Collaboration's Still KickingCollaboration's Still Kicking

After Sept. 11, some observers predicted that the nascent interest in online collaboration would falter as companies focused on securing IT infrastructures from potential cyberterrorism strikes. Wrong. If anything, conditions following the events, such as longer cargo inspections at border crossings, air-travel disruptions, bioterrorism scares, and a further weakened economy, are bringing home the message that collaborative efforts must not only continue but increase.

Ingersoll-Rand Co. says there's no going back. The 130-year-old manufacturer, which makes products from golf carts to giant air compressors to portable power units, says collaborative software is vital to its efforts to reengineer the business from a group of autonomous entities into a centrally managed company, slash millions in costs, and win customers by bringing products to market more quickly than competitors. "Security did take on increased importance to us after Sept 11, but by no means did it slow down our collaborative efforts," says George Ashley, manager of engineering business services for the $8 billion-a-year company.

Other large companies, including Cigna, DaimlerChrysler, General Motors, Quest Diagnostics, and United Parcel Service, also are increasing IT security efforts-but not at the expense of their collaborative projects. That wouldn't make sense, they say-not when such deployments promise the ability to cut costs out of the supply chain, drive revenue by accelerating time-to-market of new offerings, and get products where they're needed, when they're needed.

Indeed, heightened interest in IT security means companies will be doing more collaboration with their most-trusted suppliers, not less, says Gartner analyst Bruce Bond. "Companies are saying, 'Let's figure out how to collaborate effectively with people we know using E-business tools-it's safe, we know them, and it lets us improve our intercompany business processes.'"

That tracks with the results of a new information Research survey, which indicates the events of Sept. 11 have caused almost half the 100 respondents to improve collaborative practices with suppliers, customers, and employees. The reasons sound the same as they did before Sept. 11: increased productivity, more-efficient processes, and reduced costs.

But consider this: Only 30% of the business-technology professionals surveyed were extremely committed to collaborating with suppliers before Sept. 11th; now, 45% are predicting that collaboration with suppliers will increase in the next 12 months. While momentum behind collaborative business had been growing before Sept. 11, the shock to business that resulted from that day served not as an inhibitor to collaboration but as a spark.

Many markets were hurt by the fallout from the terrorist attacks-the airline and travel industries come immediately to mind. Others are less obvious. U.S. industrial output has shrunk for the past 14 months, and the National Association of Purchasing Management says manufacturing sales fell 2.3% in 2001, with a 1.4% drop after Sept. 11.

That means manufacturers need all the help they can get building a more-profitable future. At Ingersoll-Rand, the long-term benefits of collaborating across the company are expected to total millions of dollars and will come from a better-managed supply chain that starts with the engineering design process and extends to leveraging buying power for strategic parts and materials by consolidating regional contracts at a corporate level, Ashley says. "We believe we can have an amazing impact on direct materials purchases alone by doing business collaboratively with our strategic sources," he says. The company spends nearly $4 billion annually on such materials.

Ingersoll-Rand's collaboration strategy is based on Windchill, a suite of engineering- and design-collaboration software from Parametric Technology Corp. that's integrated with the manufacturer's Oracle 11i E-business suite enterprise-management applications and Siebel Systems Inc. customer-relationship management tools.

The collaborative software is running in several business units, including the Thermo King Corp. climate-control group. Ingersoll-Rand spent $3.3 million this year to deploy Windchill at Thermo King to connect 13 global locations with each other and with suppliers, and move design and manufacturing collaboration to the Internet.

The company expects a $14 million return on investment annually from this division alone, with more than half the savings coming from reduced warranty claims. Online collaboration ultimately results in a better-engineered product that's less likely to break, Ashley says, because designers will be able to do more digital testing of a planned product before it goes to production. Eliminating the time-consuming manual process of swapping diagrams and conducting face-to-face meetings to hash out product details also "will put new Thermo King products in front of buyers more quickly," he says. The company is implementing Windchill more widely next year, including a just-approved deployment in its industrial-productivity unit, which makes pavers and rock and rotary drills.

