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Let’s discuss…
• What matters next?…
• Our Reality…
– Economic driving forces, What does our business really wants
• INVISTA’s MBM® based framework to create value…
– Vision, Virtue & Talents, Decision Rights, Knowledge Processes, Incentives
• What will we do to create value…
• Who will help us create value?
• Sorting it Out- The role of the CIO…
Let’s keep in mind…
• All models are wrong, but some are useful (Dr. George Box)
• “I didn’t have time to write a two page letter… so I wrote eight..”
(U.S.A. President Thomas Jefferson)
• “There’s no such thing as an original thought …including this one…”
(no one seems to takes credit…)
Erik Viens for NASSCOM 2006 1
Does anything about IT matter next?
IT Doesn’t Matter
(Nicholas G. Carr )
IT Doesn’t Matter – Business Processes Do
(Howard Smith & Peter Fingar)
“In many ways, IT is held back by its ownership of the infrastructure today…
… when the infrastructure does finally go away, the opportunities to innovate
using IT inside companies will improve, making IT more important, not less.
… IT competency becomes a competitive advantage in fostering and creating
innovation and a defense against the shrinking lifecycle for innovation. … “
(Christopher Koch – Executive Editor – Investigations, CIO Magazine 12/2005)
Erik Viens for NASSCOM 2006 2
INVISTA is a global integrated producer and marketer
of premium fibers, resins and intermediates.
The company has a manufacturing or marketing presence in every major market and garment
region worldwide. Today it is comprised of five businesses: Apparel; Performance and
Textile Fibers; Interiors; Intermediates; and Polymer and Resins.
INVISTA is committed to its customers' growth through market insights and technology
innovations combined with a powerful portfolio of the best-known global brands and
trademarks in the industry including: LYCRA®, STAINMASTER®, ANTRON®,
POLARGUARD®, COOLMAX®, THERMOLITE®, AVORA®FR, CORDURA®, SUPPLEX®,
TACTEL®, and ESP®.
Erik Viens for NASSCOM 2006 3
Erik Viens for NASSCOM 2006 4
“They’re outsourcing our industry to
low-cost off-shore labor…
• …not only that, although we’ve taken measures to protect our intellectual property, one
of our own has absconded with our proprietary “Arkwright” technology and can deliver
product without the costs of crossing the ocean- how are we supposed to compete with
that”
• (probably what the British Textile Minister said in 1790 referring to Samuel Slater as he started the USA textile
industry after disguising himself to get out of England and defying British laws and tariffs on the colonies…)
• 100+ years previous… the Indian subcontinent was the largest exporting region globally
until British tariffs restructured the industry…
• 100+ years later, the USA industry started it’s movement from New England to the USA
South where labor and utility costs were lower…
• In the 1970s…Current Mexico and the Caribbean states expand textile exports to the
USA with labor costs at ~15% of USA rates…
• 1995 WTO agreements… reduction in tariffs & barriers driving movement to lower cost
countries, principally Asia.
• What’s next? Do you mean TEXTILES or INFO TECHNOLOGY?
Erik Viens for NASSCOM 2006 5
Full effects of recently completed WTO based
tariff changes will be significant…
Global Textile Industry = ~ $400B
USA Imports = ~$90B Europe Imports = ~$155B
But Also Consider…
Labor Textile % of “Apparel manufacturers achieve
Costs Exports Total
Country US$/hr US$B Exports competitive advantage by effectively
Mexico $ 2.45 $ 9.70 6% managing inventory costs and shortening
Honduras $ 1.48 $ 2.70 63% time to market through the adoption of
El Salvador $ 1.58 $ 1.90 62% sophisticated information systems to
Dominican Republic $ 1.65 $ 2.30 44% process real time orders, forecast near
Turkey $ 2.13 $ 15.40 33% term demand, and plan and track
Thailand $ 0.91 $ 6.10 8% international output… competitive
Jordan $ 0.81 $ .70 29% advantage stems more from a firm’s ability
China $ 0.68 $ 80.00 18%
to manage the logistics within the channel,
India $ 0.38 $ 12.90 23%
than from its ability to reduce costs in
Sri Lanka $ 0.48 $ 12.30 74%
apparel assembly operations” (A Stitch in Time:
Pakistan $ 0.41 $ 2.80 60%
Lean Retailing and the transformation of manufacturing
Cambodia $ 0.32 $ 1.90 88% lessons from the apparel and textile industries – Fred
Abernathy, et al)
Sources: Washington Post, U.S. Labor data, Bureau of
International Labor Affairs, World Bank, WTO
Erik Viens for NASSCOM 2006 6
What does our business need from IT?
