Managing it. The first of a series on the strategies being adopted by organisations in different industries to maximise the benefits of their investment in IT, focuses on Rover's multi-faceted manufacturing business.
Guy Hains has always liked building complicated things - the more complex the better. As a child he put together ambitious Meccano constructions; as a young man he liked taking apart car engines; and now, as ITdirector at Rover, he is in his element.
The business of Britain's only sizeable car maker is highly complex, spanning engineering, manufacturing, sales, marketing and finance. All this has to be seamlessly integrated with the activities of hundreds of suppliers and dealers. Further levels of complication are added by Rover's wide range of models, and its history of numerous takeovers and mergers. Crucial to the smooth operation of this multi-faceted business is Hains's vast £50-million-a-year computer operation. 'My role is to see how IT can be focused and to define the contribution it should be making to the business,' says 41-year-old Hains, who has been with the company since he left university. 'It's absolutely the best and most enjoyable job I've had yet.' Rover's mission is to keep ahead in the car race in terms of product innovation and speed to market. To help Hains put together a strategy to meet this goal, he has a dozen-strong team based at the company's Advanced Technology Centre at Warwick University. The location keeps the strategy team away from firefighting the day-to-day problems of IT. 'If you try to blend an operational role with a strategic one, the operations side tends to dominate,' says Hains. The university also provides a stream of postgraduates for work on research and demonstration projects.
In all, just 200 staff have direct responsibility for IT at Rover - a tiny proportion of the company's 30,500 employees. This is because much of Rover's computing is sub-contracted. So-called outsourcing is becoming increasingly fashionable among large computer users because it releases them to focus on their core businesses. At Rover, it dates back to 1987 when the company's computer operation, Istel, was sold off in a management buy-out. Istel, now owned by AT and T, has continued to provide much of Rover's mainstream computer needs.
Critics argue that outsourcing is like placing your company secrets in the hands of an outsider, but Hains reckons the benefits outweigh the disadvantages. 'Often when companies have bad experiences, it is because they outsource a problem and do not retain intellectual ownership of the direction of IT.' It is vital, he reckons, to retain a high level of expertise so that you keep control and dictate your own IT future.
Outsourcing has also reduced Rover's training burden and loosened its links with hardware and software manufacturers - a welcome release in the view of Hains, who is suspicious of their frequent claims to want to work in close partnership. 'There can be genuine partnership if you work together on product development, but the term has been overused by suppliers who are really expressing the way they would like to work with large companies.' Rover's approach is to share its strategy with a handful of top suppliers and provide them with a forward view of its goals. 'We let them show how proactive they want to be in working with us.' Hains assumed his current role in 1989 as part of Rover's move towards flatter management structures, with responsibility devolved further down the organisation. The move created a team of top level managers like Hains to think about the next 10 years. 'The luxury of this role is that it is all about IT strategy rather than having to worry whether last night's payroll ran properly or sort out a problem precipitated by some aspect of IT.' Significant change has already resulted from the strategy team's work. There is now a clear blueprint for major systems to be deployed over the next seven years. This simply did not exist before. But Hains also points to the smaller scale local developments which contribute to business efficiency. For example, a new approach to moving material around the shop floor on pallets at the Solihull Land Rover plant is yielding savings of £250,000 a year. The team is now looking at potential efficiency gains for a host of other activities, such as the procurement and administration of material to support production and maintenance. It has also made advances in logistics - the ultimate aim is to be able to take orders from customers in the showroom and build vehicles to their requirements in a few weeks. This would slash inventories - one of the company's biggest overheads.
Another goal is further to reduce the development cycle. The Rover 600 took three years from conception to production - around half the typical product development time of the mid-1980s. Moreover, a lot more time is now built into the schedule for reliability testing. But there is still far to go. 'This is not a fashion industry, yet time is critical for spotting trends and getting to the marketplace in time to have a competitive edge.' It was anticipation of the huge changes that were about to occur in the car industry that first attracted Hains to the then British Leyland 20 years ago. 'There were clear signs that the market was starting to get competitive and that the Japanese onslaught was very real.' But although IT has frequently been the tool of transformation at Rover, Hains is not interested in technology for its own sake. His background is in sales and marketing and his experience of IT has been largely as a user; for example when he developed a customer database for direct selling. Rover's other senior managers are also more realistic about what IT can achieve than in the heady days of the 1980s. 'At that time we applied lots of robots to manufacturing and there was a feeling that IT could effect a similar transformation everywhere else in the business. There was not the understanding about how people would have to change.' Hains sees his role as a selling one and tries to inspire a vision of the future that technology will help achieve. When dealing with the board, he focuses on balance sheet implications, measurable benefits, and marketing or organisational changes. Further down the management chain, he highlights the fact that big changes can be accomplished fast. 'Ambitious managers need to know that they can get things done in the two or three years they expect to remain in their current job.' To ensure that the promises are fulfilled, he appoints key project leaders with the freedom, staff, resources and breathing space they need to get the job done.
