Mead Corporation.doc

Mead Corporation Case

McNurlin & Sprague. 1998.Information Systems Management In Practice. 4/e. Upper

Saddle River, NJ: Prentice Hall. Pages 18-28. Mead Corporation, with headquarters in Dayton, Ohio, is a paper and forest products company with more than 100 mills, plats, and distribution centers throughout the United States and Canada. The company is highly decentralized, with ten operating divisions – paper, packaging, paperboard, consumer, distribution, electronic publishing and so on.

Corporate Information Services – 1960s and 1970s

In the 1960s, Mead’s corporate information services (CIS) department provided all divisions with data processing services. By 1967, the department’s budge had grown so large that management decided to spin off some of the functions to the divisions. Divisions could establish their own data processing and process engineering groups if they so desired. Or they could continue to purchase data processing services form CIS. Many of the divisions did establish their own IS departments, but all continued to use the corporate data center for their corporate applications.

In the late 1970s, the corporate information services department had six groups, as illustrated in Figure 1-8. The director reported to the vice president of operations services. The six groups under the director were Computer operations – to manage the corporate data center Telecommunications–to design the telecom network and to establish

standards Technical services–to provide and maintain systems software Developmental systems–to handle traditional system development Operational systems–to maintain systems after they become

operational Operations research–to perform management science analysis

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The 1980s–Focusing on End User Computing

In 1980, management realized that CIS organizational structure would not serve the need of the rapidly growing end user community. Furthermore, to become an electronic-based organization, Mead needed a corporate-wide network. Therefore, the department reorganized as shown in Figure 1-9 so that the directory of corporate information resources (CIR) reported directly to the company president. This change signaled the increased importance of information resources at Mead.

CIR was responsible for creating hardware, software, and communications standards for the entire corporation; it ran the corporate data center; and it operated the network. All the divisions used the network and corporate data center, and they followed the corporate standards; some operated their own small-distributed systems as well, which linked into the corporate network. The three departments with in the new group were as follows:

Distributed Support Applications (DSA) provided all end user computing support for the company. It was the marketing arm, selling and training Mead employees on end user computing, while the information services department provided the technical support for the end user systems. At the time of the 1980 reorganization, DSA had no users, no products, no common applications among it multiple locations, and only five staff members in operation research and two in its office systems support group. By 1985, they were serving 1,500 users in some 20 Mead locations with ten staff members.

DSA offered 14 products and eight corporate wide applications. Its interactive help center provided hotline support and evaluated new end user computing products. Its office systems group supported the dedicated word processing systems and IBM’s Professional Office System (PROFS)–which Mead used as the gateway to end user computing. Divisions were free to select any office system, but most followed the recommendations of this group to ensure corporate wide interconnection. Its decision analysis group used operations research tools to develop linear programming models and simulations for users needing such sophisticated analysis tools. And it built a number of company-wide decisions support systems, such as a corporate budgeting model and a graphics software system. And the financial modeling coordination and EIS group was in charge of Mead’s integrated financial system. It also supported executive computing, through IBM PCs used by corporate executives and an executive information system (EIS) accessed through PROFS.

Information Services was responsible for most of the traditional information systems functions from the old information services department–company-wide telecom support, data center operations, development of corporate –wide systems, database administration, system software support and technical support for end user computing.

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Most divisions developed their own applications, following the guidelines created by this department. The EDP steering committee–composed of the president and group vice presidents–established a policy that applications should be transportable among the various computing centers and accessible from any Mead terminal. The company’s telecom network established the guidelines for making this interconnection possible.

Information Resources Planning and Control was responsible for planning future information systems and technology. This department grew out of the company’s strong planning culture, and decentralization in the 1970s highlighted the need for an IT planning coordinating body. Although it was small, it had two important roles. First, it took the corporate perspective for IT planning to ensure that Mead’s IT plans meshed with business plans. Second, it acted as planning coordinator, helping various groups and divisions coordinate their plans with corporate and CIR plans.

Late 1980s AdjustmentsThe 1980 reorganization separated the more people-oriented

activities under DSA from the more technical activities under the information services department. The technology was better managed, and relations with users improved. However, this split caused two problems. First, traditional programmers and systems analysts felt that DSA received all the new and exciting development work. The second problem was coordinating the two departments. A matrix arrangement evolved to handle both problems, with both information services and DSA people staffing most projects.

The departmental structure implemented in 1980 remained essentially intact throughout the 1980s, with only two major changes. In early 1988, the vice president of information resources began reporting to Mead’s chairman and CEO. Second, the DSA group was reorganized, as shown in Figure 1-10.

