Cinda Hallman, chief information officer at duPont and Co., strides the marble halls leading to the Green Room restaurant at Hotel DuPont. She heads straight for the corner table, normally reserved for the company's chairman, and orders Earl Grey tea and smoked salmon--tastes acquired during two tours of duty in England. Though trappings of wealth and power pervade all corners of the restaurant and DuPont's nearby headquarters, both in Wilmington, Del., all that grandeur can't hide the tumult and change that marked a tough four years of consolidation at DuPont. The 193-year-old energy and chemicals giant has slashed some $2.5 billion from its annual fixed costs. The hotel and headquarters building have been recently restored--and so has DuPont's competitiveness.
Hallman has earned her place at the chairman's table--and as the recipient of InformationWeek's 1995 Chief of the Year award--by contributing more than 20% of that total cost reduction through technology standardization and resource consolidation. Most importantly, Hallman has reshaped DuPont's information systems organizations to meet the changing competitive needs of its business units.
In the process--which Hallman says isn't close to completion--DuPont's attitude toward IS has dramatically transformed. Since 1991, IS has become a credible business partner. That's because Hallman is serious about the business of DuPont, and serious about lowering overall corporate costs.
Homegrown Values
She acquired that seriousness early in life, on her family's farm after her father's death. That's when, she says, "I learned a lot about cash and the management of it."
So when DuPont chairman Ed Woolard put $1 billion in cost reductions on Hallman's agenda four years ago, she applied all the experience of a lifetime of fiscal management to the task. All the while, she has pushed new technology initiatives at the $39.3 billion company. DuPont's rollout of SAP America's R/2 and R/3 enterprise financial and manufacturing packages is helping reduce operating costs. The company also is delivering collaborative-computing tools such as Lotus Development's Notes, creating internal and external Internet Web sites, and installing desktop videoconferencing technology for employees around the world.
These technology initiatives, combined with successful cost-cutting efforts, have given Hallman the clout to integrate DuPont's business and technology goals. Earlier this year, she formed DuPont's Business Information Board to promote IT projects with high rates of return. She asked then-vice chairman John Krol to join, and he accepted (Krol has since become DuPont's CEO). "Several years ago," says an obviously pleased Hallman, "that wouldn't have happened."
With the Business Information Board, Hallman is looking for what she calls "step changes." These, she explains, represent "noticeable, not continuous, improvement." Businesses used to make step changes only once every 10 to 20 years, says Hallman. But today business and technology change comes far more quickly.
"It's like the change we made over the last three or four years," says Hallman, "where we improved productivity by 45%." Indeed, that percentage represents $540 million lopped off DuPont's annual spending on IS, which still rings in at a respectable $690 million.
Hallman figures she spends about one quarter of her hectic 60-hour work week toiling on business change efforts. That proportion is likely to increase as DuPont adds decision-support and collaborative-computing systems. DuPont is moving from a world defined by interconnected legacy systems or LANs running Novell's IPX to a three-tiered client-server environment with either Microsoft Windows NT or Unix servers running over the TCP/IP networking protocol--all operating in harmony with IBM mainframe computer systems.
Yet Hallman is no mere prognosticator of change. She has always set clear goals for herself and moved toward them by immersing herself in work--and by tracking her progress every step of the way. Earlier in her career, a co-worker remarked to Hallman that she was the fourth-highest woman executive at her company.
He was quickly corrected: She wasn't fourth, Hallman told him, she was third.
Though Hallman moves through management ranks as though born to the role, traces of an Arkansas twang linger in her speech as a faint reminder of how far she has come. What she has, she earned the hard way. Born on her family's farm near Locksburg, Ark., Hallman is the elder of fraternal twins who dressed and acted alike until they were 12 years old. Twin sister Linda excelled in the arts, while Cinda performed best in math and science. That intellectual bent left Cinda in charge of the household and the two family farms at the age of 15, when her father died and her mother was in her mid-50s. Young Hallman helped keep the books and oversaw the raising of cotton, pine timber, corn, potatoes, and beef and milk cattle. "When you come home from school and you have chores to do," she says, "it instills a sense of responsibility and work ethic."
