The three-pronged transformation strategy driving innovation at PPG

As CIOs know, a highly acquisitive company will reach an inflection point when years of technology proliferation begin to stymie future growth. For this reason, paying down technical debt while innovating and supporting growth is one of the greatest challenges for the modern CIO. Bhaskar Ramachandran, CIO of PPG, which provides specialty paints to a large network of body shops and retail outlets, details how the company uses a platform, consolidation, and cloud-only approach to modernization.

Why is there a need for transformation at PPG?

We’re a 142-year-old company that has paid dividends for 125 years; Wall Street calls us a dividend aristocrat. We have a lot of pride in our legacy, but it’s resulted in some technical debt. Over the last 20 years, we’ve completed over 60 acquisitions and divestitures, which have been very good for our growth, but that’s also left us with more technical complexity. For example, with several dozen ERPs and general ledgers, and no enterprise-wide, standard process definitions of things as simple as cost categories, a finance system with a common information model upgrade becomes a very big effort.

How are you approaching this modernization effort?

To consolidate and modernize our technology, we focus on three transformations: customer facing, back office, and architecture. With the customer, we’re taking a platform approach. For example, we’re moving to a single platform for customer experience technology. We have nine business units, some B2C and some B2B, but regardless of the business unit or customer, we use the same set of digital technologies across the enterprise. The products that sit on top of the common platform provide the differentiation that the business units need to serve their unique customer needs.  

For the back office, we’re consolidating several dozen ERP systems into a single instance supported by a global process template for the entire enterprise, starting with finance processes. This is a multi-year initiative.

For the technical architecture, we use a cloud-only strategy. I like cloud-only more than cloud-first because there’s no room for interpretation. I tell my team and business partners that the point is the flexibility, not the cloud. Our business will continue to have the appetite for mergers, acquisitions, and divestitures, so how do we accommodate these integration needs, while still providing product innovation and cost management? A cloud-only architecture allows us to operate in all these modes.

What new solutions is this modernized tech stack allowing you to deliver?

Our digital product organization, which reports into IT, is developing new solutions that both drive revenue and impact the market. These products are significantly increasing our digital revenue quarter over quarter.

For example, as a coatings company, we support more than 45,000 auto body shops in the US. Let’s say you have a fender bender in your 10-year-old car, and you take it to a body shop to have the bumper re-painted. The body shop can’t use the manufacturer’s paint, because it’ll look too fresh for the rest of the car. So how do you match the color? Traditionally, an experienced painter will try 10 different formulations before arriving at the right paint match.

Our solution is a software-enabled photo spectrometer that measures the color at multiple points, angles, and lighting, and comes up with the recommended formula, which now just needs to be mixed, or we can even do that in another automated machine. Instead of painting 10 test panels, the body shop just needs two. And this requires minimal experience.

Another example is when we supply to an auto OEM customer, it can take a full day to make a batch of paint and then a few days of inspection to make sure it’s the right color. Our goal to match that current batch takes a long time to achieve, so to speed this up, we use AI. We used to make eight different adjustments to arrive at the exact “golden batch,” but with our new AI solution, we can get there with only one or two adjustments. In other words, we’ve both increased the factory throughput and reduced the overhead.

How did you prepare teams for this transformation?

We have frontline IT teams embedded with the business. This way, we no longer go to the business to ask for requirements, because if we do, we’ve already lost. The principal purpose for frontline teams is to understand the needs of the business intuitively, and then bring in the delivery focused COE teams, who do the execution. The delivery teams work with the frontline team, not directly with the business. That’s how we execute quickly.

We also have a small team of IT change management people. We’re approximately a 2,000-person IT organization across several time zones that undergoes near constant change. This team of former consultants thinks about how to change the IT organization itself. For example, to support our cloud-only approach, the change management team created learning curricula appropriate to the work we do. They tell our team that if you want to be a part of the cloud COE, here is what you need to learn.

How did you get the IT team onboard for your cloud-only approach?

We were a traditional IT team running eight data centers around the world. We’ve already shut down four and 78% of our systems are now completely on the cloud. We’re on a quest to get to well north of 90% by the end of this year, which will be a three-year journey. But our success measurement is not migration of workloads to the cloud. It’s shutting down on-prem applications. The cloud migration is not complete until the last data center is shut down.

When the team first heard about the cloud-only plan, they were resistant because it represented such a major change. Then we talked about why the cloud approach is not only good for the financials and the business, but good for them. I suggested they do an online job query for data center roles, outside of the hyperscalers, and see how many jobs there are.

What is your target architecture?

We have enterprise architecture and solution architecture teams, but the North Star to me isn’t architecture, it’s our ability to respond to the needs of the business. While I’m committed to cloud only, I’m less dogmatic about other aspects of the architecture. With technology always evolving, a rigid approach to architecture is pointless. If the proliferation of systems and technical debt is keeping us from attaining our business goals, then we need to change that. Our business leaders have lived through legacy debt; they were a part of it, so they understand it.

What advice do you have for CIOs working to reduce technical debt?

You need to make the right business case to the right audience. When I talk to P&L leaders of the various business units, it’s about how we can reduce the time to market for next product or service, and scale it as needed without significant capital investment or elimination of business downtimes for periodic hardware refreshes. When I talk to the board, it’s about risk reduction, since the cloud offers a much better control plane for enforcing governance practices. And when I talk to our CFO, the case for the cloud is that I’ll no longer need to maintain eight data centers around the world, so I won’t come to you every year with a capital request. The IT organization is much less dependent on capital. What CFO wouldn’t respond positively to that?