As users became more sophisticated and less generic, the department created small groups with expertise in specific areas. By the end of the 1980s they were supporting over 5,000 users corporate-wide in three ways–service center help, application development consulting, and local area experts.

The service center people continued to introduce new users to technology and provide telephone hotline assistance to experienced users. The application development consultants helped users develop more sophisticated applications and guided maintenance of user-written applications, which had become a noticeable problem. They also updated traditional applications to permit end user systems to access the data. The local area experts worked in the functional departments supporting users in their area. They reported directly to their area manager and indirectly to the information resources department. Due to the growing number of

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user-written applications, they too helped users keep their application up-to-date.

So, during the 1980s, Mead found its end user computing focus shifting from introducing new technology to making more effective use of the technology in place. By the end of the decade, they were concentrating on harvesting their investment in IT by using it as a lever to change the way they were doing business.

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1990–Levering the InfrastructureIn 1990, CIR underwent another reorganization to bring it in line

with a new strategy. We will fist discuss the reorganization, then present the strategy.

By 1990, management realized that end user systems and large-scale business systems needed to cross-fertilize each other. Users needed one place to go for help; therefore, application development was placed in one group, which was renamed Information Services, as shown in Figure 1-11.

The emphasis was to strengthen the mainframe-based electronic infrastructure of the company, of which the corporate wide network had become paramount. Although the network had been created in 21983, its value in connecting Mead to its vendors and customer had not been recognized until the late 1980s. Therefore, in 1990, CIR created a new group–network services–to handle computer operations, technical services, and telecom. The 1990 reorganization also consolidated administrative functions (such as chargeback) into the technology planning and control group.

So while the 1990 reorganization did not add new functions, it shifted emphasis from end user computing to building an infrastructure and integrating development of all sizes of applications.

1990 Strategy In the early 1980s, Mead installed it first information resources business plan, which emphasized networking and end user computing. Bu the late 1980s, the objectives had been accomplished. In hindsight, management realized that the 1980 plan had been a technology plan, not a business plan, because its goal had been to get control of IT. Having accomplished this, Mead decided to create a true business plan, one that addressed how it would employ its IT resources.

Using the two-by-two matrix show in Figure 1-12, management realized that Mead had only been building systems that fit into the lower right quadrant–systems that supported Mead’s traditional products and internal business processes. Rather than focus on company operations, management decided to shift emphasis in two directions: (1) toward reengineering company operation and (2) toward using IT to work better with suppliers and customers.

Business process reengineering–that is, significantly restructuring the internal operation in a business–because a major strategic direction, with the company wide network playing a key role. Since IT removes many time and distance barriers associated with business processes Mead decided to use IT to build new processes rather than simply accelerate existing ones. In rethinking all the major Mead processes, two were carved out to be recentralized and reengineered–people reimbursement and purchasing. The result has been very large savings. Fore example, the reengineering group discovered that the company had 240 people handing accounts payable, mainly reconciling mismatches between

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goods received and purchases orders. By reengineering purchasing, they realized they could eliminate the need to do such reconciliations. So they outsourced the function while they developed the new purchasing system.

The second emphasis involved doing business electronically by extending current business processes and products to suppliers and customers. The motto was: “It is easy to do business with us,” using any means customers wanted–through electronic data interchange (EDI) for application-to-application transactions across company boundaries, through terminals at customer sites lined to Mead’s computers, or even though the telephone using voice response. In essence, Mead installed various front-ends on its existing mainframe systems.

So, the basic strategy set forth in 1980 remained in force in 1990–to retain central control of the IT infrastructure and distribute responsibility for building an maintaining applications in the operating divisions. As the uses of IT changed, CIR reorganized to focus on those new uses–end user computing the 1980s, business reengineering and customer-oriented systems in 1990.

1993 to Present–Vision 2000In 1993, CIR management recognized that client/server

computing was indeed a paradigm shift in computing, so that Mead’s mainframe-based structure would (at long last) need to be changed, and changed significantly. So CIR launched Vision 12000 to develop a vision of what computing and communications will look like at Mead in the Year 2000.

Vision 2000 foresees computing to be three-tiered–mainframe, midrange servers and desktops. Workstations will be user’s “window to the world” of information access, analysis, and communication. Interfaces, data, and applications will be at the appropriate level. Applications will be of three types: enterprise wide, division, and local; and they will use a global network that reaches out beyond Mead.

CIR will continue to focus on shared services (providing the infrastructure and supporting enterprise applications), while divisions will tailor systems to their customers and business. Users will not need to worry about where processing occurs, where data is housed, or how the mechanics of information processing are handled; CIR will handle all this. Data will be viewed as a resource and managed accordingly, balancing access with integrity and security. And users will have greater geographic independence than in the past.

