption project, so we bought data encryption and some tape drives for the Massachusetts data protection law. We do have one guy who is pushing ITIL[IT Infrastructure Library best practices] quite a bit, so I will probably be going to ITIL training in the next few months. We are moving in that direction, but I am really looking at what will be helpful and what is just more red tape.

Are there any other projects that you have the money for?
Jackson: We are looking at things like upgrading systems that are going out of service. Basically we are waiting as long as we can, but our whole [Oracle Demantra] predictive trade management and deduction settlement system is going out of support in February. So, we have to spend the money and upgrade.

We're looking at starting up an Oracle Release 12 upgrade[R12], more at the end of calendar 2011, and implementing in 2012.

The Demantra upgrade, we're hoping to complete for about $300,000. The R12 upgrade -- that is a good question. I am hoping no more than $5 million. If we don't have to purchase any more software, I am expecting it more in the $3 million to $4 million range. We're timing this as the amortization from our first Oracle implementation comes off the books, so we don't have a huge admin hit. We have invested an awful lot in Oracle. With our last system, it went out of support. We did not upgrade it, and we ended up spending oodles of money replacing it. [W]e don't want to repeat history, so as painful as it will be, we now have to do the R12 upgrade.

What projects are you pushing off?

Jackson: The implementation of product lifecycle management software, upgrades to our telecommunications. We had a project on for unified communications -- to integrate email and phones and all that -- that is being pushed off. Video conferencing is being pushed off.

A management question here: Any change in the relationship between IT and the business?
Jackson: I think the business here at Welch's over the last few years has a much better understanding of IT. I think it really has to do with our Oracle implementation -- how we went through that and how we interacted with the business. An example is putting the IT business process people in place. They don't sit in IT. They sit in the plant and in the departments they support.

We have established a business process owner group out in the business, who are director level or above and who are assigned a process in the company. They not only manage their departments, but also work with the business process group and the project managers to set priorities for IT. So, we have a much better business alignment than we have ever had. And with that comes a lot better understanding of what IT is doing. It also brings a better understanding to IT of what the business is doing. Overall, much, much better business alignment.

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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