vigilant information systems: the western digital experience

1. Vigilant Information Systems: The Western Digital Experience Yu-Hui Tao

3. Abstract Cost-conscious & turbulent economy Lean and high-velocity supply chain High volume suppliers whose large customers change requirements often To be vigilant means to be alertly watchful Sensing and responding capabilities Western Digital (WD) VIS � underlying layer of business intelligence applications Analyzing data from numerous sources A management dashboards automating alerting process Means for responding

4. Vigilant Information Systems VIS allows information and business intelligence to be integrated and distilled from various sources to detect changes, initiate alerts, assist with diagnosing and analyzing problems, and support communication for quick actions (Walls et al., 1992) How VISs differ from traditional ISs (Figure 17.1) User vs. system initiates the process How the concept of OODA (Observe/Orient/Decide/Act) loop is useful (Figure 17.2) U.S Air Force Coloner John Boyd (1986) How fighter pilots flying aircraft with inferior maneuverability won air combat engagements (dog fights)? Compressed the cycle of activities Observe (see the situation and adversary) Orient (size up vulnerabilities and opportunities) Decide (choose the combat maneuver to take) Act (execute the maneuver)

5. Vigilant Information Systems(count.) Stalk and Hout (1990) & Haeckel and Nolan (1993) converted OODA to business use Observe (see the changes signals) Orient (interpret the signals) Decide (formulate and appropriate response) Act (execute the selected response) Four requirement of VIS Capabilities for observing � visibility into critical business process capturing KPIs in real time; information from various sources Capabilities for orienting � graphical dashboards; sending alerts; drilling in data; slice-and-dice data; report trends Capabilities for deciding � asking what-if questions; descriptive statistics; time series comparison Capabilities for acting � architectures for communicating decisions quickly; follow-up tracking

6. Business Challenges of WD $2 billion global designer and manufacturing of high-performance bard drives for desktop personal computers, corporate networks, enterprise storages, and home entertainment applications Founded in 1970 10,000 employees worldwide Top five challenges: Constantly changing customer requirements A fiercely competitive global industry Avoiding business disruption, product returns, � Short product life cycle Need for extremely high quality and reliability Early 1990, over 11 manufacturers � 3 to 5 now 2002 � unit volume rose 30% - toughest years in IT industry Survival strategy: React more quickly to changes; integrated information; Follow-the-sun Difficulties for consolidating data: different results from ERP reports using different filters Solution: VIS and its real-time management dashboards

7. WD�s Vigilant Information System Too complex � four sections below: Architecture Three foundation capabilities Revamping WD�s business processes Management dashboards

8. WD�s VIS - Architecture Bottom-up schematic view (Figure 17.3): Layer 1: Raw data Layer 2: Functional Applications (Observe) Layer 3: Business Intelligence (Orient) Layer 4: Dashboards (Decide and act)

9. WD�s VIS � Three foundation capabilities As can be seen in Figure 17.3 ERP system - 1997 Data warehouse - 1999 Quality Information System (QIS) - 1999 ? They capture and integrate the data need for the VIS However: Legacy systems remained disconnected The data refresh rate was inadequate Managers needed better analysis capabilities

10. WD�s VIS � Revamping WD�s Business Processes New business policies and processes to put the VIS to work Three critical ones Align time-based objectives across the enterprise Capture KPIs in real time Foster cross-team collaborative decision making

11. WD�s VIS � The Management Dashboards Two real-time dashboard systems for the factory � developed in house and rolled out in late 2000 for demand planning, distribution, and sales information Figure 17.4 � Top: 4 types of factory and 10 types of corporate dashboards Middle: VIS and its information flow Bottom: three constituencies � factories in Asia, corporate offices in California and customers around the globe Information flow from right (customers) to left (corporate and factory) Core requirements for the 5 factory dashboards (Figure 17.5) were to: Show KPIs Display metrics Allow drill down Issue alerts � distinguishes them from EIS Allow staff and managers to see KPIs in near real time Each parameter on a dashboard � �target value� to be triggered. Corporate dashboards can be see from Figure 17.4

12. How the VIS Accelerates WD�s OODA Loops A well-designed dashboard can help people accelerate the OODA loop of the processes monitored The factory and corporate dashboards are used in a three-level nesting of OODA loops (Figure 17.6) Shop floor OODA loop Factory OODA loop Corporate OODA loop Factory and corporate dashboards: Not electronically connected but through the data the share and the communications of the managers who use them

13. The Business Impacts of WD�s VISCost Savings 225 managers and professional use the dashboard Better visibility, more efficient querying, less information overload, faster decision making increasing inventory turns from 22 to 29 decreasing inventory by $25 million in 2002 annual savings of $3 million in inventory carrying costs estimated cost to be $1.2 million ROI to be one year (actually less than 1 year) Margins more than doubled over the three-plus years It cost $1500 for DBA one cross-application or cross-database report � users create multiple views �on the fly� Reports request dropped from 200 to 50 per quarter ? savings $900,000 per year Printer paper save $800,000 per year Customer reports 10 minutes for managers to create Daily production meetings now take 1.5 hours rather than 3 hours � involve 15 supervisor and managers ? $350,000 saving per year

14. The Business Impacts of WD�s VISStrategic Advantage Faster analysis and decision making, immediately available information, quicker reflexes, and faster OODA loops Help focus management attention Everyone sees the same information, anytime, anywhere, and updated at the appropriate time intervals Shortened reaction time between receiving data and acting on it � from hours or days to minutes Longer-term exist and are clearly strategic Agile competitor Ties together executive decision making, supply movements, and internal operations into a virtuous circle that can function effectively as various situation unfold

15. The Business Impacts of WD�s VISLessons Learned #1 Design the real-time management dashboards to be the nerve center of a VIS #2 Plan and schedule the coordination among teams to use real-time dashboards to manage enterprise-wide #3 Build a learning loop around each OODA loop to foster group learning because the faster the loop, the more important and frequent the learning reviews need to be #4 Match the time latency of each OODA loop to the organization�s needs and cap bilities to become truly vigilant; do not indiscriminately chase zero latency #5 Vigilant information systems may need to be justified on some basis other than return on investment #6 Implementing an enterprise-wide VIS is a management initiative more than a technology initiative because it requires �active, collaborative engagement� from all top management to install the needed organizational transformation

16. The Future of Vigilant Information Systems Internally, output to wireless device is planned Externally, dashboards for collaborating with supply chain partners Figure 17.7 � four types of real-time management dashboards based on the amount of �business horsepower� required of their underlying VIS.

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