Electronics: Industry Bellwether

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September 22, 1997

ELECTRONICS:
Industry Bellwether

Chip-makers' year 2000 solutions offer new insights on the future of computing
By Rich Levin
IW 500 slug he fast-moving semiconductor sector has become one of the industry's best barometers of IT trends and management techniques. In fact, scrutinizing semiconductor IT provides an education in how to leverage new technologies-and solve problems of crisis proportions.
Take the year 2000 problem. There are only 27 months until D-Day, yet many IT shops around the globe continue to operate without a satisfactory plan of atta ck. Many with year 2000 solutions under way started planning their efforts only within the last two years. Yet most of the major semiconductor manufacturers have all but completed successful implementations of their year 2000 remedies, some of which were undertaken more than five years ago.
The same can be said for today's new technologies and the accelerated pace of change now washing over IT. The semiconductor sector is tackling Internet integration, distributed computing, and supply-chain management as a way of making their businesses more streamlined and competitive.
"Technologically oriented companies have a higher understanding of IT, and it transcends company management," says Alden Munson, senior VP and group executive at Litton Industries Inc. in Woodland Hills, Calif., a $3.7 billion diversified electronics manufacturer.
"With the year 2000 issue, you had division managers that understood the problem, and knew better than to hope that a magic floppy would somehow appear someday if they w aited long enough," Munson says. "There was a commitment for action that grew out of a more in-depth understanding of the problem."
Like others in their sector, Litton IT executives began studying the year 2000 problem more than five years ago. "In 1992, we took an initiative to look at the largest divisions with huge Cobol legacy systems," says Jeff Calisch, Litton's director of corporate IT. "We studied what it would cost, and what it would change. And in the last three years, all new applications were designed to be totally year 2000- compliant."
Reengineering with new applications has emerged as the primary mechanism semiconductor manufacturers use to solve 80% of their year 2000 problems. Over the past year nearly all of the major semiconductor manufacturers have deployed massive, fast-track implementations of general business solutions from vendors such as SAP, PeopleSoft, Baan, and J.D. Edwards.
Millennium Solution
If the semiconductor industry continues its tradition of bein g a bellwether of IT, it's likely that migrations from legacy systems to modern client-server and distributed ERP systems will end up being the preferred millennium solution.
IT executives say these large-scale reengineering efforts also deliver an unanticipated benefit beyond resolving the millennium bug: They bring with them the potential to more easily integrate the various customer, supplier, employee, and competitor links in the supply chain. This is a crucial advantage for electronics manufacturers sharing design and manufacturing responsibilities for ever-increasing portions of their customers' finished products. The increased workload requires manufacturers to build an infrastructure that supports collaboration and data access beyond corporate boundaries.
"We're part of that population that's 80% reengineered," says Pallab Chatterjee, Texas Instruments' new CIO. The semiconductor industry is getting behind SAP R/3 en masse. When all partners have SAP in place, it's possible to build intelligen t planning systems between corporations, Chatterjee says.
Moving To SAP
Texas Instruments is transferring virtually all of its major systems to an SAP framework. This follows hot on the heels of similar moves by competitor Motorola, the $27 billion semiconductor and electronics manufacturer headquartered in Schaumburg, Ill. Motorola last year implemented SAP to replace most of its legacy core systems, including procurement, human resources, payroll, financial, and customer order processing.
Litton has embarked on similar initiatives, displacing legacy systems with large PeopleSoft, Baan, and J.D. Edwards implementations throughout its many autonomous divisions, and for many of the same reasons. "We're addressing year 2000 by migrating away from mainframe," says Sergio Cortez, program manager for corporate standards at Litton.
Harris Corp. is also migrating. But the $3.5 billion manufacturer of semiconductors, electronics, and communications systems is heading to a distinctly different destination. Harris spent the past year building a completely homogeneous network that company officials believe will deliver broader levels of interoperability than simply standardizing on enterprise resource planning (ERP) solutions like SAP. The project will remain an IT priority for Harris for at least the next year.
"The primary focus for the past 12 months has been to get the infrastructure totally consistent, where we had a common desktop front office, back office, and mail system," says Herb McCauley, Harris' VP and general manager of telecommunications systems and services in Melbourne, Fla. Harris' goal is to let employees communicate within and across business units and interact with customers and suppliers.
