The New Reality for Customer Engagement
Dana Deasy's first morning on the job as chief information officer at Tyco International Ltd. was a lonely one. The conglomerate had operations on six continents, sales of more than $35 billion, and zero corporate information-technology staff. "When I showed up, there was not a single IT person to turn to," says Deasy, who joined the company in July 2003. His job was to build a corporate information-technology organization from scratch.
New management, led by Edward Breen, former president and chief operating officer at Motorola Inc., and overseen by a high-profile independent board, is remaking scandal-scarred Tyco. The holding company that was loosely assembled from hundreds of acquisitions is morphing into an operating company that hopes to leverage its size and shared assets around the globe.
"The first thing I did was pick up the phone and introduce myself to the various presidents of our business segments so I could get a little history on how things got done around here," says Deasy, who must align his nascent organization with a broad array of different players and plans.
Deasy's new corporate shop needs to work with Tyco's five heterogeneous business segmentseach a going concern with its own products, culture, strategy and level of internal cohesivenessas the segments shift their focus from acquisition to organic growth. It also has to support other corporate functions, such as human resources and global operations, as they come into being for the first time. And all this comes as Tyco, perhaps best known for former chief executive Dennis Kozlowski's scandalous compensation and decadent lifestyle, creates its first global governance systems. "I am creating an organization that never existed, as all the functions of the corporation are being created, and aligning it back out to businesses that are changing too," says Deasy.
Tyco's goal: to capture the efficiencies of an integrated operation. That means using its size to negotiate better prices on goods and services, and reducing its investment in real estate by sharing facilities instead of maintaining multiple offices in one city. It also means sharing information, processes and practices across the company, and using shared IT services whenever feasible. "All these areas have a significant IT need associated with them," says Naren Gursahaney, Tyco's senior vice president of operational excellence. "We buy nearly $16 billion worth of stuff every year, and to negotiate those purchases we have to share quality information in close to real timewe need 260,000 people buying off a new contract. We can't do that now."
Tyco also wants to pay down its $17 billion in debt and invest in new-product development, so it's aiming to free $3 billion in cash from its operating budget by 2006. For the 12 months ended June 30, 2004, Tyco had an operating profit of $3.1 billion on revenue of $40.3 billion.
Company | Tyco International Ltd.
Corporate Headquarters | Bermuda
U.S. Corporate Headquarters | Princeton, N.J.
Senior Vice President and CIO | Dana Deasy
Revenues | $40.3 billion (trailing twelve months)
Profits | $3.1 billion (TTM)
Stock performance | 52 week high-low: $33.26$20.30 Oct. 8: $30.64
Source: Tyco;Yahoo! Finance
Aligning information technology with all of these moving parts is "critical" to Tyco's success, says Gursahaney, the former chief executive of GE Medical Systems (now GE Healthcare Technologies) in Asia and the Pacific, who now runs Tyco's Six Sigma, strategic sourcing, real estate and working capital initiatives. "IT is a huge enabler of what we are trying to do," he says. "It would be destructive for them to be off doing something independent, because it would dilute the financial and people resources, and the focus of our management team."
To that end, Deasy is putting in the building blocks for companywide communication and working to foster a common culture where none has existed before. The new Tyco will remain decentralized, rather than run from corporate headquarters, but the level of shared resources and human interaction will increase dramatically. Deasy has unveiled an ambitious plan, called the "IT Vision and Roadmap," which defines his course for the next three years. It identifies five "must-do" projects, along with nine "selected opportunities" that involve business segments according to their particular needs and circumstances.
The must-do list is not a litany of sexy tech projects. Instead, it includes foundational and cultural items, things Deasy says "any good corporate CIO should do," including enhancing network security, ensuring business continuity, providing thought leadership across the company, creating uniform policies and procedures, and rationalizing vendor management. Deasy calls this list "non-negotiable."
The list of opportunities involves the wiring, plumbing and procedures that will make those five must-do's possible. Among them: the One Tyco Network, a global network for companywide communications and applications; an Enterprise Directory to replace about 150 current directories and allow people across Tyco to find each other; an outsourcing strategy; data-center consolidation; IT asset management, for tracking and standardizing equipment and software; a global finance assessment to look for chances for better reporting and more financial flexibility; annual strategic planning and portfolio-management programs; centralized IT program management; and identifying better ways and means of sharing information and knowledge across the company.
Focus was a fundamental issue. "We didn't want to simply assume that we need one network, or one corporate directory," says Deasy, although those projects did end up as priorities. "We need the basic plumbing and connectivity, so there is opportunity in infrastructure. We went after areas where we could establish common building blocks."
It was important to know what not to spend on, too. "We've never done anything together. No systems are tied together. So what value is there in assessing the application landscape? We are not about to go build the mother of all ERP systems." That would be too costly and time-consuming; instead, Deasy will use the global financial assessment on the "opportunities" list to find ways to make financial reporting more efficient.
The roadmap was announced in April. Getting to that point was a daunting journey, and a huge job remains. But Deasy, the former chief information officer for Siemens AG's North and South American operations, says the challenge, when offered, was irresistible. "My God, why wouldn't you come? It's a green field, an enormous start-up."
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