Omron reduces, reuses and recycles to optimize IT resources

By Khoo Boo Leong | Aug 28, 2009

Omron, a provider of sensing and control technologies in healthcare, electronics and automotive industries, is optimizing IT resources by tapping economies of scale and, wherever possible, reduce, reuse and recycle.

In the Asia Pacific, it operates 17 companies in 9 countries with many rep offices and warehouses scattered across different locations. Its business units include healthcare, industrial automation and electronic components.

“Clearly, IT has to be aligned with the business,” said Lim Keng Hean, senior manager of IT at Omron Asia Pacific Pte. Ltd. “Under the current economic conditions, we need to optimize costs and be more sensitive to how we spend money. So, IT looks at the cost components, how we optimize the resources that we have and how we change the things that we do.”

To start with, Omron’s business needs vary across business units. In its electronic component business, for instance, it deals directly with customers who are the manufacturers so cost efficiency in delivering high volumes of goods is important. In healthcare, by contrast, it markets its products through a distributor network.

“So, we have many requirements for communication across countries,” Lim said. “Sometimes, a rep office may need an urgent answer about stock availability to fulfill a quick delivery. Traditionally, we’ll send an email and that could take a long time if the recipient is not around, or we could make an international phone call but that is costly.”

Enterprise IM

Lim’s IT team, which is an internal shared resource, serves multiple small offices and many mobile workers on-the-go. So, communication cost is a challenge. While there are many instant messaging (IM) tools available, Lim decided that only enterprise IM will do.

Being a user of Lotus Notes for more than 12 years, it was natural for Omron to take advantage of the Sametime 6.5 collaboration tool which is bundled with Notes even though that means forgoing advanced features like web conferencing and whiteboard sharing available in Sametime 7.5.

“Commercial IM like Skype or Yahoo may pose infrastructure or security challenges, compliance issues as well as the liability of inappropriate use,” said Lim. “Also, IM and SMS are not popular in Japan. So, it was difficult getting acceptance for IM there.”

As a result, instead of deploying Sametime as the global standard, IT implemented the solution only in the Asia Pacific as an optional service to business units in the region, rather than forcing it from the top down. “So, we rolled this out based on each business unit’s needs and demand,” said Lim. “We implemented it on an old production server and it took the administrator only half a day to set it up. Now, other regions are also seeing the benefit of this and are adopting this as well.”

Not only was the investment just one Lotus Domino Server license, an old production server and half a man-day’s work, but also the return has been encouraging. “From our Philippine business unit’s feedback, they reduced overseas calls by 30%,” Lim said. “The rep office in the Philippines does not have any warehouse or inventory. Inventory is kept in Malaysia. So, the Philippine office had to call Malaysia frequently for urgent customer deliveries. Now, they use IM.”

Another benefit is reduction in email storage. In the past, a single enquiry may generate multiple copies of lengthy email threads. So, for documentation, the IT team encourages users to save their IM messages and send a single final confirmation or summary email at the end. More importantly, customer satisfaction has improved due to faster response using IM.

Reduce, reuse, recycle

Similarly, Lim’s other cost optimization initiatives applies the concept of reduce, reuse and recycle. “I don’t want to use the term cost reduction because it is about how we optimize resources with the budget that we have,” he said.

For example, the IT team has centralized the purchase of software licenses for the Asia Pacific in Singapore and “links back to Japan for cross-referencing. Thus, we enjoy economies of scale and reduce our acquisition cost,” Lim said. “If individual sites have to spend time negotiating prices and contracts, the hidden cost can be substantial.”

Operating like a utility model, the business units do not own the licenses. This offers IT flexibility when allocating licenses to staff moving from one country to another country or from one business unit to another.

Meanwhile, Omron has also implemented 1,300 Notes-based applications for workflow and depositories of information, relying on the reuse of standard and customized templates to reduce development cost.

In the horizon

“Moving forward, we’re looking at upgrading to Notes 8.5,” said Lim. “The benefit I see with upgrading is the integration with Lotus Symphony. Its support for Open Document format means that we can operate even if we do not have Microsoft Office. That also allows us to generate PDF files, especially for sales quotations to customers, without needing to buy Adobe Acrobat.”

Sametime 7.5 deployment could also be on the cards. “We want to see how we can further reduce communication cost and improve productivity through collaboration features such as web conferencing,” Lim said. “In addition, we also can’t deny that social networking can help us in collaborating with both internal and external [stakeholders]. These are some initiatives that we are embarking on in the near future.”

IT enabler

It is remarkable that Lim and his team have been contributing to Omron’s business transformation not just from a cost center perspective or an IT utility but more as an enabler or a partner to the business.

“The kinds of role that IT has to play include bringing in technologies and innovations that have been used in other industries into our own company and try to sell it internally to the management or the business unit,” Lim said.

But to change the prevailing perception of IT as just a cost center hasn’t been easy. “We need to do a lot of negotiation and persuasion because it is always consensus-based, especially in a Japanese company like Omron,” said Lim.

“We need to convince management and the business units so that they see the value [of carrying out an IT proposal]. We have to use a systematic approach,” he added. “The first step is to show that IT can do it better for them. So, rather than business units owning software licenses, for instance, I centralize and manage them in Singapore. Next step is if I can’t do it the best way, I’ll [outsource] it to someone who can do it better [like a software-as-a-service provider].”

Power of three

Omron’s approach to IT implementation illustrates the power of combining business process management, collaboration and a Service Oriented Architecture (SOA). “By applying these to industries like retail or healthcare, you have the three entry points on the path to smart work,” said Manoj Saxena, vice-president of Global Solutions and Asset Management for IBM Global Business Services.

If you want to address the speed in which your business is changing, focus on dynamic business processes where IBM can help in documenting, automating and optimizing the processes,” Saxena said.

Secondly, to maximize people’s effectiveness and how they work together, start with information management and collaboration products. “You can get going with chat, Lotus Sametime or Web 2.0 technologies for building communities of users,” Saxena said.

To use technology to leverage people and processes, and extend the life of existing IT investments, IBM’s is advocating SOA which essentially breaks down IT systems “into little building blocks [or services] and connect them into new applications. So, you’re adding new interfaces to the old systems and creating higher-order applications from them,” Saxena said.

Japan-based Omron’s sales turnover for fiscal year ending March 2009 was ¥627 billion. It operates in 35 countries across Europe, America, Greater China, Japan and the Asia Pacific, employing 32,000 employees and focusing on various types of sensing and control technologies.

It is most widely known for its healthcare consumer products such blood pressure meters, thermometers, massagers and asthma nebulizers. However, its main business is in industrial automation, supplying sensors and controllers to factories. It also makes electronic components for mobile phones and assembly systems for the automotive industry. In Japan, it develops solutions such as traffic control systems, ATM machines and turnstiles.