In the coming year, General Motors' major focus will be on collaboration with its suppliers. In conjunction with its most important suppliers, the automaker is testing the fulfillment application on Covisint, the auto-industry exchange, which provides simultaneous real-time sourcing and negotiation. GM has already beaten its target of connecting electronically with a quarter of its suppliers by the end of this year. It now handles procurement and supply-chain management with nearly 1,000 suppliers on Covisint.

Sept. 11 has had an effect on GM's collaboration efforts, too. As air travel has become less convenient, with fewer flights, more cancellations, and longer waits at airports that take a toll on productivity, resistance to using collaborative tools by some design partners is receding, CIO Kirk Gutmann says. "People are being more careful about travel. Because they don't want their engineers involved in business trips that might turn into two- or three-day scheduling problems because of canceled flights, people are embracing real-time collaboration," he says.

Next year, GM will unveil a new supply-chain initiative for suppliers that serve as design partners. GM has consolidated more than 70 Web-based designer portals into a single site, where large and small suppliers that share in the design process with GM engineers can access CAD/CAM drawings and other engineering data. About 32,000 individual designers around the world have access to this portal. "When we began to move toward collaboration, we began the process of changing business processes that would make us more efficient and able to produce a better product, and we're not going to turn away from that," Gutmann says.

Neither will auto suppliers ArvinMeritor Inc. and Johnson Controls Inc., which have also made design collaboration a cornerstone of their collaborative efforts. ArvinMeritor, which makes suspensions, wheels, door locks, and other systems, relies on its own Internet supplier portal, based on LiveLink collaborative workspace software from OpenText Corp., to connect with suppliers that are design partners. Johnson Controls has spent the last year deploying design-collaboration tools, jointly developed with software vendor Matrix One Inc., to its design partners, who provide Johnson Controls with components for interiors and dashboard assemblies. The next step for both companies is connecting their supply chains so they can communicate their needs for parts and materials in real time with suppliers, and suppliers can communicate their fulfillment plans.

With automakers beginning to pressure their suppliers to get connected, ArvinMeritor must connect with its own suppliers, says Perry Lite, senior VP and CIO at ArvinMeritor. The company is running two pilot sourcing projects with suppliers, one involving software from ERP vendor QAD Inc. and the other involving automotive ERP vendor Brain North America Inc.'s SupplyWeb enterprise.

Next year, Johnson Controls plans to connect its suppliers in real time, using Covisint Fulfillment. That's critical, because the company acts as an integrator of other suppliers' assemblies in the multitier supply chain of the automotive industry, says John Waraniak, Johnson Controls' executive director of E-business speed. For the 2002 Jeep Liberty, Johnson Controls custom-assembles 11 major components using parts from 35 manufacturers. It must deliver those assemblies to the plant in the sequence in which they'll be used, based on DaimlerChrysler's just-in-time schedule for manufacturing 400 to 700 finished vehicles daily.

To achieve this, Johnson Controls intends to reengineer its supply chain so that suppliers are responsible for maintaining the inventory of their products. The company will use Covisint to expose the number of assemblies automakers will need on a particular day, so suppliers will know what they need to get to Johnson Controls and when.

"That would be a tremendous task if we didn't have collaborative tools to let suppliers know what we're doing and for them to let us know what they're doing," Waraniak says.

Customer collaboration also is increasing in importance as companies that had undertaken such initiatives reaped the benefits of those deployments in the aftermath of Sept. 11. It comes as no surprise that four in five respondents to the information Research survey say their companies are looking to improve customer collaboration.

UPS Logistics' investment in its Global Tracker system, an open-architecture event-based system built on proprietary and commercial software, paid off when limited flights and delays at customs after the attacks jeopardized customers' critical shipments.

