ATK’s Jeff Kubacki on the CIO’s Business Responsibilities, How Leaders Set IT Strategy

(Editor’s note: this interview took place prior to ATK’s April announcement that the company would spinoff its sporting division into an independent company and merge its aerospace and defense businesses with Orbital Sciences. Click here to read GovCon Wire’s coverage of both transactions.)

As senior vice president and chief information officer at ATK, Jeff Kubacki acts as the Arlington, Va.-based company’s lead information technology strategist and oversees ATK’s IT infrastructure, applications and resources.

Kubacki joined ATK in November 2010 after three years as CIO for the Kroll division at the Marsh & McLennan Companies.

In this conversation, Kubacki discusses how CIOs like him sit at the table with company leaders to set their framework for IT governance and how compliance factors into his work. He also overviews how his M.B.A. education helped prepare him to be a CIO.

ExecutiveBiz: What are the main items on your agenda as CIO?

Jeff Kubacki: ATK’s President and CEO, Mark DeYoung, articulated two main goals for IT: transition from a tactical, order-taking function to a strategic business partner, and also to partner with the business to develop and implement an actionable and affordable IT strategic plan. To meet both of those goals, the IT leadership team developed six key IT strategic objectives. Those objectives are the main items on my agenda and have become the foundation of our annual goals and metrics.

The first of these strategic objectives includes the implementation of Peter High’s World Class IT framework, which has five key principles and thirty-three sub-principles. The five principles include people, infrastructure, project and portfolio management, IT and business partnerships, and external partnerships.

The second objective is focused on IT risk management and Information Security. The next three are focused on reducing costs across the organization, resulting in improved EBIT performance. These objectives include more automation and integration across the supply chain, improved employee productivity, and enhanced capabilities around IT cost management.

The last objective deals with enabling breakthrough innovation across the company to accelerate growth initiatives.

ExecutiveBiz: What was attractive about ATK when you joined in 2010?

Jeff Kubacki: It was a combination of several key elements. First, I was impressed with the executive leadership team and their vision for ATK. Second, the values of the company resonated well with me. Our values truly do focus and align us as a company. We are passionate about safety, people, our customers, execution excellence, patriotism and our overall corporate responsibility. We deliver mission-essential products that must perform each and every time.

I was also excited about the product portfolio. Who wouldn’t get excited about rocket motors, satellites, precision weapons, and ammunition for the commercial sporting market, law enforcement and the defense department? Lastly, the CEO was supportive of an IT transformation, and I have always enjoyed leading those transformations. Three years later, everything that was attractive about ATK is even more attractive. I have told Mark that he is the most supportive leader that I have worked with in my 30-plus-year IT career. That makes it fun coming to work every day.

ExecutiveBiz: How do CIOs work with company leaders to make IT investment decisions?

Jeff Kubacki: I believe this falls under the broader category of IT governance. IT governance defines the rules around how decisions are made regarding IT investments. At ATK, we are implementing a hybrid IT organization design. In a hybrid model, the CIO sets IT strategy and works with the business unit leaders to develop and manage governance policies and practices, and allocates decision rights accordingly.

Generally, common and enterprise-wide services are centralized, while unique business unit applications are decentralized to that business unit. The business determines what IT services they require; IT decides how best to provide the services.

To support this hybrid model, we have implemented a tiered IT steering committee structure. We have steering committees operating at the division, group, enterprise application and corporate levels. For example, the Enterprise IT Investment Council oversees the investment priorities for Corporate IT. Membership includes the CIO, CFO and business segment presidents. One key objective of the council is to prioritize IT investment initiatives and to deliver final approvals and recommendations to proceed with proposed IT investments above a certain spending level.

That list is then reviewed with the CEO, who obviously makes the decision on what IT investments we will make in a given fiscal year. Projects above a certain spending level also require Board of Directors approval. When needed, I take the business case, investment plan and return on investment (ROI) to the Board during one of their regularly scheduled meetings.

We conduct a quarterly IT business review with the CEO and the executive team to review progress against objectives and metrics performance, and discuss upcoming IT investments. We also provide an IT Monthly Update as part of an overall IT reporting and communications framework. This report includes a review of IT financial performance against the current plan and prior year. Lastly, I participate on the Enterprise Resource Planning (ERP) Steering Committees. We currently have ERP implementations underway in all three of our business segments. This is a good way to share best practices across the company and ensure alignment with our IT strategic plan and enterprise architecture principles.

ExecutiveBiz: What role does compliance play in your responsibilities as CIO?

Jeff Kubacki: Compliance plays a very large role in my responsibilities as CIO. For example, in February 2013, President Obama signed an Executive Order focused on improving critical infrastructure cybersecurity. As a part of the Defense Industrial Base Sector, ATK must ensure we are in compliance with the Executive Order and the associated information security frameworks, processes and policies. Additionally, given the nature of our Aerospace and Defense programs, ATK has International Traffic in Arms Regulations (ITAR) controlled data that we need to protect in accordance with U.S. Department of State policies.

I consider IT risk management, information security and compliance to be my top priorities. As a result, we have built an excellent team and have given them the resources they need to perform their jobs efficiently and effectively.

ExecutiveBiz: How do you apply your M.B.A. education for your current role?

I was fortunate to receive my MBA with a major in Finance and Accounting when I was the CIO for a company in Florida in the late 90s. I found the entire two-year experience to be excellent and was able to apply concepts we were learning in the class directly in the office. For example, I believe CIOs need to have a very strong understanding of finance and accounting principles.

Most IT organizations have to allocate or charge back Corporate IT costs to the operating divisions. Having knowledge of cost accounting and cost pools comes in handy when developing meaningful allocation strategies. Additionally, I find that finance is the language of business. IT professionals need to learn that language as we develop ROIs on IT investments or as we provide the business with more transparency to IT costs.

