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HOW GENERAL MOTORS IS COLLABORATING ONLINE
Designing a car is a complex and lengthy task. Take, for example, General Motors (GM). Each model created needs to go through a frontal crash test. So the company builds prototypes that cost about one million dollars for each car and tests how they react to frontal crash. GM crashes these cars, makes improvements, then makes new prototypes and crashes them again. There are other tests and more crashes. Even as late as the 1990s, GM crashed as many as 70 cars for each new model.
The information regarding a new design and its various tests, collected in these crashes and other tests, has to be shared among close to 20,000 designers and engineers in hundreds of divisions and departments at 14 GM design labs, some of which are located in different countries. In addition, communication and collaboration is needed with design engineers of the more than 1,000 key suppliers. All of these necessary communications slowed the design process and increased its cost. It took over four years to get a new model to the market.
GM, like its competitors, has been transforming itself into an e-business. This gradual transformation has been going on since the mid-1990s, when Internet band width increased sufficiently to allow Web collaboration. The first task was to examine over 7,000 existing legacy IT systems, reducing them to about 3,000, and making them Web-enabled. The EC system is centered on a computer-aided design (CAD) program from EDS (a large IT company, subsidiary of GM). This system, known as Unigraphics, allows 3-D design documents to be shared online by both the internal and external designers and engineers, all of whom are hooked up with the EDS software. In addition. Collaborative and Web-conferencing software tools, including Microsoft’s NetMeeting and EDS’s eVis, were added to enhance teamwork. These tools have radically changed the vehicle-review process.
To see how GM now collaborates with a supplier, take as an example a needed cost reduction of a new seat frame made by Johnson Control GM electronically sends its specifications for the seat to the vendor’s product data system. Johnson Control’s collaboration systems (eMatrix) is integrated with EDS’s In graphics. This integration allows joint searching, designing. Tooling, and testing of the seat frame in real time, expediting the process and cutting costs by more than 10 percent.
Another area of collaboration is that of crashing cars. Here designers need close collaboration with the test engineers. Using simulation, mathematical modeling, and a Web-based review process. GM is able now to electronically “Crash” cars rather than to do it physically.
Now it takes less than 18 months to bring a new car to market, compared to 4 or more years before, and at a much lower design cost. For example, 60 cars are now “Crashed” electronically, and only 10 are crashed physically. The shorter cycle time enables more new car models, providing GM with a competitive edge. All this has translated into profit. Despite the economic show down. GM’s revenues increased more than 6 percent in 2002. while its earnings in the second quarter of 2002 doubled that of 2001.
1. Why did it take GM over four years to design a new car?
2. Who collaborated with whom to reduce the time-to-market?
3. How has IT helped to cut the time-to-market?
Intranets: Invest First, Analyze Later?
The traditional approach to information systems projects is to analyze potential costs and benefits before deciding whether to develop the system. However for moderate investments in promising new technologies that could offer major benefits. Organizations may decide to do the financial analyses after the project is over. A number of companies took this latter approach in regard to intranet projects initiated prior to 1997.
Located in Strasburg. Virginia, Judd’s is a conservative, family-owned printing company that prints Time magazine, among other publications. Richard Warren. VP for IS. Pointed out that Judd’s “usually waits for technology to prove itself…. But with the Internet the benefits seemed so great that our decision proved to be a no-brainer.” Judd’s first implemented internet technology for communications to meet needs expressed by customers. After this it started building intranet of the significance of these applications to the company is the bandwidth that supports them. Judd’s increased the bandwidth by a magnitude of about 900 percent in the 1990s without cost-benefit analysis.
Eli Lilly & Company
A very large pharmaceutical company with headquarters in Indianapolis, Eli Lilly has a proactive attitude toward new technologies. It began exploring the potential of the Internet in 1993. Managers soon realized that, by using intranets, they could reduce many of the problems associated with developing applications on a wide variety of hardware platforms and networking configurations. Because the benefits were so obvious, the regular financial justification process was waived for intranet application development projects. The IS group that helps user departments develop and maintain intranet applications increased its staff from three to ten employees in 15 months.
