Industrial integration

WHEN CTO PHYLLIS MICHAELIDES took the helm of megaconglomerate Textron two-and-a-half years ago, she stared across a sea of software with more tentacles than a jellyfish.

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Textron's history of acquisitions and global manufacturing operations that span E-Z-GO golf carts, Cessna Aircraft, and industrial fasteners manifested as an IT hodgepodge. The Providence, R.I.-based corporate giant was swimming in legacy and silo-style packaged applications, disconnected directories, innumerable data formats and definitions, and rigid, point-to-point application connections -- not to mention the cost of maintaining it all.

Taming this "technical spaghetti" first required getting Textron managers thinking with an "enterprise mind" by selling business managers on large-scale integration and working to articulate business processes up front, Michaelides says. Only then did an IT plan emerge to loosely tie systems into a central architecture using a combination of messaging middleware, a unified LDAP-based directory, an enterprisewide portal, and a shared datacenter.

"We really wanted to have one executing company enterprise, rather than a collection of companies. And this gave our project a business impetus and a good reason to connect things," says Michaelides, who is currently in the middle of the massive integration project.

Integration mandate

Harnessing Textron's far-flung software empire into one cohesive, manageable infrastructure is indicative -- on a large scale -- of the type of challenges facing manufacturing CTOs as software integration moves up the IT priority ladder.

An AMR Research report released in May reveals manufacturing companies are spending an average of $1.9 million annually on integration projects. Of that amount, 79 percent is plunked down on internal EAI, while 21 percent is allocated for business-to-business integration with partners and suppliers. The highest tier manufacturers are forking out an average of $3 million per year on integration, the research indicates.

Meanwhile, the widespread acceptance of XML as well as emerging standards for Web services such as SOAP, UDDI, and WSDL might remove some of the trepidation about launching complex projects. "We're already using XML across the board and we will eventually use the Web services standards as they mature," says Michaelides, whose first technical integration chore involved cleansing all data so it mapped across systems.

Cutting costs

There are compelling reasons for CTOs to jump on the bandwagon. Integrating systems is a surefire way to leverage their existing IT assets. Plus, supply-chain automation, EAI, and b-to-b each promise ways to streamline internal and external operations, drive efficiencies, and lower costs -- benefits made all the more attractive to CEOs in today's trying economic times.

Six years ago it took General Motors 48 to 50 months to design and produce a new vehicle, from paper blueprint to assembly line. The Detroit automotive giant has cut that time to 18 months by integrating systems including workflow and business processes, digitizing design, and engineering development.

"This has made a huge difference because we can be more responsive to the marketplace," says General Motors CTO Tony Scott. "If you have 100 engineers working on a vehicle design for 18 months vs. 48 months, there's a lot more opportunity to produce more interesting cars."

But not every manufacturer is on the scale of a GM. Integration today remains difficult, especially at manufacturing firms where the legacy baggage is heavy, work is very project-oriented, and -- in some industries such as aerospace -- the company is highly regulated. All this brings a notoriously high price tag, leaving CTOs at many manufacturers under the gun to demonstrate proven ROI, according to Mike Burkett, research director at AMR Research in Boston.

"The early [integration] adopters are high-tech manufacturers," Burkett says. "The other end of the spectrum is heavy industrial manufacturing, and aerospace and defense. They're trying to move ahead, but need to transition from very old legacy systems to new technology. This is a major integration nightmare."

CTOs within the traditional spheres of manufacturing also face an added cultural hurdle: convincing business managers that there can be as much corporate value in smooth information flow across systems as there is in a new piece of machinery, according to Stan Cort, a professor of marketing at the Weatherhead School of Management at Case Western Reserve University in Cleveland.

"A lot of manufacturers want to hear it clink and clank, to touch it to see that it has value," says Cort, who specializes in the profitable design and management of targeted supply chains and distribution channels. "What many of them don't see is how you can significantly reduce your costs by cutting down the on the number of IT transactions needed across systems. Demonstrating this is a big opportunity for a CTO."

Cort argues that integration also affords CTOs a chance to position IT as a revenue generator for their companies by using information locked within a supply chain or logistics system as the foundation for a new business. As an example, he cites shipping giants FedEx and UPS, both of which have exploited real-time data on the location of their delivery trucks to carve out whole new markets in inventory tracking and management.

Driving standards

Beyond cutting down vehicle design time, integration and real-time information sharing has helped GM meet primary business objectives of maintaining high-volume manufacturing across a range of affordable vehicle types, according to Scott. Another impetus for connectivity is economics: It is no longer financially feasible to maintain a separate IT infrastructure for Buicks and another for Cadillacs, he says.

GM outsources all of its IT initiatives, including integration and middleware projects, with former subsidiary EDS handling much of the firm's procurement and implementation. Outsourcing gives GM the flexibility to go after best of breed and "light up" projects quickly, Scott says.

This business model also colors the way Scott approaches the CTO job. He spends more time evaluating and pushing standards internally and with suppliers and dealers -- something central to all integration projects -- and less time courting technology vendors.

"Because we procure externally, I can focus on strong standards, business processes, and methodologies," says Scott, who outlines the architecture for the hired guns to execute on.

The evaluation of business processes, transaction needs, and workflow remains a starting point for most successful integration projects and the place where the CTO and business managers often intersect, according to industry experts.

Tom Gernon, CIO of pharmaceutical instruments and consumables manufacturer PerkinElmer, recently completed the integration of the company's electronic storefront to its back-end ERP and other systems via webMethods' EAI platform.

The biggest challenge for Gernon involved aggregating data in disparate systems and then standardizing on common data definitions. The work became a team effort, with Gernon creating cross-functional groups from IT, business, and operations departments to settle on common semantics and processes last year. Wellesley, Mass.-based PerkinElmer also contracted with systems integrator Molecular, in Watertown, Mass., to help design the infrastructure and drive the project, which began in August 2001 and went live in November 2001.

"We are doing a much tighter integration with our business teams now," Gernon says. "Our structure has changed to having a strong focus on applications in IT and to aligning our many organizations along function lines. Our sales group knows who their IT counterparts are."

Michaelides embarked on a similar crusade at Textron. She created "centers of excellence" teams within the company to coalesce around the idea of an interconnected enterprise and eliminate the repetition of effort across departments.

Among the integration details the centers of excellence have ironed out are plans to move away from API adapters to a more generic approach of storing metadata that will service particular applications. They are completing work on a single LDAP directory for authentication that will eventually be extended to customers and partners.

"The main goal is about best-practices, making sure that everyone is involved, that there is documentation on projects and reuse of code," Michaelides says. "It's a challenge educating the company about middleware. But we realize that we can be better than the sum of our parts."