Toyota's Big Fix: An IS Department Turnaround

How Toyota's CIO radically restructured her entire approach to IT and regained the trust of the business.

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To further strengthen the IS-business bond, Cooper chartered the executive steering committee, or ESC, to approve all major IT projects. The committee consists of Cooper; Cooper's boss, Senior Vice President and Planning and Administrative Officer Dave Illingworth; Senior Vice President and Treasurer Mikihiro Mori; and Senior Vice President and Coordinating Officer Masanao Tomozoe. By exposing IT's inner workings to the business side at Toyota Motor Sales, Cooper hoped that this new transparency would lessen IS's role on IT project vetting and monitoring, and increase business's responsibility.

"Barbra shouldn't be asked to make value judgments about whether or not a project is worth it to the company," Daly says. Project sponsors (with their DIO at their side) have to come back at set intervals, and provide status updates on how each project is doing.

The executive steering committee now controls all of the project funds in one pool of cash, and it releases funds for each project as each phase of the project's goals are achieved. Everyone in the company can look at which dollars were (and were not) going to be spent, the pool's administrators can sweep unused funds out, and other projects can go after those funds. And there are no more spending swings; projects are regularly paced throughout the year.

Who Moved My Cheese?

Not everyone welcomed the revamped IS department with open arms.

To begin, many business executives didn't want to participate in the new approval process that required them to seek funding through the executive steering committee. Instead, those executives tapped lower-level business sponsors who worked with IS on business case development and implementation. But then, if a project ran into trouble, those high-level "executives would scatter like cockroaches," says Goltara. No senior-level business execs were willing to take IS project responsibility. After about six months of this, Cooper demanded that a higher-level business executive-a corporate manager, VP-level or above-back each IS proposal. Now, the ESC won't approve a project unless that support is there. "There's equal skin in the game now," says Goltara.

Goltara says he no longer has to sell the ideas. "It's the VP of distribution, or the VP of marketing," he says. "I'm sitting there, but [the ESC members] are not even looking at me. The committee members are grilling the business executive to see if he can support the business benefits."

But some business execs are still skeptical of the DIOs and business operations managers living in their offices. Doug Beebe, who took on the DIO role for the Business Support Systems (ERP, HR, finance, purchasing, legal, IS, corporate communications) and the Affiliates divisions (private distributors around North America), was greeted with skepticism by some business managers. Many of his customers felt ignored during the Big Six run-up, and Beebe says he is still working on mending those relationships.

Another challenge for Cooper was dealing with the uncertainty in her IS department after such a massive change. Employees' fears centered around changes in their responsibilities and reporting relationships. Before the overhaul, for instance, Bently Au had been responsible for privacy and security. After the reorganization, disaster recovery was added to his responsibilities. "I was a little bit overwhelmed," recalls Au. He says that middle managers were pretty stretched out during and after the restructuring, but follow-up training has helped him and other midlevel managers make the stretch.

A Gift to the Business

The three DIOs, meanwhile, have been learning on the jobâ¬essentially creating their roles as they nestle in with the business. So far so good, several business executives say. Daly says that having Karen Nocket, who took on the DIO role in Toyota Customer Services, in his management meetings has quelled any IS backlash before it can begin. In late 2004, a critical customer service function went down, but Nocket was there to brief the management committee on what happened and how it was getting fixed.

"Having Karen in the management meeting cut off all of the speculation and finger-pointing that sometimes emerges in that situation," Daly says.

Another executive who's a firm believer in IS's new operating model is CFO Doi. "Putting more senior people in as DIOs has been a huge benefit because there's a higher level of respect for individuals that are partnering with you," she says.

Doi's DIO is Beebe, and after spending five minutes with the pair, it's easy to see why theirs is a successful collaboration. They sometimes finish each other's sentences, and there seems to be a layer of trust between them. The duo recently collaborated on a financial planning system that rolled out in early 2005. The existing system was outdated and could not handle the company's growth. Unlike previous years, Doi's finance group worked on the business requirements before selecting a system. "Before, we would have told IS six months into our planning process, 'Hey, you know what we're doing? We've got this great project. And we've already picked a vendor,'" says Doi.

This time, after Doi's group solidified the business requirements for the financial planning system, IS got involved. And all of this happened before any presentation to the executive steering committee. Even so, the project was bumpy, Doi says. Her finance staff had a difficult time getting used to the changes in the workflow necessitated by the new software system. And configuring the system so that it worked properly took a lot more time and effort than either IS or finance bargained for.

But because Beebe and his team worked with Doi's team the whole time, Doi says she is confident the bumps will be smoothed out. And she knows exactly whom to go to.

IS has also won more fans in corporate headquarters because of the new metrics. One industry metric all the business execs understand is how much each Toyota vehicle costs to manufacture. Now they know how much IS costs per vehicle, and each division head also knows how much all of his IT costs him. "I have a much better understanding now as these projects are moving through the approval process of how much it's going to cost in total," Daly says.

Toyota Motor Sales' board was particularly delighted with one number: In 2004, IS was able to give back to TMS 16 percent of the costs of running IT projects, a give-back that ran in the multimillions. And Cooper reports that the Japanese parent company is interested in her revamped IS model and wants to apply some of the techniques over there. "Barbra's stock is high," says Daly.

IS staffers now spend a lot more time traversing the courtyard between Toyota Motor Sales' business offices and the Data building. It's a change that the business side welcomes. "Projects are much more thought out now than they ever were before," Daly says.

Copyright © 2005 IDG Communications, Inc.

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