We decided that moving from regionally based IT teams to a unified, global IT team that will ultimately become integrated with the business' organizational structure would strike the right balance. It's important to point out that we don't look on this as "alignment" -- I believe IT leaders are leaving the alignment debate behind and moving toward making IT professionals a part of a singular business team. That broader move from regional to global IT teams allowed us to remain responsive to regional market needs while gaining the benefits of our global scale. Let's take a look at those key initiatives of working in close concert with the business, and operational excellence.
At Avnet, we strive for our business and IT teams to work as one, and we view all IT projects through a business lens. We want our IT team to essentially be a part of the business, although recognizing that the IT staff has specialized skill sets and approaches to solving challenges. To support this culture, we have regional IT leaders who work as integral members of the leadership teams of Avnet's regional business units and develop clear, business-focused IT plans. These regional IT plans are rolled into our overall global IT plan, which helps us determine common needs across the company and in parallel develop global IT initiatives with our global business leaders. As we examine our IT needs regionally and globally, projects are prioritized in line with business needs.
Additionally, we want to be transparent to each of Avnet's business units in terms of IT costs, resources, and results. Avnet's business units now receive an annual report on IT performance. This annual report includes how the IT team performed against its budget, service-level, and project-delivery commitments. We also provide key performance indicators such as actual IT spend as a percentage of gross profit (our preferred benchmark measurement for IT spending) and data on the actual ratio of IT innovation spend versus IT sustaining spend. The IT team also publishes a monthly scorecard that evaluates project commitments and system availability and is measured from the business' perspective with traffic-light indicators (red, yellow, and green). This cadence maps to our monthly business reporting cycle and enables the clear communication of performance. Perhaps even more important than our formal monthly and annual reports, we track and individually report out these metrics in real time.
For operational excellence, one of the goals of the unified IT team was to leverage information sharing and economies of scale. To facilitate this, we established a set of common processes and metrics. This allows us to view workload across the team and determine the best staffing model for global initiatives. It also makes it easier for us to work together cross-regionally on projects and ongoing system support.
For example, our teams recently collaborated on a business intelligence system that provides us with global functional expense-reporting data across each of Avnet's business units. This gives us a detailed and consistently measured view into our expenses around the world. We recently used the information provided by the system to update our automobile and mileage reimbursements policies in the United States to be more reflective of usage, resulting in a 30% reduction in associated U.S. expenses.
The decision to move from a regionally based IT team structure to a unified, global team may sound simple, but the actual implementation is both challenging and rewarding. It takes careful planning, constant communication, culture and process changes, and potentially years of effort until all the pieces are in place. However, by structuring our unified, global IT team to align with the global organizational structure of our business, we're better placed to meet the needs of our customers and partners, who are increasingly global in their outlook. We also ensure that we use our global scale to deliver systems that create a competitive differentiation for all of Avnet's businesses -- wherever in the world they're located.
Steve Phillips is senior VP and CIO for Avnet, a global technology distribution company. He's also a member of the Avnet executive board and a corporate officer.
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