The following case study/profile was originally published by BI Review. For similar industry implementations and profiles please visit BI Review's Web site.
For years we have been hearing about the advent of the "real-time" enterprise. In the hands of various proponents, the term can mean anything from instant data access, to business activity monitoring, to rule-driven event management. Progressively, these capabilities should deliver outcomes that stretch all the way from optimized upstream supply-chain planning and execution to instant customer service. In support of such outcomes, technology vendors use the term to support product sales of enterprise service buses, portals, data, content management, analytics, and business intelligence platforms.
In the post-Y2K world, corporations are trying to react faster by leveraging investments in enterprise resource planning systems and other data resources. Technologists will clamor about improvements in capacity and throughput, but business solutions are not solely dependent on these variables. "Real time implies speed, but that isn't always the most important part of the solution," says Scott Hicar, CIO at computer hard drive manufacturer Maxtor. Maxtor is a $4 billion company that has traditionally competed in a commoditized market of fast turning, short-lifecycle products. As such, Maxtor is working upstream to gain rapid visibility into customer demand processes, trying to match the customer forecast with a mix of available finished goods and the factory build schedule. "For that we're really trying to establish what the right real time is," Hicar says. "Is it a forecast signal? Is it daily, weekly or net change?" All of these signals flow in silos of different processes at different intervals. As it turns out, the discussion is about much more than ratcheting up the speed at which data flows.
A deficiency of the real-time promise is that it does not usually account for business dynamics that occur outside the scope of transactional data. Eight years ago when Maxtor started down the path of optimizing transactional processing with ERP investments, the company was primarily a PC OEM provider and distribution channel business. "We modeled ourselves by saying, 'Dell is our toughest customer, they move the fastest and expect the most,'" Hicar says. "So, we said if we could meet Dell's expectations we could do better than the rest of the market." Today, Maxtor serves four or five big market opportunities that include set-top DVRs, branded consumer products and personal audio devices. All these markets have different levers and cyclical patterns of demand, which leads to sets of dependencies that cannot be uniformly accelerated. To better illustrate this, Hicar borrowed an idea from an AMR Research report on collaborative networks, and charted the linkages between Maxtor's own production, inventory and suppliers (for an example, see sidebar, Node by Node). "The goal of a collaborative network in our case is to get from one node on the network to another with accurate crisp information."
Hicar sees real time as a process function in which each process has its own discrete, natural gates, whether they are time-based, technology generated or people generated. "There is a globe and 24 hours, so you want to map out a process and observe what the timing is today, and what organization, process or technology change you can undertake to accelerate that state. Equally important is understanding the perceived versus real business benefits of accelerating the process to the next set of metrics."
Hicar will be the first to say this is a learning process for all involved. When his team originally set about accelerating inventory management years ago, it was told by the business that it wanted updated reports every hour. "We didn't know any better," he concedes. "One of the first things you learn is you can accelerate information faster than people can consume it, and that makes it wrong-time information. You learn that you need action information based on the way people make decisions." At Maxtor, orders for Japan, for example, go through a separate sales office, which operates at a different speed and on different cycles. "We learned to look for the business benefit of accelerated information, what it gives you that you didn't have before. You go through a 12-hour process and see that within the process is a human decision, or two or three. Right at those points we want to get you the best information we can to help you make the best decision you can. In the end, you want to make people successful and there are a lot of interconnected processes to consider."
Not only that, a change in a partner process could quickly invalidate what was assumed to be the correct information flow between partners. "It doesn't take much," says the CIO. "A new customer selling model, or new ways to deploy inventory outside a customer's manufacturing facility might look identical to a transaction system, but is totally different than the terms and conditions under which the business model is set up."
At Maxtor, a centralized information technology organization benefits from early work that ended in a single enterprise instance of SAP ERP. "That solves a lot of problems all by itself in terms of data consistency and availability," Hicar says. "A lot of basic information runs daily and a lot of what were monthly processes now run weekly." But accuracy is the hardest component to maintain, and at Maxtor that responsibility lies mostly in IT. Truly, this is the case at many or most organizations, though analysts and consultants generally preach business ownership of data. "I would say it works for us because over time the business wants to pay attention to output data. In a perfect world it would be different, but as a centralized organization we are very aware of data accuracy and pay attention to where we have drifted. We're happy to take that responsibility." In any case, warns the CIO, if data accuracy cannot be assured and maintained, don't even attempt the undertaking. Instead, go back, narrow the scope and redefine the mission of the real-time initiative. "Don't try something that will fail, and don't let it fail because of data accuracy. Once you start a process of failing it will be more difficult to gain confidence." Awareness of such issues can be invaluable in discussions with the customer. "We can go back to certain geographies, go back to the network map and build flexibility into the system."
CIO as Salesman
Most people don't realize that the CIO's position is largely a sales job, Hicar says. "My guys know that I gave up my technical skills years ago and that I might be the least technical guy in my office. My job, when it's going really well, is to educate our senior executives on how to leverage technology to the company's advantage." Like any good CIO, he also knows the limits of their interest. In fact, Hicar maintains a list of "exit words," terms like "middleware," "XML," and "RosettaNet," which are likely to blunt the conversation. "You keep your priorities in order," he says. "The business wants to grow market share, product position and the customer base. You want to be an enabler, not a disabler." CIOs are never heroes by themselves, a role he doesn't mind. Interestingly, he finds that providing one executive with previously unavailable information generates interest from others, spreading awareness of data projects and encouraging input on key business pain points. As executive questions - even from incomplete data - spread down to the sales force, for example, the entire organization becomes more aware of metrics and performance generally.
As head of a service organization, Hicar engages at a couple of levels, first with operational executives through their planning and staff meetings and reviews. The real meat of what happens is in his business/IT liaison role. It is here where the business analyst - who might have responsibility for fulfillment of the outbound supply chain - meets with an IT person responsible to that organization. "They meet with operational managers in those businesses and that's where they get their priorities straight." In Hicar's mind, where the working level relationships are strong, he'll have good traction with senior executives. "For a CIO, you'll win or lose at the operational level, and when you win it makes for a strong relationship across all fronts."
Hicar doesn't see an end to the challenge. "The market has changed so much that some of the first things we built have become relatively useless now," meaning that even early adopters will need to readdress their strategy from time to time. What was once a single industry with a single set of markets has evolved into a complex model with multiple industries and markets, each with its own dynamics and opportunities to compete. "That's the challenge of the job because business intelligence is a job for life. You build a fast car and then the course changes. It's like a total quality model in that you always have a parade of opportunities and you attack the biggest one. There's always another right behind it."
The course may be changing for Maxtor as well. After materials for this article were gathered, industry competitor Seagate Technology publicly proposed an acquisition of Maxtor. Whether or not that happens, the industry will continue to consolidate and new challenges will emerge. For like-minded executives, there will always be one globe, 24 hours, choices to be made and changes to be accelerated - at their proper speed, of course.
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