• Our material and $$ “accumulate” all over the place; visibility is paramount…
• All we really need is a daily mass balance- knowing where every gram of
product is and every penny is at any time is the key to optimizing value…
• Info &Technology:
– needs to be in front of the business needs! Get I & T off the critical path!
– holds the key to human capital productivity!! Get more involved with new innovation!
– has a unique vantage point!! How can we use this to create opportunities?
• IT must synthesize corporate strategy, BU and Functional strategies, product
portfolios, business development plans, mergers, acquisitions, divestitures,
growth agendas, risk management, compliance issues, etc, etc
• “We don’t know what we don’t know yet… But you’d better be ready for it…”
• “I can’t define (it)… but I know it when I see it…” (U.S.S.C. Justice Potter Stewart)
Erik Viens for NASSCOM 2006 7
Integrity – Compliance - Value Creation – Entrepreneurship - Customer Focus – Change – Knowledge – Humility – Respect - Fulfillment
INVISTA’s Market Based Management® Guiding Principles will help strengthen
and position us to create superior value for customers around the world.
These principles set the expectation of operating lawfully and with integrity;
striving to continuously improve safety, health and environment performance;
driving profitable innovation; and developing the will and talent to be operators
of choice in the communities in which it operates.
The MBM® Framework to pursue our IT goals…
• Vision - Commitment to identified & captured opportunities that leverage our capabilities to
generate value- waste is eliminated.
• Virtues & Talents – The right people with the right values and skills to partner on the right
value creating projects
• Decision Rights - Clear and measurable accountabilities earned and in place to allow
people with the best knowledge to make & live by the best decisions
• Knowledge Processes – Value is created by acquiring, sharing, vetting and applying
knowledge, while measuring key business drivers.
• Incentives - the right talent and partners are attracted, motivated, and retained. Their work
is focused on value creation…
Erik Viens for NASSCOM 2006 8
Vision: Solve the integration paradox
• Vision: Solve our biggest barriers–
– Delivering integrated information globally…
– The growing octopus of integration – within and outside the firm…
– Build the environments that keep IT off the critical path
– The inability to innovate our business processes…
– One size can’t fit all…Is our ERP a “one trick pony”?“
• Run IT like a business…
– Strong, disciplined decision right based governance…
– Demand-biased with internal market processes & metrics…
– Constantly evaluate our sourcing partners & options
– Standardize for efficiency but optimize for effectiveness…
Erik Viens for NASSCOM 2006 9
Value = ƒ( scale, complexity )
Optimize
function for
Standardize VALUE and
function & effectiveness…
Drive SCALE
Cost for efficiency…
$
“Context”
“Core”
Illustrative…
Scale
We must know which curve to be on…
Erik Viens for NASSCOM 2006 10
Passed down over generations…
Vision: Loosely Coupled Technology & Processes
• One size doesn’t fit all? Can we create our own sari?
• “Hardwired IT” makes processes hardwired also…
• “Loosely Coupled IT” allows loosely coupled business processes
• Loosely coupled IT…
– Dis-integrates silo-ed processes to allow integration within &
across firms…
Can one size fit all?
