Put Your CIO through the Hoops
January 1 2003 by Doug Bartholomew
Is your company paying Ferrari prices for computers and software that run like a 10-year-old Hyundai? Is your information systems staff unresponsive? Is Linux worth the plunge? What was the deal with that expensive new software that was supposed to-but never quite did-supercharge your order management? For the debut of our new feature, Chief Executive posed some of your most pressing tech questions to a practicing CIO.
Some of our questions were so pressing-or depressing, depending on your point of view-that more than one CIO turned down the chance to bare all. In declining, one technology honcho noted that our questions “sound just like the ones our CEO has asked me, and unfortunately, he never liked my answers.”
Our inaugural oracle is Peter Janak, vice president and CIO at Delphi, a $26.1 billion maker of automotive components in Troy, Mich. Janak manages information systems and global communications for Delphi’s 179 manufacturing plants in 41 countries, plus its 17 technical and engineering centers worldwide.
Q: What are you doing to help Delphi cut costs?
Over the years, we’ve been a bit sloppy, letting different parts of the business get their own applications and put them up on different servers. The same thing has happened with data storage. So we’ve instituted a consolidation program to save on hardware and software licenses and on support costs.
One example is our email systems. Under the prior, more decentralized structure, regions and divisions determined which email platform to deploy. Lotus Notes was the most common, but several others were also being used. We decided to centralize on Microsoft Exchange/ Outlook. Doing so has decreased our licensing fees, diminished problems sharing messages between disparate systems and simplified user support.
Another way we’re trying to reduce costs is by looking at our legacy systems. Most large companies have more than one system performing the same function. When Delphi separated from General Motors in 1999, our seven divisions relied on several thousand legacy systems, hundreds of different databases and countless business technology processes across the globe. We undertook a massive program to centralize these various systems on a common enterprise resource planning system built around SAP software. Not only does the new software provide a leap in functionality, it also offers better integration, more flexibility and lower licensing fees and support costs.
We’re also considering moving some development and operational support offshore, to countries such as India or China.
Q: Are there any nonessential projects that can be curtailed or eliminated altogether?
No, we do a pretty stringent scrub on these things before we go out and launch them. Delphi’s mission is to be its customers’ best supplier, so when they require something or there are legal requirements, it gets implemented.
All other discretionary programs undergo a process of business case development and review. A primary consideration, especially in the current environment, is whether the investment will yield a financial return in about two years. Some things are requested that we will not do. A recent example of a program that management was eager to pursue, but which did not stand up to analysis, was a customer-relationship management system.
Q: What about those service problems we had a while back when the new enterprise resource planning system was installed? Has all that been straightened out?
We haven’t had any major disasters. Usually when there is a problem, and you look behind the curtain, it’s not an information technology problem but a management problem.
With ERP systems, the problems usually arise in the business process area. Most often it’s because people haven’t been trained adequately, so when you go live, they are left fumbling around. People need to understand that the business and processes are changing. Also, with ERP you have to keep the data up to date or you’ll have problems.
We have found that SAP is extremely flexible. It will support any kind of process you want it to.
Q: Speaking of new software, can we save money by moving from Microsoft to Linux?
We negotiated a new contract with Microsoft a year ago. Microsoft is so embedded in our business-both on the desktop and on servers-that we will tolerate a reasonable increase in cost [rather than switch systems]. At some point we may move some things to Linux, but you have to take the cost of conversion into account. There definitely would be a cost spike.
Q: Is mobile computing really that essential?
It’s essential and indispensable. Delphi is a very global company with a mobile management staff. We insist that our employees have access to our network anywhere in the world. An executive can dial in on his PC and get his email. If you look at the power of getting information quickly and being able to respond quickly to business issues that arise, it’s very important to the company to have this kind of access.
Q: Are staffing levels where they need to be?
We let some Delphi employees go, primarily those associated with our older legacy systems. I may slow a couple of programs down, and if so we will also cut our contractor support for them. Overall, we’ve cut way back on our use of contractors. We’ve gone from buying a certain service at a certain price to where we can manage the service better than they can at a lower cost.
Q: We have one new division and some recent acquisitions. Are the old systems meshing with the new ones?
Delphi’s aftermarket division was created a year-and-a-half ago from some existing businesses and some acquisitions that were meshed in, and it will do $2 billion this year. The division needs common business processes and some new systems at the same time. We’re using ebusiness techniques to establish electronic catalogs. Customers can find parts and order them online, and follow their order until it’s delivered. To grow the business, it’s essential that we continue to invest in this technology.
Q: How else are you helping us grow the business?
Clearly, information technology has to support the business. At the same time, enlightened business people recognize the power of information technology. In the automotive industry, we get a large number of customer requests for quotes. We’re able to respond quickly by preparing our analysis and building up the price quote that way. These tools really enhance sales opportunities.
Q: How do you plan to reduce expenses while helping us grow?
It’s a balancing act. Companies and management teams with a myopic view of the world curtail spending in ridiculous ways. I’m lucky in that Delphi’s executive team is technology oriented and understands its benefits. I’m doing our 2003 budget right now, and it’s a very iterative process. Unfortunately, most of the costs of technology show up in my budget, but the savings usually show up in somebody else’s department. At the end of the day, though, if information technology doesn’t improve profitability, then it’s not worth it.