Hains, who read psychology at university, reckons most business psychology is misguided because it is based on a straight transactional view of what people see as rewards. 'The traditional approach was to view the success of an organisation as hingeing on a handful of people at the top.' However, winning commitment from people in amorphous task-oriented groups is considerably harder than the old style of line management of the 1980s, he says. 'The process of managing and seeking to influence people who don't necessarily work for you is infinitely more taxing than getting people to obey orders. It is enjoyable but quite draining.' Proof that it works can be seen in the successful spread of PCs throughout the company, reckons Hains. Many organisations are in computer chaos because users have seized on PCs as a way to evade the central data-processing department. Staff at Rover, on the other hand, have been offered planned access to PCs for the past eight years and have taken advantage of centralised advice services and bulk purchasing. 'We avoided anarchy because we were proactive and wanted people to enjoy the benefits of PCs as early as possible. The spread of PCs was rapid but controlled.' over does not yet have a PC on every desk, although it is moving in that direction. For staff with more advanced desktop processing needs in areas such as computer aided design and computer integrated manufacturing, there are around 500 work-stations. Less visible but crucially important is the technology that permits Rover's closer working relationship with its suppliers. At the Longbridge plant, for example, where the Metro 200 and 400 are built, sub-assemblies such as axles and suspension systems are delivered on a timed sequenced basis in response to electronic messages broadcast automatically by Rover.
Another important application of IT is the creation of powerful and flexible databases using the latest techniques of parallel computing and spreadsheet-style manipulation of data. Designers can access a huge repository of historical data about the popularity and performance of components. Such information can be invaluable in helping optimise the balance between choice, price and complexity of new vehicles.
To Hains's great satisfaction, the databases are also beginning to be used by non-technical staff, and even by dealers who want to investigate their performance relative to industry averages and ask ad hoc questions about how they compare with their counterparts in other geographic locations. 'This sort of thing shouldn't be leading edge. The industry has been talking about it for years. But it has taken this long for the technology to be readily available.' Rover also uses leading-edge computer simulation and sophisticated 3D databases for design, prototyping and on-screen crash-testing. Meanwhile, techniques such as stereolithography are making it possible to build protoypes within days rather than the weeks or months of old.
ains is a classic example of one of the computer industry's fashionable 'hybrid' managers - someone with expertise in business and computing. He believes the importance of hybrids has been overstated. 'IT is an industry of fads. Five years ago people were predicting that everyone would be a hybrid. Now there are certainly more of us around, but I don't believe that every MD will eventually be an expert in IT.' Hains is more than willing to get evangelical on a public platform in a good cause. One of his favourite topics at present is the extent to which engineering and manufacturing can be integrated. 'Five years ago there was a great vision of computer aided design and manufacturing coming together, but in reality they are quite different. What we need are linkages. A single system will fail.' He has also called for greater leadership from the industry on standardisation, and more assurances about long-term system support from suppliers. The current turmoil in the IT industry makes this all the more important, he says.
So what would he do differently if he had his time again? Hains reckons his biggest mistake was not to have sought more radical changes in business processes during the 1980s. 'We spent too much time automating existing systems. Of course, we've changed that now, but it would have been quite possible to make more radical changes then, if we'd only seen the opportunity.' For the future, he sees the changing structure of companies as one of the biggest challenges. 'Partnerships will be a feature of all businesses in the 1990s and into the next decade, and not in the sense of building societies taking each other over and then having to merge their IT operations.' It will become harder to spot the boundaries between Rover and its business partners. 'You won't have to worry just about your dealer's balance sheet, or your supplier's balance sheet, or your own. You'll have to worry about the whole lot.' This is good news for the IT experts. Their skills at simulation and describing the processes within organisations should become increasingly valuable. And it is good news for Hains, given his fascination with complexity. His 12-hour days are clearly set to continue. IT is a prospect Hains enjoys, but he feels the weight of responsibility and is keenly aware that there is no room for complacency. The new Rover carries no passengers. 'It is very much a meritocracy - you're as good as your last strategy.'