| |
Contact me at david@geercom.com, via this form or at 440-964-9832 (Fax:440-964-2172).
News Story by David Geer Late in the 1990s, the typical IT R&D mission was to move ahead to the next technology no matter what. Research often went almost directly from experimentation into production without proper testing, without any justification of the value of the technology to business, without plans for properly engineering it into the environment and without a design for deployment, says Vijay Sankaran, IT manager for enterprise technology at Ford Motor Co. in Dearborn, Mich. "There was no formalized, architected approach to introducing new technologies," says Sankaran. This led to unfocused technologies such as multiple company Web sites that weren't even linked together, he says. As a result, many dot-com IT R&D initiatives ultimately failed. "Projects were late; they didn't do as expected, and even if they did work as expected, they didn't deliver the kind of revenue gains people expected," says Martin Reynolds, an analyst at Gartner Inc. "In the dot-com days, R&D efforts were consistent with that period's land-grab mentality," says John Baschab, co-author of The Executive's Guide to Information Technology (John Wiley & Sons, 2003). Companies were focused on increasing their Web real estate by using technologies like scalable Web architectures to grow their Web presence, visual design techniques to draw people in and back-office systems that could support millions of customers, he says. But for the most part, these plans did not materialize. "IT R&D today focuses more on practical, pragmatic issues," Baschab says. While today's IT R&D still has to innovate fast, it also has to innovate in the right way, says Sankaran. The focus has shifted from research for research's sake to meeting business needs. For example, in the late 1980s and into the '90s, as much as 50% of the IT R&D budget at The Procter & Gamble Co. went to pure emerging-technology research. "Now, about 80% of it is spent on doing engineering against business problems," says Robert Scott, vice president of IT and innovation at the Cincinnati-based consumer goods maker. Innovation has always played a critical role at P&G, Scott says. "But as we looked toward the future, we knew that we needed IT R&D to play an even larger role to maintain our edge in an increasingly competitive marketplace. For that to happen, we needed to change how IT worked and how it integrated with the rest of the company." Other changes at the company's R&D group reflect the same new mind-set. "We call our IT R&D group 'E&D' for engineering and development," explains Scott. The name implies that the group's goal is to engineer applications for business rather than research emerging technologies, he says. Despite the changes, IT R&D is once again very alive and robust, according to Scott. "We have some fundamental areas of breakthrough that we consider strategically important to the company," he says. "Our research organization has been realigned to go right up against those areas and deliver breakthrough ideas to push the envelope." Cultural Changes New R&D group cultures also demonstrate much tighter ties with business. For example, DaimlerChrysler AG in Auburn Hills, Mich., for example, has a Global Technology Council with members from business, IT and IT R&D. It meets monthly to discuss business unit expectations and align budgets, says Seshu Bhagavathula, director of technology strategy. R&D today is less isolated from the rest of the business than it was before. "Everybody from the chairman on down is sponsoring advancements in technology," says Jeffrey Cohen, CIO at DestiNY USA, a New York-based shopping mall developer. "It's actually our chairman who has driven us to having an open-source platform across all R&D," he adds. "From the top down, everybody's interested in technology [and] how it will impact what we do as a company." Broader sponsorship means more brains are working together, storming up innovative approaches to R&D. According to Sankaran, one of those approaches is to look for recombination opportunities. "How do you take technologies already on the shelf and recombine them in such a way that they make a meaningful business impact, rather than looking at what may be five to 10 years out?" Sankaran says. R&D groups are also forging closer ties with suppliers. At DaimlerChrysler, for example, IT R&D not only measures the performance of strategic suppliers, but it also sometimes affects it. DaimlerChrysler product managers participate in customer focus groups in the research labs of the automaker's top suppliers, suggesting features that they would like to see in upcoming versions of products. The product managers are also permanent members of the supplier councils, which schedule meetings a minimum of four times a year. So the product managers know what's coming next from the vendors much sooner than they once did, according to Bhagavathula. "They may even have input into what the next product should look like," Bhagavathula adds. In cases where P&G has outsourced IT operations, it leverages relationships with vendors such as Hewlett-Packard Co. and IBM to gain access to their innovation labs. "We collaborate aggressively to create innovations. That's our standard operating procedure," says Scott. These partnerships aren't limited to suppliers, though. Ford collaborates with various consortia, as well as open-source development labs and the Internet2 initiative, according to Sankaran. Internet2 is the next-generation Internet, which the government and universities are developing today in much the same way they developed the current Internet. "We're looking for ways to take offshoots of some of that research and apply it to near-term implementations rather than esoteric research," says Sankaran. Ford is focusing on the personal collaboration space and how voice, video, podcasting and videocasting are going to affect the way it does business, Sankaran says. P&G, Ford and DaimlerChrysler are also all looking at how to use radio frequency identification technology to make their supply chains more efficient. "Velocity through the supply chain is critically important," says Scott. "We have done a lot of collaborative work to push that envelope because we believe we can significantly reduce costs for our retail partners and us." Risks and Returns Because of R&D's mission and budget realignments, many group find that there are more hard ROI expectations now than there were in the past. "IT R&D was previously about technology for its own sake. Today, it is much more linked to ROI and key business value creation," says Sankaran. "We went through this phase where we undertook too much change within our organization. Now we're just trying to figure out what's robust, what's scalable and how we peel back some of the messes that we made." But expectations of big returns can work in R&D's favor when it comes to budgeting. At P&G, the widespread belief that IT R&D is strategically focused on the right things has helped shift the focus from a concern for controlling costs to a recognition of the need to invest in the business. As a result, Scott says, the company is willing to take more risks in order to "hit some big home runs." With all of the changes in IT R&D, there is one striking similarity to the research organizations of the '90s: The goal is still innovation, and people still believe that technology is a critical differentiator. "Companies that can embrace technology and build it into their product in a more meaningful way more quickly are the ones that are going to be more adaptable to change," says Sankaran. Today's IT R&D is less about pie in the sky and more about innovative applications that serve the business now. It's run like a business and for the business by business-minded IT professionals. "Innovation has become a fixed scheme, not only within our company but also in many companies in the U.S.," says Sankaran. "That's one of the key factors in the reinvigoration of an IT R&D organization." Sidebar: People, Roles and Expectations
While R&D staff titles are much the same as ever, the profiles of the individuals are fundamentally different, according to Robert Scott, vice president of IT and innovation at Procter & Gamble. "I've been with P&G for 30 years, and I can tell you there was a time when our IT R&D group was made up of the technical geeks who nobody could understand and frankly didn't want to be around much," he says. "You talk with our R&D people today, and I bet you could have a conversation with them for an hour and not know they're part of our IT R&D group." Today's IT R&D professionals are a reflection of evolved expectations, says Vijay Sankaran, IT manager for enterprise technology at Ford. "For example, my people have to submit formal research proposals on the technologies they are evaluating. They have to tell the story of how the technology fits in," he says. According to Scott, the key difference in today's IT R&D teams is that they're considered business partners who keenly understand how their expertise serves business needs. P&G's IT R&D leaders made a deliberate effort over the past four years to better integrate their teams with the business by setting goals that aligned with company goals, working more directly with the business units and refocusing employees, according to Scott. "Ultimately," he says, "our R&D folks start with the end in mind."
Copyright 2005 by Computerworld Inc., One Speen Street, Framingham, Mass. 01701. Reprinted by permission of Computerworld. All rights reserved. |
