By Monua Janah
Issue date: Sept. 9, 1996

hemicals companies, driven by increasing pressure to cut costs and time to market, are investing in global business applications while standardizing everything from desktop software packages to network protocols. Their aim: improving information flow and slashing the cost of maintaining their current mishmash of systems.

"Our biggest priority is standardization of the desktop computing environment to enable access to information worldwide, both via the Internet and the intranet," says John Schaefer, an IT director at Monsanto Co. in St. Louis. "That involves putting in place a knowledge management architecture, a communications infrastructure, and some global systems, such as SAP's R/3." Monsanto, DuPont, and Dow Chemical all say they're moving toward Microsoft's Windows NT as their main LAN server environment.

Rising Pressure
Chemicals companies aren't usually the biggest IT spenders or innovators. But several factors make the need for standardization and global infrastructure even more pressing than in other industries. Big chemicals companies are multinationals with research and development, manufacturing, and downstream subsidiaries scattered around the world. Their time-to-market pressures keep increasing as they face rising wages and stiffer competition from local competitors in regional markets.

"Chemicals are a truly international business, and what we're seeing is a movement toward standardizing, driven by enterprise applica- tions like SAP," says Dave Crow, a managing partner at Andersen Consulting, which acts as a business and systems integration consultant for several large chemicals companies.

But because they have diverse business units, some chemicals firms tread carefully when standardizing. At Monsanto, "we have a federated information technology model that enables a business unit to support applications unique to it, but share a common infrastructure to gain economies of scale," says Schaefer.

Outsourcing is also a major trend in the chemicals industry. One reason: Many chemicals companies are reengineering their business processes and end up bringing in systems integrators to provide both business reengineering and IT expertise. That effort can go hand-in-hand with implementation of new packages such as SAP's R/3.

"One of our highest priorities is the implementat ion of [R/3] to support simplified business processes," says Tom Carpenito, global information utility manager at DuPont Co. in Wilmington, Del.

Like big companies in other industries, multinational chemicals firms generally are relying less on custom applications and more on increasingly powerful off-the-shelf packages. "Our strategy is to use purchased applications whenever we can, and develop applications when necessary," says Carpenito. Besides SAP's software, DuPont uses Manugistics' business planning software. Carpenito notes that the global nature of the chemicals industry means there's a big need for common applications that support communication and collaboration worldwide.

But IS executives at big chemicals companies say there's no rush to migrate their business applications wholesale to client-server or to intranets. Instead, several say, vital business applications will continue to run on a combination of mainframe and midrange computers for several years. Some companies are rolling out SA P's R/2 mainframe suite worldwide, using the client-server R/3 for extra functionality or to support reengineered processes.

"We run a single, large SAP complex," says Dave Kepler, director of information applications at Dow Chemical Co. in Midland, Mich. Dow runs key business applications on a mainframe, and engineering and manufacturing systems mainly on Digital VAX computers. "We are evaluating R/3 in areas such as product safety and maintenance, and looking at implementing on R/3 functionality we don't currently have on R/2," Kepler adds.

But Dow's long-range goal is co-existence of R/2 and R/3. "We believe we are going to continue to leverage our investment in the R/2 mainframe environment," Kepler says. "What we are really trying to do is integrate that with client-server."

Dow Chemical is working with Andersen Consulting, its systems integrator, and SAP to develop R/2 and R/3 coexistence strategies for use by Dow--and possibly by other firms.

DuPont's situation is similar. Carpenito say s most mission-critical applications will continue to run under IBM mainframe MVS environments, or on midrange environments like Digital's VMS. But DuPont is implementing R/3 within specific businesses and plans to deploy the software broadly during the next three to five years, Carpenito adds.

Hot Trends
Chemicals firms are also tapping other technology trends such as intranets, data warehouses, and the shift to Microsoft's Windows NT operating system. Both DuPont and Dow are building intranets to provide enterprisewide access to information, and eventually to intranet-based applications. The idea is to facilitate collaborative work, no matter where employees are located.

To improve access to corporate data, most chemicals companies are building data warehouses by using client-server relational databases such as Oracle and Sybase. With faster access to data, making key decisions should be easier.

The chemicals industry is using servers running NT as part of the trend toward standardiz ation of desktop environments, shrink-wrapped applications, servers, network hardware, and protocols. "In the last six months, we've put in about 25,000 new personal computers and have also brought in NT servers with TCP/IP capability, so that everybody has the same standards around the world," says Dave Butler, Dow's director of information delivery.

Today, Butler says, Dow mostly uses NT servers for file, print, and mail services, with Digital's Alpha machines used as application servers. But, he adds, most new applications are Oracle database applications that run on NT.

Monsanto's Schaefer says, "we have a mix of several LAN environments and are gradually moving those to NT, with the desktop client being Windows 95 and NT."

DuPont is "preparing for a widespread deployment of Windows NT as a standard operating environment from desktop through server," says Carpenito.

DuPont runs a combination of Novell NetWare and NT, and it does not plan to dump NetWare. "NetWare will have less and less ma rket share in DuPont," Carpenito says, "but it will still be a player in our environment because of its widespread use now and because the economics don't justify a complete migration to NT." .

With large chemicals companies running a mix of TCP/IP, SNA, IPX, NetBIOS, AppleTalk, and other protocols, managing network traffic is labor-intensive. It's no surprise that the companies are looking to cut the number of protocols.

At DuPont, Carpenito says, simplifying network protocols is a top priority, with widespread deployment of TCP/IP a major goal. As client-server applications are deployed, demanding more bandwidth, DuPont also plans to evaluate high-speed LAN and WAN technologies such as asynchronous transfer mode. The company uses Cisco Systems routers and Network Equipment Technologies wide-area multiplexers as its network infrastructure, with shared hubs on the LANs to provide connectivity to servers and desktops.

As network traffic grows, DuPont will decide whether to keep its private WAN, whi ch it uses to run voice and data over the same circuits, or to move to a "virtual network" provided by a carrier such as AT&T or MCI.

Monsanto is deploying IP as its network protocol with "consistent hubbing and routing" LAN hardware companywide, says Schaefer. Kepler says Dow has brought in TCP/IP worldwide and is phasing out SNA. That's consistent with Dow's strategy of using common systems worldwide to support a multinational business. Says Kepler, "Collaborative computing requires common platforms and protocols, and that's what's driving our standardization around the world."

To view the IW 500 Chemicals chart in PDF format click here

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