Speaking at Orange Business Live 2011, Ernie Park, vice president and CIO of 3M, explained how his company is executing on its Vision 2020 for IT transformation. 3M, initially founded as the Minnesota Mining and Manufacturing Company, has 55,000 products, operates in 65 coutnries and sells its products in more than 200 countries. With 80,000 employees and sales of US$27 billion, the company operates 45 technology platforms and seeks to combine the expertise within these to create unique products.
Park explained that 3M identified three options. The first was to maintain its legacy systems. “There’s no option to that because the people that built them have mostly retired,” he said. The second option was build their own solution, new custom-developed system but that was perceived to be too risky. The third option, which 3M is pursuing, is to buy an ERP package and place that at the foundation of its new IT systems and processes.
“It has to be evolving, incremental and low risk,” said Park. “The reason why we came up with these principles is we have seen many failures in large companies when they try to implement global transformation. We’ve come to this late so we can take the lessons of other companies.”
Park detailed his future state vision of 3M’s architecture. The foundation is common master data, then ERP, then collaborative commerce and an integrated global supply chain to move manufacturing capabilities closer to customers, he said. Those are capped off with predictive analytics to create real-time actionable insights.
Park said it is necessary to effect transformation now because of the rapid transformation of the business world in general. “If you look at the landscape around us we are operating in a very rapidly changing environment,” he said. “China and India will become the first and third economies over the next 15 to 20 years. It is happening right now. I see a lot of Chinese people travelling now and many years ago it was Japanese people, when their economy was booming. 3M is generating most of its growth in China, Brazil, India, Russia, the Middle East and Africa. 3M is changing as well because of the need to service our customers differently. Our employees need to understand the need for different skill sets as many of our IT activities have become commodities.”
“We have to realign our strategy around need for growth, excellence, innovation, customer intimacy and globalisation,” added Park. “The IT enablers for this are Web 2.0, an integrated ERP foundation, virtualisation, telepresence and mobility, predictive analysis and cloud computing.”
Park said a four-stage methodology is necessary:
1.Assessment
2.Rationalisation
3.Modernisation
4.Empowerment
“We are between phases two and three,” he said. “In terms of IT cost reductions, we’ve achieved $100m of annual spending reduction by organisational restructuring and supplier and contract management – we’ve consolidate our communications contracts from 650 down to 250.”
Those approaches form the basis of 3M Vision 2020, which will see a global platform ready for the demands of Generation Y customers and to accommodate the high growth economies of the newly emerged markets.
By George Malim