The Global Tracker system includes transportation-management, warehouse-management, and order-management software that connects, via the Web, EDI, or flat files, with UPS customers' systems, including their financial, accounting, order-taker, and enterprise-resource planning software. Customers' systems feed data to UPS software, so the logistics vendor was able to get the information on which shipments, already lined up on pallets waiting to enter the country, contained items that needed to be delivered fast. Those packages were then pulled from the pallets and shipped using UPS Express, which expedited their clearance through customs, says Lynnette McIntire, director of marketing for UPS Logistics.

"Collaboration between customers and UPS Logistics that's supported by IT and the Internet has always been important, and that was certainly highlighted on Sept. 11," McIntire says. Next year, collaborative activities will continue at a brisk pace. The company has earmarked nearly all of the $55 million it will spend on new developments in 2002 for collaborative projects that involve the Internet, she says.

Employee-benefits provider Cigna is bolstering its self-service collaborative tools to provide better service to customers. As the economy weakened this year, customers became increasingly interested in being able to better manage their 401(k) accounts, and that concern grew as the stock market tumbled in the wake of the attacks. This year, Cigna began offering interactive decision-support tools on its Web site to help consumers make judgments about medical insurance. In 2002, it will enhance personalized services online for 401(k) investors, letting them review and make changes to their plans based on life events, such as starting a new job or preparing for retirement.

Cigna will spend about $800 million on IT next year; about $300 million of will be set aside for new E-business collaboration development, says David Gordon, Cigna's senior VP of E-commerce. Providing these collaborative tools helps keep companies' employees satisfied with their benefits services. "If employers have a stronger bond with their employees, that builds a stronger bond between the employers and us," he says.

The health-care industry is trying to strengthen the bonds among doctors, hospitals, and public-health offices as the country grapples with anthrax, and concern grows about the possibility of terrorists manufacturing and delivering even worse diseases, such as smallpox. The industry realizes that the collaborative tools it recently began using to track incidents of known diseases across a particular region, for example, will have even greater applicability now that the nation has these new threats to contend with.

Collaborative efforts range from the Rapid Syndromic Validation Project, an online database developed by the Sandia and Los Alamos national laboratories that's used by New Mexico health officials to spot disease outbreaks using data input by six hospitals across the state, to the internal IT systems at Kaiser Permanente of the Mid-Atlantic States. These systems let the health group link the data culled from monitoring calls to triage nurses in its hospitals to scheduling programs, so the right number of health professionals can be assigned to facilities expecting large numbers of patients-such as those who learn they may have been exposed to a deadly biological agent (see "Get Well, Fast").

Leading diagnostics companies also are moving forward with collaborative tools that are useful in everyday patient care but can become critically important in emergency situations. Collaboration "isn't something we woke up to on Sept. 11 and realized was important. Sept. 11 emphasized the need to accelerate collaboration," says Gerald Marrone, CIO of Quest Diagnostics Inc., a Teterboro, N.J., diagnostics company with 1,300 patient-service centers, about 150 rapid-response laboratories, and 30 major testing laboratories throughout the United States.

In the first quarter of next year, the company plans to provide physicians with a single point of access via a Web portal to patients' clinical information that originates from hospitals, pharmacies, laboratories, and other sources. A physician will be able to grant other health-care professionals access to patient test results and medical records, letting them collaborate with one another on patient care. Quest will use MedPlus Inc.'s eMaxx Web portal product to deliver the information; Quest recently acquired MedPlus, a provider of clinical integration and workflow products and services.

The portal also will be used to support the company's Quest on Demand initiative, which lets doctors place orders for tests online before a specimen is sent, and receive the results that way, too. The system prints out a bar-code label for requested tests that gets attached to the specimen when it arrives at a Quest lab. This collaborative capability lets Quest technicians better plan their laboratory work in advance, because they can tell what tests will need to be performed even before the specimens arrive at the labs.

For some, the tough business climate after Sept. 11 might have made IT security and collaboration seem like an either/or proposition. But smart companies are finding a way to do both, because they have to. ArvinMeritor continues to evaluate new security technologies but, says CIO Lite, "this is no time to stop collaborating. For us, E-business is the business. We almost don't really have a choice if we want to continue to be a rigorous competitor."