This vision is based on a “demanding partnership” in which the divisions “buy into” the infrastructure and its standards while CIR provides a flexible and responsive infrastructure.

CIR made the following five major assumptions when developing Vision 2000 in 1993:

1. The mainframe will continue to be the best platform for large-volume transaction systems or systems requiring massive computing power. In

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addition, it could be come an enterprise server. This is consistent with the adoption of an enterprise wide client/server architecture.

2. Integration of voice, image, video and so on will occur at desktops, servers, and portable devices; therefore, higher-capacity networks are needed to transmit and route these massive amounts of data.

3. Although unit costs of technology will continue to decline, overall IT usage at Mead will increase

4. PCs present a hidden cost that is at least as large as the visible IT costs.5. Technology advancements will increase; therefore, the challenge is to balance

the need for standards while keeping up with the pace of change.

New Organizational Structure. In order to implement Vision 2000, Mead had two organizational options. One was to set up a skunk works to create the new infrastructure and systems. The other was to embed the new-client/server paradigm into CIR’s organizational structure. CIR chose the latter, so the entire corporate information resources group was reorganized to match the client/server model, as shown in figure 1-13.

The core is the Vision 2000 Project, managed by high-level CIR executives. Around this core is the technology layer of the CIR organization–the four core technologies that provides data and information. Server Technology Services handles all servers on the network, from mainframes on down. Client Services handles all devices that customers touch, which include desktop workstations, fax machines, and telephones. CUR defines its customers as Mead employees as wells as others who interface with mead, And Network Services handles everything that ties these other pieces together, both voice, and data communications as well as the Internet, intranets, gateways, firewalls, and working with their Internet service provider.

All four groups report to the vice president of CIR, John Langenbahn, who, by the way, has led Mead’s IS department since 1985. All four groups have two jobs: (1) to run current operations and (2) to build Vision 2000. Langenbahn notes that the move from mainframe to client/server has moved CIR from managing hundreds of components to managing thousands of them-an order-of-magnitude change.

On the outside layer of the organization chart, closer to the customer, are the application groups. They draw on Vision 2000 and the IT infrastructure provided by the inner layers to server their constituencies. Division support supports the applications developed by Mead’s ten operating divisions. Reengineering Support is concerned with a few company-wide business processes that have been recentralized and reengineered to improve efficiency and lower costs. These include Mead’s financial systems and purchasing system, all of which do not touch customers. Enterprise Tools and Applications provides a common desktop toolkit to all Mead staff. It consists of hardware as wells as a suite of software products–spreadsheet, e-mail, word processing, graphics, browser, EDI, and

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knowledge tools (such as Notes). Corporate Center Solutions handles application development and maintenance of corporate applications. Technical Standards and Planning is a one-person think tank devoted to determining the standards that underlie Vision 2000– while everyone lese works on the day-to-day issues. And finally, as shown below the circle, is CIR Administration, which handles contracting and financials.

Like other companies, Mead has encountered the typical staff problems of getting the mainframe staff to move into the client/server environment and getting new client/server talent to follow the discipline needed to develop enterprise-wide systems.

Progress to Date. The Internet has had a large impact on Vision 2000 in that more and more of the elements of the vision can be served by it. For example, the vision foresaw storing lots of data on servers, so that CIR, not users, could handle backup. But now, with so much information on the Net, CIR does not need to acquire so much public information, install it, or maintain it in-house. For instance, CIR had planned to install the U.S. telephone directory on a CD-Rom server. Since that is available on the Net, CIR has simply added an icon to the standard desktop for quick access to the directory. So the Internet will reduce some Mead costs.

Client server computing is not cheaper that mainframe computing. Mead realized that in 1993 (even though press articles were touting its lower cost). At that time, Mead placed the cost of a PC at $9,024 a year ($2,517 hard costs, $6,507 soft costs). However, since the company already had 6,000 PCs installed, it had already made a huge down payment on the new environment. And to reduce the soft costs, Mead has implemented it Vision 2000 standards so that those $6,507 in soft costs can be cut to $3,005 a year.

In all, CIR has made good progress in implementing Vision 2000. The vision was conceived in 1993, implementation began at the end of 1994, and by mid 1996, it had been rolled out to 2,000 Mead employees. The target population is 6,000, so CIR expects to be completed by the end of 1997.

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Mead Corporation’s Pre-1980 IS Department

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Mead Corporation’s 1980’s IS Department

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Mead Corporation’s 1989 CIR Group

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Mead Corporation’s 1990 CIR

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Mead Corporation’s Strategic Opportunities Framework

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Mead Corporation’s Current Corporate Information Resources Structure

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