Later, Hallman attended the University of Southern Arkansas, graduating with a bachelor of science degree in mathematics. At college, she played tennis and considered a career in fashion, but was recruited as a systems analyst by oil producer Conoco. She ended up in Ponca City, Okla., site of the company's largest oil refinery and now the location of one of DuPont's data centers. It's also where sister Linda, a teacher, settled.
London Calling
In 1974, Hallman became the first female employee at Conoco sent overseas, to run a data center in London. It was in England that Hallman's hobbies of collecting antique mahogany and Wedgewood china blossomed.
Moving abroad also was a defining moment for Hallman in the eyes of co-worker Robert Frankenfield, now Conoco's director of distributed computing. It was where Frankenfield saw just how determined Hallman could be. At the time, Hallman owned an old, gas-guzzling Buick Riviera that she had to sell before moving. There was one problem, Frankenfield remembers: Because a gasoline shortage had lowered demands for cars like hers, the offers of the local car dealers were too low for Hallman's liking. "She thought they were doing that because she's a woman," Frankenfield recalls. Though he advised Hallman to sell quickly, she stood firm. Eventually, Hallman received the price she wanted. Frankenfield had to admit he was wrong, and Hallman, always one to keep score, replied, "Yes, you were."
By 1990, Hallman was the highest-ranking female executive at both Conoco and DuPont, which had acquired Conoco in 1981. She cracked DuPont's glass ceiling in 1990, when she became the company's first female VP. Since then, just three other women have reached that rank at DuPont.
DuPont, in the eyes of one long-time observer, is healthier today that it has been in a very long time. "The cost-cutting initiatives over the past three years have positioned the company better than at any time since the early 1900s," says Thom Brown, who follows DuPont as managing director at Rutherford, Brown & Catherwood Inc., a Philadelphia investment firm.
During the last three years, DuPont has undergone a wrenching restructuring to improve its focus on customers and slash operating expenses. The restructuring has Woolard, chairman of DuPont since 1989. That year, DuPont's earnings peaked at $2.5 billion, but earnings later began to slip. So between 1991 and 1994, DuPont shed nearly 37,000 employees--more than one-quarter of its work force--and some $1.2 billion in assets. It also reorganized six large business sectors into 20 smaller and nimbler business units.
Woolard injected the company with a new attitude, says investment broker Brown. Instead of passively waiting for customers, DuPont now proactively seeks out areas where its products can be used. It also sends engineers to help integrate DuPont products into customers' manufacturing processes.
This new attitude encompasses IT. Hallman, Brown says, is considered "one of the smart ones, and people at DuPont don't talk about people lightly." In fact, it was DuPont's IS group that first practiced CEO Woolard's philosophy. Eighteen months before DuPont began restructuring companywide, Hallman, then VP of IS, and former CIO Ray Cairns began laying the groundwork for reining in DuPont's sprawling IS resources.
Hallman carried on the work after Cairns retired in 1992. She consolidated DuPont's data centers by reducing the number of computing facilities to 38 from 196. She slashed the number of IS employees and consultants to some 4,400, a headcount reduction of more than 40%. And she helped reduce DuPont's spending on IS as a percent of company revenue to 1.8% from 3.8%.
All that technology and business restructuring came to fruition last year, when DuPont's earnings grew by 65% over the previous year. Net income for 1994 was $2.7 billion, up from $555 million in 1993. Growth has continued, with DuPont reporting a 19% increase in net income for the third quarter, ended Sept. 30, compared with the same quarter the year before.
Hallman isn't finished with her contributions to DuPont's bottom line. When Conoco, which has a separate organization for the support of some 12,000 PCs and workstations, began looking into outsourcing, Hallman raised the issue of combining PC management efforts throughout DuPont. The move would incorporate an additional 53,000 PCs and workstations, thus lowering total unit costs. Currently, support for DuPont's entire distributed computing environment is being transferred to the Global Information Utility, the central IS organization that was created in 1994.