Needham, a Dallas advertising agency, has offices in various parts of the country. Needham discovered that, in developing presentations for bids on new accounts, employees found it helpful to use materials from other employees’ presentations on similar projects. Unfortunately, it was very difficult to locate and then transfer relevant ,materials in different locations and different formats. After doing research on alternatives, the company identified intranet technology as the best potential solution.
Needham hired EDS to help develop the system. It started with one office in 1996 as a pilot site. Now part of DDB Needham, the company has a sophisticated corporate wide intranet and extranet in place. Although the investment was “substantial”, Needham did not do a detailed financial analysis before starting the project. David King, a managing partner explained. “the system will start paying for itself the first time an employee wins a new account because he had easy access to a co-worker’s information.”
Cadence Design Systems
Cadence is a consulting firm located in San Jose, California. It wanted to increase the productivity of its sales personnel by improving internal communications and sales training. It considered Lotus Notes but decided against it because of the costs. With the help of a consultant, it developed an internet system. Because the company reengineered its sales training process to work with the new system, the project took somewhat longer than usual.
International Data Corp., an IT research firm, helped cadence do an after-the-fact financial analysis. Initially the analysis calculated benefits based on employees meeting their full sales quotas. However, IDC later found that a more appropriate indicator was having new scales representatives meet half their quota. Startup costs were $280,000, average annual expenses were estimated at less than $400,000, and annual savings were projected at over $2.5 million. Barry Demak, director of sales, remarked, “we knew the economic justification…would be strong, but we were surprised the actual numbers were as high as they were.”
1. Where and under what circumstances is the “invest first, analyze later” approach appropriate? where and when is it inappropriate? Give specific examples of technologies and other circumstances.
2. How long do you think the “invest first , analyze later” approach will be appropriate for intranet projects? When (and why) will the emphasis shift to traditional project justification approaches? (Or has the shift already occurred?)
3. What are the risks of going into projects that have not received a through financial analysis? How can organization reduce these risks?
4. Based on the numbers provided for Cadence Design System’s intranet project, use a spread sheet to calculate the net present value of the project. Assume a 5-year life for the system.
Putting IT to Work at Home Depot
Home Depot is the world’s largest home-improvement retailer, a global company that is expanding rapidly (about 200 new stories every year). With over 1500 stories (mostly in the United States and Canada, and now expanding to other countries) and about 50,000 kinds of products in each store, the company is heavily dependent on It, Especially since it started to sell online.
To align its business and IT operations, Home Depot created a business and information service model, known as the Special Projects Support Team (SPST). This team collaborates both with the ISD and business colleagues on new projects, addressing a wide range of strategic occur at the intersection of business process. The team is composed of highly skilled employees. Actually, there are several teams, each with a director and mix of employees, depending on the project. For example, system developers, system administrators, security experts, and project managers can be on a team. The teams exist until the completion of a project; then they are dissolved and the members are assigned to new teams. All teams report to the SPST director, who reports to a VP of technology.
To ensure collaboration among end users, the ISD and the SPST created structured (formal) relationships. The basic idea is to combine organizational structure and process flow, which is designed to do the following:
• Achieve consensus across departmental boundaries with regard to strategic initiatives.
• Prioritize strategic initiatives.
• Bridge the gap between business concept an detailed specifications.
• Result in the lowest possible operational costs.
• Achieve consistently high acceptance levels by the end-user community.
• Comply with evolving legal guidelines.
• Define key financial elements (cost-benefit analysis, ROI, etc.).
• Identify and render key feedback points for project metrics.
• Support very high rates of change.
• Support the creation of multiple, simultaneous threads of work across disparate time lines.
• Promote known, predictable, and manageable work flow events, event sequences, and change management processes.
• Accommodate the highest possible levels of operational stability.
• Leverage the extensive code base, and leverage function and component reuse.
• Leverage Home Depot’s extensive infrastructure and IS resource base.
Online File W 15.11 shows how this kind of organization works for home depot’s e-commerce activites. There is a special EC steering committee which is connected to the CIO (who is a senior VP), to the Vp for marketing and advertising, and to the VP for merchandising (merchandising deals with procurement). The SPST is closely tied to the ISD, to marketing, and to merchandising. The data centre is shared with non-EC activities.
