Integrating the Engineering, IT, and Integrating the Engineering, IT, and Business Functions at Raytheon Business Functions at Raytheon Using Three Types of GlueUsing Three Types of Glue

Presented by Tom Presented by Tom LydonLydonDirectorDirector

Enterprise Network ServicesEnterprise Network ServicesSeptember 25, 2003September 25, 2003

Raytheon AircraftRaytheon Aircraft

Our ProductsOur Products

A Leader in Global Technology Integration

Government and Defense

Raytheon Systems Limited

• More than 77,000 employees

• In 54 countries, in more than 150 locations

• Over 50 sites in the United States

• More than 7,000 programs

• More than 24,000 engineers

• 9,000 new graduates (within five years of Bachelors degree)

Who is Raytheon ?

1998 Challenge - Four Cultures

• How to Convergence Cultures while retaining Legacy Data & Best Practices

RaytheonRaytheon

HughesHughes

TI TI DefenseDefense

EE--SystemsSystems

19981998 19991999 20002000 20012001 20022002 20032003

??

BurningBurningPlatformPlatform

100,000 employees100,000 employees$17B Revenue$17B Revenue4 Strong Cultures4 Strong Cultures

How doHow dowewe

do thisdo this

Challenge - Integration of Functions

• Integration of Engineering and Information Technology with Businesses

EngineeringEngineering&&

TechnologyTechnology

CustomersCustomers

PartnersPartnersSuppliersSuppliers

CustomersCustomers

CustomersCustomers

SuppliersSuppliers

SuppliersSuppliers

PartnersPartners

PartnersPartners

CustomersCustomers

PartnersPartnersSuppliersSuppliers

Process & ToolsIntegrated Product Development System

Defines the way we plan, capture and execute programs

Provides tools and processes that

enable Integrated Product Teams to

perform their tasks

EVMS, IMP/IMS, CAIV

Provides an environment for

continuous process improvement

Raytheon Six Sigma

Provides “One Company” language and tools to enable program capture and successful execution

Building a Process Culture - Requires Discipline!

Program Management2 - Project Planning, Management and Control

3 Requirements

andArchitectureDevelopment

5System Integration,

Test, Verificationand Validation

(ITV&V)

4 Product Design

andDevelopment

Planning 6 - Production and Deployment

Planning 7 - Operations and Support

1Business Strategy

ExecutionBusiness/StrategicPlanning

Program Capture/Proposal

1 2 3 4

5

6

7 8

109

11

PROJECT DECISION GATES•Validates process•Drives discipline•Allows tailoring•Management involvement & oversight

Interest / No InterestPursue / No Pursue

Bid / No BidBid / Proposal Review

Internal Preliminary Design Review

ContractClosure

Start-Up Review

Internal System Function Review

Internal Critical Design Review

Internal Test / ShipReadiness Review

Internal ProductionReadiness Review

-1 0

Strategic Plan

Integrated Product Development System

• Discipline without bureaucracy • Integration across value stream• Execution driven by gate reviews

Integrated Product Development System

IPDS Drives Cost and Schedule Performance, PredictabilitySchedule Performance Index

Cos

t Per

form

ance

Inde

x

0.86

1.00

0.86 1.00

IPDS Deployment IPDS Deployment Across RaytheonAcross Raytheon

2000

2001

2002

1998 1999 2000 20022001 2003

1998 1999 2000 200220011997 2003

Level 3DefinedLevel 3Defined

Level 2ManagedLevel 2

Managed

Level 4Quantitatively

managed

Level 4Quantitatively

managed

Level 1PerformedLevel 1

Performed

Multiple Multiple ProcessesProcesses

CommonCommonMetricsMetrics

THENTHEN NOWNOW

Software CMM Software CMM Across RaytheonAcross Raytheon

Level 5OptimizingLevel 5

Optimizing

BurnhamBurnhamIPDS IPDS

directivedirective

Raytheon is WorldRaytheon is WorldClass in Software Class in Software

Development Development TODAY!TODAY!