– Defines standards outputs; decouples the transform…
– Transforms how we collaborate & innovate across enterprises…
– Mobilizes large numbers of specialized partners to deliver more
value
– Allows Rapid incremental innovation within modules
• Loosely coupled IT enables global process networks…
Reference: The Joy of Flex – CIO Magazine, September 2005 (John Hagel & John Seely Brown)
Erik Viens for NASSCOM 2006 11
Value = ƒ(people, process, technology )
Drive Principled
People with MBM® Virtues & Talents …
Entrepreneurship to
• MBM® Guiding Principles & Expectations
• Compliance Processes & Code of Conduct optimize value…
• Decision Rights & Aligned Incentives
• Knowledge & Fact Driven…
Value = ƒ(cost, benefit, advantage time )
Focus Technology on Value… Focus Processes on Value…
– Enabling value processes – Managing Commerce – Buy, Develop, Make, Sell, Service, Retire
– Releasing critical information – Managing People – Selection, Compliance, Conduct, Expectations
– Constantly driving efficiency – Managing Finances – Decision Rights, Decision Making Framework
– Optimizing effectiveness – Managing Knowledge – Systems, Challenge, Economic Thinking, etc.
Erik Viens for NASSCOM 2006 12
Virtues &Talents: Becoming a contributor…
• What is changing?
– “old dogs must learn new tricks”
– infrastructure is becoming a commodity- what’s the individual’s comparative advantage?
– We need the ability to partner globally to put best talent where it’s needed…
– Insight to & alignment with business opportunities becoming more critical…
– End to end process knowledge creates improvement focus on information & technology
• Critical questions I want my I.T. resources to ask:
– When do the capabilities created by new information & technology solve a business process
issue for us? When will they be used against us?
– When do new business processes create better information that can be used to create value
for us? When will they be used against us?
– What disruptive technologies could create opportunities?
– Do we need a new I&T strategy or a new business strategy? How do I rethink my business to
drive new revenue growth and reduce costs?
– How can we use I&T to improve our customers experience? How can we make customers
more loyal? Attract new ones? How can we win over competitors best customers?
– How can we make our suppliers more attracted to our business? How can we make
suppliers more loyal? Attract new ones? How can we win over competitors best suppliers?
– and hundreds more that clever people will think of…
Erik Viens for NASSCOM 2006 13
Other talent…What partners will be valued?
What I need to do…
• Targeted Sourcing – I need to find the “sweet spot” for my partners…
• To know what is your real comparative advantage ??
• To truly share risk honestly - Do you promise too much??
• Engagement flexibility -Sometimes we don’t know what we don’t know yet…
• Creativity - sometimes resulting in alternatives that just might reduce revenue…
What you should do for me…
• Demonstrate your strengths, don’t cause me risk with your known issues…
• You should not expect me to pay you for knowledge transfer…
• Do not just accept me (or my organization) as “always right”…
• Can you positively push back & challenge to create more value?
• If you say “we should live by the intent, not the contract “– then do it!
Erik Viens for NASSCOM 2006 14
Why special attention needed for global partners?
• Long “Acceleration” period
– You - Getting to know our business
– Us - getting to know you & your processes
• Ability to Communicate
– Connections with senior leadership
– Disciplined and comprehensive communications processes
– Specifications fitting the need
• Unrealistic Project Goals
– Costs & Timing
– Actual Benefits
• This is just so different…
– Much higher turnover rates
– Interaction and dispute styles
– Discipline & governance to the process
– Lack of offshore experience
Erik Viens for NASSCOM 2006 15
Value = ƒ( functionality, time, cost )
Global Sourcing
enables greater
flexibility in
optimization of
the variables…
Cost
$ …OR…
Fixed/Same
Add/Remove
Functionality
Functionality
Typical
Globaltime to cost vs. time relationship…
Faster time
With different
With same
Labor
Same labor costs…
Sourcing
completion means cost/time…
Arbitrage
to complete
Flexibility…
more benefits flow
means curve…
Lowers less
earlier…
costs…
Illustrative…
time
We must know which variable to optimize…
Erik Viens for NASSCOM 2006 16
The three roles of a CIO
1. Operating the business with ever increasing
productivity- or “Keeping the Lights on…”
2. Using information & technology to sustain
existing value and create new value;
3. Constantly demonstrating there’s a 2nd job…
by sorting out the issues of P-P-T.
Are we becoming the “SIO” next?
Erik Viens for NASSCOM 2006 17