To ensure interoperability across multiple business and application requirements, Harris chose systems that have the greatest market acceptance. Which systems fit the bill? "It's basically Microsoft," McCauley says dryly. "They've captured the desktop. It's Microsoft front office, Back Office, and Microsoft Exchange and Outlook. That's what we're likely to see externally, and definitely will see internally."
Harris was also one of the earliest adopters of client-server technology, wading in over 10 years ago, and solving most of its year 2000 problems in the process. "A lot of our divisions replaced everything with client-server-based software, starting around 1985," McCauley says. "So the millennium bug is contained to two large order-entry systems, and they're being addressed."
Electronics manufacturers appear to be ahead of their peers in other sectors-standardizing on modern client-server and distributed systems, in a two-pronged effort to vanquish legacy code and provide modern facilities for hooking up their once isolated information systems with their customers and suppliers.
Net Leaders
The semiconductor sector will take the lead in experimenting with, prototyping, and deploying new technologies far ahead of the usual adoption curve exhibited in other IT sec tors. Virtually all of the major electronics manufacturers have started developing wireless, mobile, and collaborative computing networks this year, with an eye toward large-scale deployments by late 1998 or early 1999.
"The intranet, Internet, and pervasive access to knowledge is one thing," says Cora Carmody, CIO for PRC, a unit of Litton Industries. "If you unfold that, we're looking at more of a nomadic workforce, and that includes customer and supplier access from wherever they are, and employee access from wherever they are."
For Litton and other electronics manufacturers, that means more robust dial-in services, and more strategies extending ISDN and wireless access. That also means, because users are traveling more, revisiting the definition of what constitutes a portable computer. "The current footprint of a laptop is too big," Carmody says. "So we're looking at doing things with Windows CE handheld PCs. We're prototyping with the Philips Velo, and plan to use that from both a remote dial-in and a wireless point of view. This should give remote workers some access to the key knowledge in the system."
Texas Instruments is following a similarly aggressive track. The company is experimenting with a wireless mobile conferencing and collaboration system, and it has a few conference rooms running in an alpha test mode. The system will enter a larger beta test in 1998, with the goal of deploying it companywide by 1999, depending upon the success of these early tests.
"The ability to move around in your building, walk into a conference room and be connected is real," says Chatterjee of TI. "I haven't even bothered to get back onto my Ethernet; I just stay on that wireless link."
Electronics manufacturers plan to apply these technologies first to mobile sales professionals and support staff and second to the semiconductor engineers and related teams. Sales personnel generally don't require collaborative features. They primarily need remote dial-up or wireless access to E-mail and information s tores, and the ability to rapidly download canned presentations from the road. Engineers are a different breed entirely. "The next thing we're looking at is cross-functional collaborative work functions," says TI's Chatterjee. "More and more, if you have a really good product development team, you need to get both marketing and manufacturing people working with engineering people to design, manufacture, document, distribute, and support the products right."
Seeking Closure
The biggest challenge to semiconductor IT in the coming year could be the pressure to conclude migration efforts, while simultaneously experimenting with new technologies and meeting demands to open vast portions of enterprise systems up to Internet access-yet another migratory challenge. "My biggest challenge is our intranet," says PRC's Carmody. "We have 25% to 30% of our divisions up and running on our intranet. Our goal is to have 100% participation within a year."
Like those of other sector leaders, Carmody's intran et has moved beyond static pages that give out information-such as employee relations and information on meetings-to actually migrating applications. "We are looking at using the Internet as a vehicle to migrate applications," she says. Work is scheduled to begin on this in 1998.
TI's Chatterjee says these ongoing transitions-ERP, wireless, mobile, collaborative, and the Internet-will remain the sector's No. 1 IT priority for at least the next two years.
"Moving multibillion-dollar companies from legacy to open and mobile systems, worldwide, is a nontrivial job," Chatterjee says. "A lot of attention over the next year will be paid to ensuring we made the transition and didn't lose anything in the process. We're basically jacking the engine from one car to another while they're still moving."

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