AUGUST 20, 2002 Where IT leaders achieve business goals  
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Leading amid change
June 3, 2002, 09:00 a.m. ET
By Barbara Steinberg

James Lee

James Lee


Optical Fiber Solutions, a subsidiary of Japan-based Furukawa Electric Co.


Number of IT employees:
140 permanent; 100 contract employees

Number of end users:

How long have you held this position?
Two years

As Lucent Technologies Inc. sold and divested its Optical Fiber Systems division, James Lee led the IT systems separation, which took more than a year. He remained with the division when it was acquired by Furukawa following an auction process, and he is now interviewing for a global CIO position at Furukawa. In this interview with Computerworld's Barbara Steinberg, he talks about the divestiture.

What has been your most demanding leadership task?

My most demanding leadership task has probably been to reinvigorate the IT organization's drive to overcome barriers that hinder partnering with business partners. Since business and markets shift so much, the IT organization is whipsawed. We are almost like the flea on the tail of the dog. The problem is: People get frustrated because projects usually take nine to 15 months to complete, and by the time you near completion, the business and marketplace have changed again.

How do you approach ROI for new IT initiatives now, as opposed to the height of the dot-com boom?

We have modified our approach: [In] 2000 [it] was straight ROI, 10%-12% annual return. Now in 2002, an IT project must be cash-flow positive, as well as show a savings to the net bottom line, within 12 months. That's a much more rigorous evaluation.

By sticking to objective financial targets, the people who become very frustrated with not being able to deploy the bleeding-edge tools finally understand. They own stock. They own part of the company. There is more acceptance for pulling back from large, complex projects, and doing things that are simpler, quicker and much more likely to succeed.

Do you find the financial discipline good?

Actually, pretty good. I think the discipline gets better if there is a strong project review and management review by the business users. Usually, the business users are the ones who can validate the savings. So there has to be a very strong business review as well as an IT review.

What major technical initiatives are being worked on to enable growth and efficiency?

Based on today's market, the three areas would be consolidation of infrastructure, selective outsourcing to best-in-class service providers, and simplification of systems that depends on the painful standardization of business processes and rules.

Take, for example, customer credit guidelines and customer pricing. A lot of times divisions, product lines, different offices or different customer teams have their own set of complex rules, which require logic to be built into the systems. It becomes very difficult and expensive when you have multiple, conflicting business rules.

The key is getting the business to rationalize and simplify [its] business rules, which in turn allows us to reduce the overhead in IT.

What kind of emphasis do you place on training for your IT organization?

In better times, the training was much more self-driven. Employees would be able to sign up for conferences and in-house courses. We had in-house trainers, or [we] could fund an employee to go out for a week or two at a time.

However, now, due to the lean times, training is much more focused. Although we still fund employee academic education on a part-time basis, the company reduced the in-house instruction staff. Instead, each department hires specialists to come in and give a class for a week or three days at a time.

We have also learned to incorporate training as part of the cost of the technology package from vendors. Getting them to throw in training for free is something that is best when negotiated upfront. Vendors not only do technical training, but they also demonstrate how the technology is used at other similar clients.

Who do you report to? How do the organization's directors see IT's role?

Prior to divestiture from Lucent, the business unit CIOs reported in matrix fashion-direct-line to a corporate CIO and dotted-line to the business unit president.

When the business unit was put [up for] sale, my corporate duties diminished while my business unit roles grew. I essentially reported to the business unit president. I worked with a small executive team to prepare, negotiate and auction the business. We had less and less to do with Lucent's ongoing corporate activities. That's actually a strange, but common thing that's happening these days where large corporations are divesting themselves of noncore businesses, especially ones they can get cash for.

As you were auctioning off your unit, do you think that auction was handled well from a business standpoint? Did the finances behind the divestiture make sense to you?

Optical fiber is a capital-intensive manufacturing business, where gigantic glass-making factories make fiber-optic equipment. Lucent wanted to be more in the wireless and networking space, which is a low-capital business model.

So strategically, with the market 18 months ago being so favorable for optical equipment making, this divestiture was the right thing to do. In fact, Lucent had carried out this approach several times. I think Lucent was much better and faster at divesting companies than integrating companies.

What happened next?

Cross-functional teams were formed, which focused on breaking and separating all co-dependencies between the business unit and the corporation. The hard part in this process was that it was an auction. In the beginning, there were about 10 bidders. That got winnowed down to four, and eventually got to one. Each buyer wanted something different. For example, some wanted a business, others wanted just the assets.

And the hard part was the CIO area was the biggest one-time restructuring cost area because so many things potentially had to be either broken or re-created. Say, for example, the bidder was a large, well-established global organization. If it had a fully operational front and back office, we wouldn't have to re-create all of those things. That would result in a much lower one-time restructuring fee.

There was a lot of financial activity in the scenario planning, based on each of these different bidders. At one point, we had 10 different groups of bidders with their consultants and our own Lucent separation activities all happening at once.

But it was all done. There was an end to it and, because the optical market was slowing at the time, speed was a paramount need.

Can you describe a typical workday?

One-third of the day is spent looking at operational and production IT issues -- how IT is supporting production, front- and back-office operations like customer service, sales and so on. Another third of the time is spent on reviewing projects such as a data warehouse, e-business and ERP. There were usually more issues related to business process, data standards, training and change management than about technology. The last third of the day is probably working at more of the executive level, making sure that the IT strategy is in alignment with the business leaders.

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In an interview with the Computerworld Executive Suite, James Lee talks about his everyday role, along with the ownership change from Lucent Technologies to Furukawa Electric in the division he oversees.



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