Analysis: Intel CIO pushes productivity payoff

You would expect the CIO of the company built on the famous Moores law of exponential growth over time in CPU capacity to push the productivity benefits of new IT investment. This is exactly what Intel VP and CIO Doug Busch did in Sydney last week.

Busch is charge of a 4200-person IT department which caters for the IT requirements of 80,000-plus Intel personnel and accounts for an IT spend of about $US1 billion a year. From 1998 to 2001 Intel's staff grew from 65,000 to 80,000, growth slightly outpaced by increases in its IT spend of about 30 per cent over the same period.

According to Busch, Intel has considered the return on IT investment at three levels: national economies, companies in verticalindustries and at Intel itself.

Arguing that the benefits of IT spend at companies, Busch cited "preliminary results" from an MIT Sloan School of Management Study of Internet Organisations, culture and productivity, as showing a "definite statistical correlation between [a company's] investment in IT capability and productivity" in a survey of 500 firms.

Busch also claimed a 10 times increase in the productivity of Intel engineering staff since 1982 through gains built on "application of computing technology to help automate the design process". The 10 times productivity improvement was calculated after dividing the increase in CPU complexity (represented by the number of transistors) by the increase in number of design engineers. Busch also highlighted decreasing time spans between the introduction of a new CPU manufacturing process (0.25 microns in 1995, 0.18 microns in 1997, 0.13 microns in 2000) and the date at which "world class" defect density was achieved and production started. These lags were reduced from about two years for the 0.25 micron process (1995 to 1997) to about one year for the 0.13 micron process (2000 to 2001), which Busch said were achieved with the help of sophisticated IT tools which allowed analysis and improvement of production processes and improved communication between manufacturing facilities. The change also had significant profitability implications for Intel.

Busch also reported productivity gains in its manufacturing supply chain management, claiming a 15 per cent productivity improvement for its commodity managers and a 75 per cent decrease in cycle time during the past couple of years. In pursuing B2B efficiencies, Busch also noted that Intel is a member of the RosettaNet B2B standards consortium.

He also claimed significant productivity gains for Intel's customer service representatives who previously spent only 20 per cent of their time on high "value add" activity and 80 per cent on data entry. The implementation of new Web-based ordering systems two years ago has drastically reduced their data entry requirements, he said. Busch also claimed a "100 per cent" improvement in the company's HR department over the past four years for HR personnel responsible for managing the employee stock option plan. This was achieved by replacing a phone and fax based process with a Web-based system.

Busch sees Intel's key IT goals over the coming two years in achieving improvements in disaster recovery, security and business continuity capacity; deployment of wireless services; in streamlining delivery of employee services; and implementing "very aggressive" e-biz initiatives.

Intel ships RosettaNet tools

Intel this week helped small and mid-size business customers, and itself at the same time, with the release of a new RosettaNet development toolkit. The IA SDK for RosettaNet (Intel Architecture Software Development Kit for RosettaNet), simplifies the development of electronic business-to-business applications used by small to mid-size companies, according to Intel representatives.

By fostering the use of RosettaNet to drive more electronic B2B automation, Intel actually makes life easier for itself, as many of the new toolkit's potential customers are Intel suppliers and business partners, said Shawn Willett, an industry analyst at Current Analysis. "Most of the specifications [for RosettaNet] are for the high-tech manufacturing market," Willett said. "Intel is a big customer of the technology in that it is trying to automate interactions between themselves and their suppliers. That probably how they got in to this whole thing." B2B networks between trusted business partners using RosettaNet PIPs (Partner Interface Processes) assist member companies inordering products and forecasting inventory requirements, Willett said.

Intel's new IA SDK for RosettaNet delivers the tool necessary to get up and running on a PIP, as well as new features that link to back-end data bases, according to Intel. "It's to Intel's advantage to get everybody up and running on RosettaNet, and that's probably one of its main motivations here," said Willett. IA SDK for RosettaNet supports the following RosettaNet Implementation Frameworks: Version 1.1, Windows 2000, and PIPs 3A4, 3B2, 3C3, 3A7, 3C4, and 0A1, according to Intel.

-- Dan Neel

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