ExecutiveBiz: How do you work to get company leaders, the board of the directors and the CEO on the same page in terms of the company’s IT direction?

Jeff Kubacki: As mentioned earlier, our CEO asked me to lead the development of an actionable and affordable IT strategic plan. He wanted the first version of that IT strategic plan to be presented to the executive leadership team, as well as the board of directors, in August of 2011. So, we put together a large team of approximately 45 people across business and IT and focused on six key strategic objectives, including things like developing our ERP strategy and how to improve our performance across the integrated supply chain.

Once the plan was completed, we socialized that with the business group presidents, the functional leaders, and the CEO to get their buyin and support affirming this was the direction they wanted to take IT over the next three to five years. Once we were all comfortable with that, I did some minor tweaking, and I took it in to the Board of Directors in August 2011. It was the first IT strategic plan that ATK had developed in a long time, and it received their unanimous support to move forward.

I now do an annual update to the executive leadership team and the Board of Directors and present a status of what we’ve accomplished since the last update, any changes that we’ve made to the plan, etc. At times, I’ll be asked to come in to the Board meeting and do specialized updates on topics such as information security. I’ve had a chance to present to the Board five or six times in the last three years, and I appreciate that exposure.

ExecutiveBiz: What does ATK’s hybrid IT organization look like?

Jeff Kubacki: When I got here as the CIO, I would say IT was an extremely decentralized organization. Decisions regarding IT investments were really being made at the individual business unit. As a result, we had many ERP systems, many versions of email, and a lot of redundancy. What we decided to do was move forward with the hybrid model. We did a lot of centralization and consolidation including IT shared services.

There are certain services, like email, SharePoint, data centers, disaster recovery and enterprise applications that all of our business units, groups and corporate need to consume as users. It makes sense to keep that centrally managed in one corporate data center that allows us to manage our costs very effectively and deliver a common user experience across the company. At the time, we had five IT help desks, and now we only have one, for example.

But, all decisions can’t be made at the corporate or central level. Because we have such a unique set of businesses, certain things require local decisions. In our governance model, which I presented to the board in that very first meeting in 2011, we outlined what decisions would be made at my level, at the corporate level, and at the group level and then the division level so that we could avoid conflicts.

I felt that was something we needed to solve very quickly, since it was a very decentralized organization, and now there was a CIO that was responsible for IT across the company. Defining the rules of the road was something imperative to do at the very beginning.

ExecutiveBiz: What did you take away most as a CIO from your business education?

Jeff Kubacki: I’ve worked at several large companies, and although they made different things – from rocket motors to computers to eyeglasses – they had one thing very much in common. That was that most of the executive staff and leaders of the company were always concerned about their IT spending and that they always felt it was too high. In some cases, I would argue that it was actually not high enough. Through the MBA program, there was certainly an emphasis on finance and accounting.

It’s important that you sell your ideas as a CIO or as an IT leader and when you’re presenting those ideas or investments, you have to be able to put it in terms that resonate well with an executive in the company, like when they’re selling their programs or investments that they want to make to an external customer.

There has to be an ROI and clear numbers on what the cash flow looks like, what capital you need, if you are going to lease or buy something, etc. When you’re spending a material amount of money on IT every year, you need to run it like a business. And if I am running IT like a business, then I need to make sure I have my arms around the financials of that business.

A lot of the programs or classes from the MBA program were very helpful there. There were also things from marketing that play a role in being able to build a business case and sell your ideas. It’s something that IT people generally aren’t very good at, in terms of selling their ideas. They then wonder why all their wonderful ideas never go anywhere. It’s because they’re not effective communicators and can’t sell it. The MBA program was helpful, from that perspective, and I encourage IT professionals to pursue an MBA.

ExecutiveBiz: How would you advise someone to go about learning about the business of being a CIO?

Jeff Kubacki: When I coach either my direct reports or people in my organization, one of the things that I tell everyone is that when it comes to being a CIO, you have to have three very important skills, in this priority order.

One is you have to have a tremendous amount of business acumen. You have to understand the business as well as all of our business people know it and at a very low level and finite level in the organization, so you understand what their challenges are, what problems they’re trying to solve and what the business is trying to do. Business acumen is huge.

The next skill is strong leadership skills. You have to be able to get up in front of the room and sell your vision and strategy and motivate and get people excited about the direction that you’re taking. There’s a certain amount of charisma that you need to be able to get up and get people excited about what you’re trying to do.

Lastly, you need some set of technical skills, given what we do. It’s important that you have a background in applications, whether that’s implementing global ERP systems, or Customer Relationship Management (CRM), or financials, whatever the case may be. It’s important that you’ve led an infrastructure organization and you understand what it takes to build and operate a data center, build out the infrastructure that you need, and that you have some idea of enterprise architecture and how to put all the pieces together.

Clearly, you can’t do all that alone. You have to get work done through others. So you have to be a really good coach and mentor, and understand what it takes to hire the best, keep them motivated and delegate to them so that they get excited about what they’re doing and continue to deliver great results to the business.

I’ve been in IT since 1980 and started as a mainframe Cobal programmer way back then and have worked at several large organizations and some smaller ones in a lot of different roles. It’s important that you get a variety of different experiences.

I’ve spent a lot of time doing international work as well as domestic work. I’ve had a blast in my entire career, but I would say I’ve had the most fun in my entire professional career in the last three years that I’ve been at ATK, and I’m not afraid to tell people that. It has truly been an awesome opportunity. What makes it exciting is the support that I get from our CEO, and the Board. It just makes the job of leading a transformation so much easier when you have that support. It’s important to build those relationships quickly, because you need that air cover when you’re trying to get things done. It just makes it a lot easier.