Managing Upheaval
Open Computing - December 1995 - By Bill Roberts
Real men don't use Lotus Freelance Graphics or Microsoft PowerPoint, and neither does Connie Deletis, who is vice president of information systems at National Semiconductor. Deletis, who oversees 500 IS staffers worldwide, prefers low-tech presentations. "People spend too much time on formality, and too much time on what color this is rather than on the content. I handwrite my foils for presentations, even to management."
It might seem like a trivial point, but Deletis believes it contributes to an informal atmosphere, and in National Semiconductor Corp.'s IS department an informal atmosphere may be just what is needed. Nearly half of Deletis' staffers are living on pins and needles. Everyone in the central IS organization-no exceptions-recently had to reapply for their jobs, or, in many cases, entirely new jobs, in a redesigned IS organization.
Deletis' organization is in the second phase of a high-stakes one-year effort to redesign IS at this 2.4-billion-in- revenues semiconductor maker on the comeback trail. The purpose is not to downsize or save money, but to realign IS with business divisions and business processes, and to make IS more responsive to internal customers' needs. A few months ago, in the first phase of the redesign, 22 top IS staffers all reapplied for their jobs. No one was laid off, but four management levels became two. No one took a pay cut, but four staff positions were downgraded to a lower pay ceiling and two were upgraded. A new breed of IS business partner was created to work directly with business units. Everyone lived with a nervous stomach for weeks.
The IS redesign rivals upheavals elsewhere. IS executives no longer have carte blanche budgets; they must add to the bottom line. They must get into the trenches with customers, understand the business problems, and contribute to solutions. Deletis and his staff are no exception. "Our job is to help them define what they want," he says. "You can't do that unless you're involved."
Delivering what they want is imperative because NSC's business units can outsource if they're not satisfied with the company's own IS department. When that procedure was put into place a couple of years ago, some business units did go outside. "We're winning some of them back," Deletis says. "They've voted with their checkbooks by increasing their charge-backs to IS."
Deletis figures he has less than a year to produce results. By June, a companywide migration to LAN-based electronic mail and a new data warehouse must be well under way. And the four new IS business partners must prove that they "understand the business strategy, and then maximize the value of IT to that business strategy," he says.
Early evidence is encouraging. With $1.5 million in savings at stake, the IS and finance departments recently collaborated on closing quarterly books faster. It was a test of the finance-IS relationship, new technologies, and IS attitude.
It's 7:30 on a mid-August morning. The IS office at NSC's world headquarters in Santa Clara, Calif., is a silent warren of cubicles awaiting workers to descend for another day of trying to get the job done while living with the uncertainty of whether they will have a job tomorrow.
Connie (short for Conrad) Deletis has just arrived. He's wearing a blue and white wide-striped dress shirt and tie, with the shirt sleeves turned up precisely one cuff length. No jacket. His ground-level office is modest by any measure. It's crammed with a small conference table and desk. The walls are adorned in illustrations telling the redesign story. In a spot near the light switch there's a page from a June 1995 issue of Computerworld magazine, which shows NSC ranked sixth among the 100 best IS shops as judged by IS professionals.
In key ways, Deletis, 57, is the right man to lead this transformation. He's got an electrical engineering degree from Youngstown University, and he spent three decades at IBM Corp. One of his responsibilities was to help update the semiconductor group's information systems and was responsible for plant floor systems in 30 plants around the world. He is laid-back, open, and accessible. Reflecting on how he achieves successful organizational redesign, he recommends "talk, openness, and trust."
Deletis' values can be attributed in part to his father, an Italian immigrant who built a successful construction company in Youngstown, Ohio, on the strength of a handshake-and good lawyers. Deletis also credits three mentors at IBM, including the man who taught him programming and a manager who had an uncanny knack for getting things done on a "You do something for me, I'll do something for you" basis. It's a method Deletis practices to this day. Another thing going for him: He took this job almost on a whim after working 30 years at IBM. He doesn't need to prove anything to anyone. He accepted the challenge-and the aggravation-because this redesign is "the chance of a lifetime."
On this day, Deletis will meet with two of his direct reports to go over 1996 management-by-objectives (MBO) goals, talk about the reapplication process, and gauge it's impact on workers. After doing some perambulatory managing, he and the corporate controller will put the finishing touches on a plan that will speed up the closing of the quarterly books.
At 8 a.m., Deletis meets with Phil Lorson' a member of the three-person "glue'' team leading the redesign. In 25 years at NSC, the tall, soft-spoken Lorson has seen it all. When hired in 1970, he was the second IS worker on the payroll. Deletis was brought in three years ago as vice president of information systems, over Lorson, whose job as vice president of computing and telecommunications was phased out in the first stage of the redesign.
