Tyco's IT Turnaround

Tyco International Ltd. CEO and chairman Edward Breen's mission over the past two years has been to restore shareholder confidence in his scandal-shaken company, grow the company's five main subsidiaries through sales rather than acquisitions, and clean up Tyco's spotty accounting of recent years.

Dana Deasy, the company's first-ever corporate CIO, had less-public marching orders: help Breen transform Tyco from a holding company that treated IT as a support function into an operating company that uses IT to gain competitive advantages.

Deasy still hasn't filled one of the five business-unit CIO jobs, but he and the four other CIOs have laid out plans for turning IT into a more-strategic function. Good thing--the company expects to begin growing through acquisitions again in 2006.

Deasy's to-do list includes integrating the company's 140 individual networks, consolidating its 200 data centers, and creating a Tyco Enterprise Directory for its 260,000 employees worldwide. He already has consolidated purchasing of software and other technology, saving the company $75 million, and outsourced Web development to India.

A large part of consolidating data centers is linked to consolidating the applications that run within them. 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 apps for its various business units with the desire to let them continue autonomous operation.

Tyco has yet to decide on a technology for its upcoming 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.

For Deasy to succeed, he needs to coordinate companywide goals with Tyco's divergent business subsidiaries. Tyco's Healthcare unit, which last year recorded about $9 billion in sales, already has an integrated network and integrated systems for

E-mail and payroll for its 85 manufacturing facilities worldwide. "We want the [Healthcare unit] to be able to make decisions based upon business needs, not on system limitations," says Steven McManama, VP and CIO of Tyco Healthcare. To do this, he has 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.

The fact that these types of initiatives are moving ahead is a sign of change, says Ron Vance, VP and CIO of Tyco Electronics Corp. "The old Tyco looked at IT as an expense to be controlled rather than an investment to be leveraged."