Hallman also oversees four global
IT units: data and applications, architecture and planning, telecom and processing, and delivery of integrated information. In addition, there are six regional IS organizations, plus appli-
cations development and planning groups within the DuPont's 20 strategic business units.
Political Prowess
The cuts have allowed Hallman to demonstrate skills more commonly found in a career politician than a technology manager. When DuPont chairman Woolard began talking restructuring, says investment broker Brown, "he got a lot of heat for taking an old culture, wringing it out and rebuilding it."
Hallman, in effect, did the same with IS but "without any kicking and screaming" from DuPont's finance, procurement, manufacturing and other functional units, according to Thomas Schrenk, a former manufacturing manager and 31-year DuPont veteran.
Schrenk was recruited five years ago by Hallman to lead the "leveraging" of IS efforts. Schrenk spearheaded DuPont's exhaustive survey of outsourcing options. Real Decisions, the benchmarking unit of IT advisory firm Gartner Group Inc. in Stamford, Conn., found that DuPont ran its mainframe operations for $40 million a year less than what the typical outsourcer would charge. After learning of those results, DuPont decided against outsourcing most of its computing functions.
But cost-cutting--whether through outsourcing or by other means--represents just one facet of Hallman's management philosophy. She also patiently builds relationships with business units and gains credibility by bringing in business managers such as Schrenk to work on IT projects.
Indeed, business-side relationship-building is a Hallman hallmark. Frankenfield recalls that when Hallman transferred from Ponca City to Houston as a manager in 1980, she first researched the IS efforts of each business unit, hoping to see what she could do to add value. That formed "a great deal of faith in her ability to relate" to the businesses, Frankenfield says.
Today, Hallman still researches business needs. She serves on DuPont's Global Nylon Leadership business team, a top corporate management group that sets strategy for the nylon business unit, the company's largest outside of Conoco. "She's there to help us use IT to make the business grow," says Michael Emery, senior VP of integrated operations and Hallman's boss. "She has made a dramatic shift at DuPont, changing IS from being a technology-driven to a business-driven organization--an investment for competitive advantage, instead of a cost.
"Three years ago," Emery continues, "we were a techie organization, priding ourselves on being the first beta site for a new technology. There was friction between IS and businesspeople." Hallman, he explains, turned that around by focusing on having the right information available at the right time and place.
For example, Emery notes, DuPont had been spending 55 cents on raw materials for every dollar of goods sold. Hallman's efforts to integrate procurement information helped drive that figure down to 51 cents per dollar in 1995, and the target--no projected date is available--is 48 cents.
Hallman's dual IT-business approach is reflected in her outside professional interests. She sits on the advisory boards of both IBM and Hewlett-Packard, and she's active in the Research Board, Conference Board, and American Management Association.
"She's had a heck of an impact," says Ned Jackson, VP and general manager for DuPont's Dacron division, and a liaison between three other business-unit managers and the IS group.
Together IS and the businesses have forged another common goal: standardization. "In the past, everyone did damn well as they pleased" when it came to IT purchases, says Jackson. Now, after determining their needs, "we don't really give the strategic business units a choice, we try to make the best decisions for the corporation."
Jackson's Dacron division is in a "tough business and has been under the gun in terms of costs and efficiencies." He admits that the group became "carried away with cost reduction, and probably spent too little" on IT. Today, the division's IT spending is just 1.3% of sales, below the DuPont average of 1.8%. That gives Jackson room to increase technology investments. "I'm spending more [on IT] which will save me money in manufacturing."
Change For Better
For Nancy McDonald, the business IS leader for DuPont's $2 billion Engineering Polymers unit, IS centralization means that her unit can shift its focus to "applications and data, rather than running data centers." McDonald and her counterparts in other business units report to the businesses, though their technology initiatives are controlled by Hallman's central IS group.
Indeed, the total IS work force at DuPont is fairly evenly split with 2,100 working in central, corporate functions and 2,300 toiling in 20 business units.