The SPST migrated to an e-commerce team in Aughust 2000 in order to construct a Website supporting a national catalog of products, which was completed in April 2001. (This catalog contains over 400,000 products from 11,000 vendors.) This project requires the collaboration of virtually every department in Home depot (e.g., in the figure). Also contracted services were involved. (the figure in online file W15.11 shows the work flow process.)
Since 2001, SPST has been continuously busy with Ec Intivatives, including improving the growing Home Depot online store. The cross departmental nature of the SPSt explains why it is an ideal structure to support the dyanamic, ever-changing work of the EC-related projects. The structure also consider the skills, strengtyhs, and the weeknesses of the It employees. The company offer both the online and offline training aimed at improving those skills. Home Depot is consistently ranked among the best places to work for IT employees.
1. Explain why the team based structure at Home Depot is so successful.
2. The structure means that the SPST reports to both marketing and technology. This is known as a matrix structure. What are the potential advantages and problems?
3. How is collaboration facilitated by IT in this case?
4. Why is the process flow important in this case?
Dartmouth College Goes Wireless
Dartmouth College, one of the oldest in United States (founded in 1769), was one of the first to embrace the wireless revolution. Operating and maintain a campuswide information system with wires is very difficult. Since there are 161 buildings with more than 1,000 rooms on campus. In 2000, the college introduced a campuswide wireless network that includes more than 500 Wi-Fi (wireless fidelity: see chapter 6) systems. By the end of 2002, the entire campus became a fully wireless, always connected community – a microcosm that provides a peek at what neighborhood and organizational life may look like for the general population in just a few years.
To transform a wired campus to a wireless one requires lots of money. A computer science professor who initiated the idea at Dartmouth in 1999 decided to solicit the help of alumni working at cisco systems. These alumni arranged for a donation of the initial system, and cisco then provided more equipment at a discount. (Cisco and other companies now make similar donations to many collages and universities, writing off the difference between the retail and the discount prices for an income tax benefit.)
As a pioneer in campuswide wireless, Dartmouth has made many innovative usuages of the system, some of which are the following:
• Students are developing new applications for the Wi-Fi. For eample, one student has applied for a patent on a personal-security device that pinpoints the location of the campus emergency services to one’s mobile device.
• Students no longer have to remember campus phone numbers, as their mobile devices have all the numbers and can be accessed any where on campus.
• Students primarily use laptop computers on the network. However, an increasing number of Internet-enabled PDAs and cell phones are used as well. The use of regular cell phones is on the decline on campus.
• An extensive messaging system is used by the students, who send SMSs (Short Message Services) to each other. Messages reach the recipients in a split second, any time, anywhere, as long as they are sent and received within the network’s coverage area.
• Usage of the Wi-Fi system is not confined just to messages, students can submit their class work by using the network, as well as watch streaming video and listen to Internet radio.
• An analysis of wireless traffic on campus showed how the new network is changing and shaping campus behavior patterns. For example, students log on in short bursts, about 16 minutes at a time, probably checking their messages. They tend to plan themselves in a few favourite spots (dorms, TV room, student centre, and on a shaded bench on the green) where they use their computers, and they rarely connect beyond those places.
• The student invented special complex wireless games that they play online.
• One student has written some code that calculates how far away a networked PDA user is from his or her next appointment, and then automatically adjusts the PDA’s reminder alarm schedule accordingly.
• Professors are using wireless-based teaching methods. For example, students armed with Handspring visor PDA’s equipped with Internet access cards, can evaluate material presented in class and can vote on a multiple-choice questionnaire relating to the presented material. Tabulated results are shown in seconds, promoting discussions. According to faculty, the system “makes students want to give answers,” thus significantly increasing participation.
• Faculty and students developed a special voice-over-IP application for PDAs and iPAQs that uses live two-way voice-over-IP chat.
1. In what ways is the Wi-Fi technology changing the Dartmouth students?
2. Some says that the wireless system will become part of the background of everybody’s life – that the mobile devices are just an afterthought. Explain.
3. Is the system contributing to improved learning, or just adding entertainment that may reduce the time available for studying? Debate your point of view with students who hold a different opinion.
4. What are the major benefits of the wireless system over the previous wire line one? Do you think wire line systems will disappear from campus disappear from campus one day? (Do some research on the topic.)