Lorson is now an individual contributor responsible for internal marketing. How does he feel about his new role? "I begin by believing that you should be compensated based on your contribution to the organization," he says. "When we identified the new leadership team, a number of the strongest performers took individual contributor roles. The company wins. The individual wins if they're doing something they enjoy and are successful at."
Lorson is a Deletis fan: "Connie's very supportive, and willing to take risks. He's very people oriented-a good change agent." The feeling is mutual: "Our values systems line up pretty well," says Deletis. "If an issue comes up, it's almost like we're twins."
The two men spend 15 minutes looking over Lorson's MBO goals. There's give and take in reaching an agreement, but both seem satisfied. "We've spent a lot of time linking everyone's goals," says Deletis.
They discuss the reapplication effort. Lorson estimates that half a dozen didn't meet last week's deadline. But by now everyone has applied. Deletis takes this as an early sign of success. "I look for people who haven't applied," he says. "So far everyone's applied. We have these 220 jobs and everyone's applied."
Talk turns to the e-mail migration for 12,000 workers. Lotus Development Corp. products-a combination of cc:Mail and Notes-are going to replace IBM Corp.'s OfficeVision. Deletis expects 5,000 users on the new e-mail system by June, and the other 7,000 a year later. But he's concerned: "It took them two days just to install cc:Mail on my desktop at work and on my home system."
In Lorson's new role, he's designing the process for aligning IS with business divisions, planning how to unify 500 worldwide IS staff across the company (even though information is becoming distributed), and developing an internal marketing plan to make IS strategies more visible. Communication has long been a problem. "We have IS strategies," says Deletis. But the rest of the company "thinks they're secret."
Lorson believes one key to success is to have "early wins communicated loud and clear." What might those be? "The help desk," he asserts without hesitation. "When you ask NSC employees what they think of IS, they think of the help desk. We want to make big changes there; if you make them there, people will see them."
The easy give and take seems to I to be their hallmark. One imagines Deletis and Lorson sitting around the table a few years ago exploring ideas for moving from mainframe to client-server computing. In fact, that's how the redesign began. There was no higher mandate, Deletis says, but "Phil and I said this is the perfect time. We're switching technologies."
At the time, NSC had just changed the way IS was funded from centrally budgeted to a business division charge-back mode "It was taking too long to do the things they wanted to do, it cost too much for the perceived value, and they felt they had little control of costs," he says. "So in this charge-back system, they can buy services from us-or not." Something's working: IS has won back some of the business it lost, and its budget rose 10 percent in the first year, and 14 percent last year. That's like saying IS revenues increased in both years.
To increase customer satisfaction "we had to change the technical infrastructure," says Deletis. They migrated to a Unix platform (AIX), then moved applications off the mainframe. Then IS began the redesign of its own organization to match the technological changes.
The IS organization is the fifth NSC division to redesign since Dr. Gilbert F. Amelio became president and CEO in 1991. In the past two years he's led NSC to record earnings after a string of losses. The company reported net income of $264 million on sales of $2.4 billion for the fiscal year that ended in May 1995. The stock price has risen from about $4 per share at its nadir to more than $30. NSC did this by narrowing its focus to core businesses in analog and digital technologies. It's the leading supplier of semiconductors for networking products and a key player in mixedsignal chips for the surging voice- and video-processing markets.
Observers say Amelio has the company on the right track. "They needed a new strategic direction that wasn't dominated by Intel or the Japanese," says Jack Wilson, managing editor ofComputerLetter, a publication of the research firm Technologic Partners. "He's done a great job of finding new markets. Part and parcel with that is an organizational approach that has moved from a centralized, all-powerful CEO to decentralized business units that go after these markets."
Deletis, Lorson, and others give Amelio a lot of credit for decentralizing. "He set the environment," reflects Thomas Brooks, a high-level IS staffer who is also on the glue team. "Then he pushed the responsibilities down." This applied directly to two phases of the IS redesign. During the "macro" phase, from October 1994 through January 1995' the glue team led the 22 top people to define how the strategic intent of the redesign would change internal activities, processes, and attitudes.
They came up with 14 behaviors, feelings, and attitudes-BFAs, they call them-that they wanted IS employees and managers to exhibit, including teamwork, communication, and other soft skills. A survey of IS workers planned for the spring will gauge the success of top IS people in these areas.