Before the 1992 centralization effort, DuPont business units were served by technology clusters, each of which added technology resources without regard to overall efficiency within the company. But that hardware centralization effort was relatively painless compared with what McDonald calls the "master plan of 1989-1990," which called for reducing the total number of enterprise applications running the business.
That's why DuPont is looking to a single supplier--largely SAP with its R/2 for mainframe systems and R/3 for client-server systems--to run its supply-chain and finance operations. Engineering Polymers' McDonald looks to SAP to help DuPont manage the entire supply chain and provide an integrated view from the time an order is taken to the receipt of payment. "Today," explains McDonald, "it takes several different systems to check the status of an order."
DuPont's implementation of SAP's software began in the 1980s in Europe and continues today. Hallman expects the company will run both the mainframe and client-server versions, using SAP's Application Link Enabling tool to provide messaging capabilities between the platforms. DuPont won't convert completely to R/3 until business needs can justify the migration of all legacy applications to NT and Unix.
Also, DuPont continues to support many key applications that rim on IBM MVS and Digital Equipment VAX VMS systems. "The large number of legacy applications on MVS and VMS is a big problem," says Hallman.
At least there won't be any R/2-to-R/3 migration headaches at Conoco, Hallman's old stomping ground. The petroleum unit already has some operations in England running on SAP R/3, says Robert Downing, Conoco's IS applications leader. The rest of the unit is scheduled to complete its R/3 rollout by 1998. "R/3 is easier for us because we don't have R/2," notes Downing.
Because DuPont increasingly relies on packaged software, the 45 IS people assigned to the Engineering Polymers unit perform "very little development," explains McDonald, except in decision support, where Powersoft's PowerBuilder is used for development and Dimensional Insights' CrossTarget suite is used for multi-dimensional database analysis. While nearly everyone at DuPont runs a standard 486 PC with Microsoft Windows, key business transactions are still handled on mainframe terminals.
But worker collaboration through E-mail, groupware, and the Internet is also pushing DuPont to distributed systems. The company has some 1,700 Notes seats, a number which should soon grow substantially.
Hallman promotes the use of the Internet and both internal and external World Wide Web development. Emerging technologies already have become a part of external and internal communications: DuPont recently distributed a video clip on its internal Web site of a staged flash fire that could occur in a DuPont plant. But until recently, DuPont's use of the Internet and the Web have largely occurred in pockets around the company.
For example, an enthusiastic team within DuPont's Lubricants unit built a departmental Web site, then created DuPont's corporate home page which went live this past July 31.
At about that time, Hallman established a dedicated group to "champion new and emerging technologies," according to Peter Butler, the group's manager.
Today, says Butler, "we're in the process of developing internal Web pages to expedite fast access to corporate data." That includes meeting minutes and reports from different teams throughout the company.
DuPont installed a character-based Internet browser on a Digital VAX server last year "so anyone who can get to a dollar-sign prompt can access the Web," Butler says. There also are PC Web browsers in use throughout the company, with Netscape Navigator serving as the de facto browser standard.
With TCP/IP becoming DuPont's standard network protocol, Butler is examining ways to use secure transfer facilities to send and receive tamper-proof messages to customers and suppliers. Transmitting chemical processes or computer-aided design drawings to customers who can integrate the data into their own applications would save both DuPont and its customers time and money.
DuPontNet
Butler also is exploring multimedia and looking for ways to integrate DuPont's Lotus Notes databases into Web sites, or use videoconferencing over the Internet.
While Hallman recognizes that videoconferencing can save travel expenses, she doesn't rely on it herself. In part because she's single and has no children, it's easy to be on the road constantly to meet face-to-face with colleagues.
Collaborative technologies, Hallman adds, will play very important roles in plant safety and product development. That's especially true as DuPont continues its aggressive expansion into China and other Asia-Pacific regions, where the need for expert advice from DuPont scientists around the world will be in great demand.
Hallman has accomplished much in her 29-year career. But one gets the feeling that there are more "step changes" to come. Says Hallman, "I haven't reached the limits of what I can do."
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