May 27, 2004 (04:05 PM EDT)
Tyco CIO Shows Off IT Progress, Outlines Goals
Read the Original Article at InformationWeek
Tyco International Ltd. CEO Edward Breen's mission over the past two years has been to restore shareholders' confidence in his scandal-shaken company, grow the company's five main subsidiaries through sales rather than acquisition, and clear up accounting discrepancies that have plagued Tyco in recent years. Recognizing that this was no normal to-do list, Breen a year ago launched a bold initiative to create Tyco's first-ever corporate CIO position and filled that spot with Dana Deasy, who has held CIO positions at both Siemens and General Motors Corp.
Deasy's marching orders: help Breen transform Tyco from a holding company that marginalized IT purely as a support function to an operating company that uses IT to gain competitive advantages. Not an easy task, compounded by the fact that one of Deasy's top priorities when he started in August was to hire IT executives to manage Tyco's Fire & Security, Plastics & Adhesives, and Engineered Products & Services businesses. The company's Electronics and Healthcare businesses had CIOs already. He interviewed candidates from Tyco's posh Manhattan offices as those confines were being packed up and moved to Princeton, N.J.
Deasy returned to New York on Thursday to address the CeBIT America information and communications technology show and discuss his road map for helping Breen meet his objectives. With Deasy were Tyco's four business-line CIOs--he hopes to fill the Engineered Products & Services CIO position this summer. The CIOs have plans for transforming IT into more of a strategic function within their business units. Good thing: The company expects to launch another growth spurt in 2006.
After months of studying what Tyco International needs from its IT organization, Deasy has decided to prioritize his own to-do list with plans to integrate the company's 140 individual networks, consolidate its 200 data centers, and create a Tyco Enterprise Directory for all 260,000 employees worldwide.
One of the company's secret weapons is its Tyco Global Network, built and operated by its Tyco Telecommunications Ltd. subsidiary. This network, which extends from coast to coast, provides Tyco International with bandwidth for its own use, in addition to plenty of bandwidth for Tyco Telecommunications' carrier customers, which include Korean telecom operating and broadband service supplier KT Corp. and TeliaSonera International Carrier, the leading carrier of IP traffic in the Nordic and Baltic Sea regions.
A large part of consolidating data centers is linked to consolidating the applications that run within those data centers. Tyco International has more than 500 payroll systems in North America alone. "And we have every ERP system imaginable," Deasy says. One of Tyco's challenges will be balancing the need to integrate and consolidate its various individual business units with the desire to allow these business units to continue autonomous operation. Deasy said Thursday, as he did in August, that he's not looking to pull every aspect of Tyco into a common enterprise-resource-planning or customer-relationship-management system, although he concedes that a common data warehouse would make sense from a corporate governance perspective.
Deasy says his greatest success thus far has been to consolidate sourcing, a move that's saved the company $75 million over the past year by bringing together software and other types of purchasing contracts. Tyco International, which reported $37 billion in sales last year, has likewise outsourced all of its Web-development work to India. Over the next year, Deasy will evaluate other areas the company can outsource.
Tyco has yet to decide on a technology for its upcoming Tyco Enterprise Directory, which will integrate employee information worldwide. The challenge is that individual subsidiaries aren't standardized on a directory technology, although Microsoft's Active Directory is the most predominant, Deasy says.
Much of Deasy's success will rest on his ability to coordinate with Tyco's different business subsidiaries. Tyco's Healthcare and Electronics businesses have benefited from business-level CIO leadership over the past several years. Healthcare, which last year recorded about $9 billion in sales, already has an integrated network as well as integrated systems for E-mail and payroll for its 85 manufacturing facilities worldwide.
"We want the [Healthcare group of businesses] to be able to make decisions based upon business needs, not on system limitations," says Steven McManama, VP and CIO at Tyco Healthcare. To do this, McManama has set three main priorities: setting up a more-efficient system for vendor-managed inventory, starting a radio-frequency identification program to comply with retail partner Wal-Mart Stores Inc.'s demands, and implementing product-life-cycle-management software.
These types of initiatives represent quite a change for Tyco, says Ron Vance, VP and CIO of Tyco Electronics Corp., which had about $10 billion in sales last year. "The old Tyco looked at IT as an expense to be controlled rather than an investment to be leveraged," he says.
While Tyco will focus on organic growth in the short term, Deasy has until 2006 to rein in Tyco's IT systems. After that, he says, the company wants to open the doors to future acquisitions. Adds Deasy, "IT doesn't want to be a bottleneck when this happens."