A Rolls-Royce approach to e-business

“We’re at the beginning of a rapidly moving evolution,” says Michael Roberts, Rolls-Royce world-wide director of business process improvement. He’s talking about e-business, which he defines as “the use of web technologies to strengthen manufacturing and business relationships.” And he should know: he’s been at the centre of moving this seriously innovative global high tech engineering group into e-business since the start of last year. He’s done so against a background of ongoing corporate enterprise system (ERP) development as well as local tactical business, manufacturing and engineering design IT projects. Rolls has, for example, been putting in SAP R/3 ERP systems over several years – in its gas turbines operations in the UK and US, the repair and overhaul business and Rolls Germany – while managing its legacy of other systems across the businesses (not least the result of mergers and acquisitions). For Roberts, “focusing on customers” and finding “new approaches to the fundamentals of how we do business” were the first essentials in moving forward with e-business. It’s a matter of going ‘back to basics’ and considering business processes, working practices, culture and infrastructure – as well as back office systems, data integrity and the rest. “That’s critical,” he says. “Real bricks and mortar companies have to absorb e-business technology and use it. But you can’t do that as a bolt-on – we have to restructure the way we work, the way we do business with customers, everything.” You have to review every aspect of what you do in the light of what the new technologies can enable and the barriers it can pull down. And he adds: “It should be regarded as an enabler and framework for business enhancement – not an end in itself.” There’s no easy way to getting started, but what worked for Rolls was a three stage approach. “First,” says Roberts, “it was almost shock tactics: across the businesses we wanted a number of pilot projects, and we told representatives, ‘the challenge is yours’.” Each had to be complete from design to implementation in 100 days, and the result was a range of e-projects. “We learnt a lot, but most important we got a community of people fired up with awareness.” Stage two, and “now we have four properly structured projects at a corporate level,” says Roberts: “one on customer services, one on e-procurement, one on design and collaboration and one more general, about using our intranet and corporate systems better.” These span several Rolls-Royce businesses, including civil and defence aerospace and the associated energy companies. Three are running under its outsourcing partnership with EDS (procurement, collaboration and the general purpose project); while customer service is through a joint venture with SAIC. Beyond this, the intranet project has also spawned an infrastructure programme involving data warehouse development. “It’s very important for our future. For the new processes to work you need to manage information, be able to move it around, so it’s a fundamental part of the IT strategy.” Roberts’ third stage is about creating e-business groups in each of the business sectors – and ‘centres of competence’ to deal with vendors and the company, providing for “leadership, support, benchmarking, mentoring and capability acquisition and integration.” It’s a comprehensive strategy. Looking at the customer service project, Rolls has already launched aeromanager.com – a customer service portal. Remote users gain access to all Rolls Royce content, such as component and engine data, information on alerts, scheduling tools, electronic manuals, lifecycle analysis, overhaul status, and training and knowledge management. And there’s spares buying and availability. Nested within this is its Engine Data Centre on the web – launched at the 2000 Farnborough Air Show – which provides in-flight real time engine health monitoring and an electronic log book, all browser-based and accessible anytime, anywhere. Says Roberts, it means that engineers at Heathrow can tap into full engine data and be ready with procedures and parts before the plane even lands. “It’s all about how you provide, in an intelligent way, information and support to your customers so that they … get the best out of the products they’re using.” On the e-procurement side, Rolls’ vision includes e-procurement itself, with collaborative direct and indirect materials procurement, marketplaces and auctions and electronic catalogue management. “There is already some pilot activity in the UK on e-procurement,” says Roberts, “with a small number of suppliers based around our gas turbine businesses … The programme will be expanded over the next year or two.” At the moment, Rolls is using Oracle interfaces to the web, front-ending the SAP R/3 enterprise system (via Business Intelligence Warehouse) – providing Rolls-Royce ‘Trading Net.com’ with global access to electronic catalogues and into SAP. “The question of whether will use mySAP.com has yet to be settled between ourselves and SAP,” says Roberts. And he adds: “You don’t necessarily need complex technology to do a lot of this.” For the rest of the vision on the demand side, Rolls anticipates building up to include forecasting, portfolio and promotion planning and sales and operations planning (SOP), with an ‘e-Dashboard’ providing graphical business information. Roberts says it should ultimately extend to demand synchronisation, inventory planning, collaborative planning and scheduling – as well as logistics and distribution management. “We’re talking about all that being a couple of years away. But the key thing is to have the vision – and to check projects against that.” Moving on to design and collaboration, Rolls’ goal is the new ‘design anywhere, follow the sun’ model – with seamless information flow and a single source of data. Roberts foresees a single web-based collaboration environment throughout the concept, design, manufacture, deploy and disposal lifecycle. In the vision it underpins Rolls’ PTC CADDS CAD tools, the myriad CAM systems and its Metaphase PDM. Roberts concedes, “this has a long way to go.” But he says the results will be teams enabled to work together from different locations in real time, which will provide “better value form the existing investment in systems, processes and practices” and “cost-effective re-invention every two to five years.” Finally the general purpose project “is at the centre of our intranet and Internet strategy,” says Roberts. Rolls is looking for “much better exploitation of our intranet to provide services to employees: everything from travel and expenses to providing new information, training and personnel information”. SAP HR is going in now, and he expects this to make a big contribution. It all sounds very comprehensive, but what of the business units themselves? Ian Farquhar, business improvement and IT director at Rolls Royce Combustion Systems based at the Hucknall site, provides a useful insight. He says the programme does present challenges on the ground. The issue, he observes, is getting corporate implementations – e-business or not – to complement local tactical ones, which are bound to be running concurrently. Companies can struggle with this as they find themselves trying to effect too many improvements at once. Says Farquhar, “Improving operational efficiency is still very important – eliminating waste, streamlining processes and getting lean manufacturing – but it’s all bottom-up driven and tactical.” Recent years have, for example, seen Combustion Systems reducing IT systems to engineering/technical, shopfloor data management (SFDM – in constant redevelopment) and latterly SAP, with the emphasis on thinking in terms of better customer value and more efficient manufacturing value streams. “But putting in corporate e-business projects tends to be top down and strategic,” he says. “You have to deal with that and get involved. Remember that if [the latter] are going to be effective they need to be appropriate to the coal face. So you have to be very rigorous about understanding what the current and future needs of your business are likely to be. And you have to make sure that the systems will remain flexible but that you don’t lock in wasteful processes.” In conclusion, Roberts says: “Remember speed in e-business is a virtue, but so is having a clear strategy and ensuring that what you do is accompanied by changes in business processes, working practices and company culture. If you don’t think about the impact on your people, suppliers, customers and so on you won’t get the benefit.” And he warns: “Make no mistake, it requires a lot of investment. We will be affording it by investing in aggressive cost reduction in our IT and processes.”