The macro phase also produced 38 design priorities. First was the divisional-business-partner concept. Others included a shared resource center, better solutions for linking everyone in the corporation, a strategic planning function, a marketing and communications function, and a standards function. `'We aligned by division and by business process," says Brooks.
The macro phase concluded with the top 22 people reapplying for fewer management jobs and an increase in individual contributorships. The number of managers dropped from 17 to 12, and the number of individual contributors rose from 5 to 10, including one business partner assigned to each of NSC's four business divisions. The new team was announced in February.
During the micro phase, which concluded in late September with the announcement of new job assignments, the glue team led about 150 IS staffers through a process to figure out the details. How would the new alignment change IS structures? What job functions would remain? What new ones would be added? Which ones no longer made any sense?
The IS staff was not immediately impressed. "The biggest concern people had was job security. Everyone thought we wanted to downsize," says Deletis. "I'm looking for inconsistencies, looking for ways to engage and check the pulse of things."
Over a lunch of soup and crackers in the company cafeteria, Deletis and controller Bob Mahoney discuss key personnel changes, a new decentralized inventory system, and a plan to close the first-quarter books more quickly than ever.
Mahoney, who exudes an accept-all-challenges confidence, says IS and finance have the best relationship in the company, which wasn't always the case.
Most of the discussion centers on closing the first-quarter books. They've been working together for a year to cut the time from eight days to six. Not only are there bragging rights for the fastest quarterly close of any Fortune 500 company, but they gain two days of productivity.
The plan is a case study in how IS can work closely with customers. Deletis once thought he might have to add a $1.S million mainframe to accomplish the faster close. "We had people from the user area, from the datacenter, and the apps guys looking at the problem," he recalls. Then his IS staff figured out ways to optimize the computer runs, cutting them from 10 hours to 6, and the additional mainframe was not needed.
There's more decentralization in the works, which Mahoney says will allow each of the 10 plants to close its books even more quickly. Then headquarters will be able to complete the books in four days. They're putting an IBM/SP2 RISC-based Unix processor in each plant. It will run SAP AG's accounting package, and a new data warehouse, which is being built on a Sybase platform.
Deletis later says he feels good about the working relationship with Mahoney. 'CI don't have this kind of relationship with everybody," he says. "I want that with everybody."
It's mid-afternoon, and Deletis has gathered five IS employees to discuss the redesign with a reporter. Deletis says he's been told that it's not uncommon for less than 40 percent of a staff to survive a complete organizational redesign, but no one at NSC has quit, and he thinks the retention rate will be very high.
About 150 staffers were involved in the micro phase7 helping to define the new organization. Almost to a person they were skeptical when plans were announced several months ago' especially about promises of no layoffs. These workers became believers once the list of jobs was posted. "There were far more jobs posted than the number of employees," says Cial Baras, systems administrator.
Toward the end of the hour, Deletis is asked to leave the room. Now, what do they really think? They are emphatic in their regard for Deletis. They believe he's honest and open, although a bit emgmatlc.
One employee says that in the micro phase' when jobs and bodies were being divided, it seemed like horse trading, which was understandable-but management never explained the tradeoffs. The others say they wish Deletis had been more communicative. Deletis acknowledges later that despite numerous methods of communicating-newsletters, staff meetings, coffee klatches-if he could do one thing over, he would have made himself more available.
The long day isn't quite over. There's a task force meeting to discuss plans to remove IBM's VM mainframe in two years. (VM provides OfficeVision to 12,000 users, a data query language and application called Focus to 20,000 users, and a circuit-design simulator.) Moments later there's a sales pitch by two marketing mavens from Quadrillion Corp., a Canadian software developer with an application that's designed to diagnose quality problems in chip production. Deletis says they need to make their pitch to the IS people at the plant in South Portland, Maine. They wonder if Deletis could do them a favor: put a personal phone call in to the right guy to make sure he sets up an appointment soon. Sure, he says.
The demonstration in South Portland takes place a few weeks later, about the time that Deletis and team are announcing the outcome of the reapplication process: The 220 people who reapplied in August found out what their new jobs were. Deletis says 70 percent of the 250 people got their first job choice, 14 percent got their second choice, and 9 percent got their third. No one was laid off. During the second phase one staffer opted to take a job with another company. "These results are better than we expected. People are surprisingly highly enthusiastic," says Deletis. 'The one downside was that during the final week this place became almost paralyzed because everyone was caught up in what new job they would be getting. So the quicker you can do this the better."
Deletis has no doubts about the redesign. When individual problems arise, he deals with them. But fundamentally, he believes his team is on the right track. "! don't lose sleep over this'" he says, "but the true test is nine months from now."