Capability Maturity Model®-Carnegie Mellon assessment of software

Process Maturity Pr

oduc

tivity

Prod

uctiv

ity

Level 3DefinedLevel 3Level 3DefinedDefined

Level 2Repeatable

Level 2Level 2RepeatableRepeatable

Level 4ManagedLevel 4Level 4

ManagedManagedLevel 1Initial

Level 1Level 1InitialInitial

Level 5Optimizing

Level 5Level 5OptimizingOptimizing

CMM(i)CMM(i)

NotNotPredictablePredictable

ControlControlEmergingEmerging

FeedbackFeedbackControlControl

PredictablePredictable

ValueValueOptimizedOptimized

CMM / CMM(i) CMM / CMM(i) ------>>Prioritization FunctionPrioritization Function

The Foundation of R6�

KaizenKaizen

QFDQFDDOEDOE PIPI

SPCSPCcfmcfm

TraditionalTraditionalSix SigmaSix Sigma

DFMDFM

AgileAgile

CMICMI DTCDTC

JITJITLeanLean

ProcessProcess

ToolsTools ToolsTools

RaytheonSix Sigma

• Classical Six Sigma• Quality Function Deployment • Design of Experiments• Process Capability Analysis• Gauge R&R• Ishikawa Tools• Taguchi Methods• Process Mapping• Statistical Process Control

• Design for Six Sigma• Design To Cost• Statistical Requirements Analysis• FMECA• Statistical Design Performance

Simulation • Software Predictive Statistical Tools• Risk Management• DFMA

• Total Quality Management

• Re-engineering• Breakthrough Improvement• Process Mapping• Change Management Skills• Process Improvement Teams• Problem-Solving Tools • Benchmarking

• Lean/Agile Enterprise• Value Stream Analysis• Single Piece Flow• Agile Manufacturing• Just In Time• Supply Chain Management• Kaizans• Mistake Proofing• Continuous Flow

• Goal Deployment• Balanced Scorecard• Hoshin Planning

Design for Six Sigma is JOB 1 in Engineering

The Five R6� Principles

�Specify value in the eyes of the customer.�Identify value stream; eliminate waste

and variation.�Make value flow at pull of the customer.�Involve, align, and empower employees.�Continuously improve knowledge in

pursuit of perfection.

Our Proven Model

A Common Language!A Common Language!

• Technical Career Ladder• Rewards & Recognition Strategy• Retention Strategy• Diversity Initiative• Learning & Development Strategy• Career Development• Team Development

• Web-based Communication• Collaborative Product

Development (CPD)• Newsletters• Symposiums, etc

• CMMI• Metrics• Gate Review Process• Program Execution• Raytheon Six Sigma

• Process & Tool Strategy• Common Process Development• Interface to Enterprise Process• Process Deployment Roadmaps• Policies & Procedures• CMMI• Raytheon Six Sigma

• Technology Strategy • Technology Networks• IR&D Allocation Process• IDEA Program• University Research

The Engineering & Technology Starpoint

Engineering &Technology Council (E&TC)

“One CompanyApproach”

PerformanceExcellence

Communication& Collaboration

TechnologyStrategy

Process & ToolStrategy

EngineeringPeople Strategy

Integrated Technology Strategies

Business Units

Strategic Business Area

MS RACIDS NCSIIS SAS

Technology Areas

RF

EO/Lasers

Processing

Arch/Syst Int

Missile Defense

Precision Strike

Homeland Defense

ISR

CorrelateRationalizeStrategize

RF

EO/Lasers

Processing

Arch/Syst Int

Mat’l & Structure Mat’l/Struct• Deliver Technology Area roadmaps• Articulate what is possible and when• Coordinate Joint Business Unit IR&D projects• Shape Customer Technology Vision and Create CRAD Opportunities• Rationalize Common Component Technology Sourcing through

