Optical Fiber Solutions, a
subsidiary of Japan-based Furukawa Electric Co.
Number of IT employees:
permanent; 100 contract employees
Number of end users:
How long have you held this
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
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
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
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
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
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.