- Make/Buy Process - Strategic Alliances

FutureTechnologies

5-10 Years

Product Introductions

0-10 Years

StrategicThrusts

0-15 Years

Re-shaping the company through innovation

NanoTechnology-(MIT) $50MNanoElectronics $32MGallium Nitride T/R Modules $10MFocal Plane Arrays $25MSolid State Lasers (HP) $36MNext Gen T/R Modules $10M

Cum Investment (IRAD+CRAD)

Directed Energy WeaponsBMD Hit To Kill WeaponsCooperative EngagementNetwork Centric Systems

Missile DefenseIntel, Surv., ReconPrecision StrikeHomeland DefenseSystems IntegrationModeling & Simulation

CEC

DEW

Tomorrow’s Technology

Component Technologies Systems Technologies Thrust Areas

Architecture & Systems Integration - The Domain

Networked Networked CollaborationCollaboration

Global Battlespace Global Battlespace VisualizationVisualization

Robust Time Robust Time Critical TargetingCritical Targeting

Dynamic Dynamic Engagement ControlEngagement Control

Horizontally & Vertically Horizontally & Vertically Integrated MultiIntegrated Multi--Spectrum Spectrum

CoverageCoverage

Cross-Enterprise Collaboration

Raytheon Council Structure:Both Enterprise and Engineering cross-business councilsfocusing on leveraging “One Company” solutions for:

- People, Process & Tools, Collaboration, Technology and Performance Excellence

Raytheon CorporateGOVT&DEFENSE

Non

GOVT

AIRCRAFT

Program Leadership Council

Engineering & Tech Council

Supply Chain Council

BD Council

Productivity is evident in our results …

179 180

194

217

235

150

160

170

180

190

200

210

220

230

240

250

1999 2000 2001 2002 2003P

4-year CAGR = 7%($000) Sales Per Employee

3.03.54.04.55.05.56.06.57.07.58.0

1999 2000 2001 2002 2003P

turn

s

Avg. Working Capital Turns (G&D)

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003P

Annual Cost TakeoutFrom Productivity

Drivers of this success�R6�

�IPDS (Process Discipline)

�IPDS (Program Management)

($M)

… evident to our customers …

82%90% 94%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002

Award Fee History

Earned Value Performance History

0.880.9

0.920.940.960.98

11.021.041.061.08

1.11.121.141.16

0.88 0.9 0.92 0.94 0.96 0.98 1 1.02 1.04 1.06 1.08 1.1 1.12 1.14 1.16

20002001

2002

1999 ??

Target Area

SPI

CPI

0

10

20

30

40

50

60

2000 2001 2002

Customer CPAR(Yellow & Red Programs)

As rated by customer

“R6� saves lives”

- Stephen MajerowiczMALTA Ground TerminalUS Department of Defense

1998 1999 2000 20022001 2003

IPDS Deployment Across Raytheon

OVER

UNDER

AT

CO

ST

EARLYLATE ON-TIME

SCHEDULE

OVER

UNDER

AT

CO

ST

EARLYLATE ON-TIME

SCHEDULE

IPDS: The Results !

Three Types of “Glue” Pulling Teams Together

• Cultural Convergence while retaining Legacy Data & Best Practices

RaytheonRaytheon

HughesHughes

TI TI DefenseDefense

EE--SystemsSystems

19981998 19991999 20002000 20012001 20022002 20032003

ipdsipds

CMMICMMI

R6sR6s

IPDS + R6� + CMMI Pr

oduc

tivity

Prod

uctiv

ity

FixFixProgramsPrograms

InformationInformation

IntegratedIntegratedSupply ChainSupply Chain

CustomerCustomerFocusedFocused

MarketingMarketing

EVMSEVMS

HR ProcessesHR Processes StrategicStrategicPlanningPlanning

Annual Annual OperatingOperating

PlanPlan

Innovation will flourish on the bedrock of discipline

RISE *RISE *

* Raytheon Integrated Synthetic Environment* Raytheon Integrated Synthetic EnvironmentGlue #1Glue #1

Glue #2Glue #2

Glue #3Glue #3