Caterpillar Leverages Information Technologies for Sustainable Growth

Comment: This was a paper I wrote in 2008 on Caterpillar's use of technology. I thought it highlighted many interesting points. 

Caterpillar Leverages Information Technologies for Sustainable Growth

by

JT Bogden, PMP

Business is warfare based principally on sage utilization of information which is a key factor determining success in business. Caterpillar has long recognized that access to accurate information in order to build actionable knowledge is critical to business success. Caterpillar is a complex global enterprise operation based out of Peoria, Illinois that through well tuned information management is achieving incredible success. Sales revenues during 2007 exceeded forty four billion dollars. (Caterpillar, 2007, Annual Rpt p 33) Enterprise growth goals by 2010 are projected to exceed fifty billion dollars. (Caterpillar, 2007, Annual Rpt p 27) This expansion of the revenues is coming with solid vision and sage business design. Caterpillar’s vision centers on sustainable development utilizing a strategy of innovation and technologies in support of the company’s objectives. (Caterpillar, 2007, Shape Rpt p 36). This means information and the requisite systems are principle to analysis, rapidity of decision making, and identification of actionable business opportunities.

Intellectual Capital Drives Innovation

Many professionals in business incorrectly believe intellectual capital, IC, is simply good ideas that become proprietary because of the station at which the idea was imagined. As an outcome, these professionals believe a company has a legal claim to a good idea. The reality is that good ideas are abundant as nearly everyone has a good idea but most lack the means to put the good idea into effect.

Intellectual capital is better thought of as knowledge that can be converted into commercial value and a competitive advantage resulting in intellectual assets of the company. The conversion of knowledge into commercial value requires a means to codify the knowledge into an intellectual asset. In order to achieve this companies provide structural capital in support of the human capital to gain access to intellectual assets. Thus, IC results from human and structural capital operating in an unique relationship forming intellectual assets. Companies distinguish their operations from the competition by combining knowledge and the infrastructure in differing ways. The process of converting knowledge into intellectual assets results in the innovation that companies seek to commercialize (Sullivan, 1998, p23).

According to the book The Innovator’s Solution by Clayton Christensen innovation in business means growth resulting from the introduction of something new that can be exploited for commercial value. Christian further explains that sustainment growth focuses on delivering new and improved benefits to high-end customers. He then comments that companies are more interested in disruptive growth which results in reduce cost, simplicity, and new directions. Introducing something new is often thought of as unpredictable which is not desirable to most companies. Christensen believes the key to innovative success is not predicting human conduct as rarely does innovation come from a single human fully developed. Instead, He comments that companies must understand the forces that act on humans. What this means is that when innovation is managed through design there is predictability then companies are more readily apt to embrace the change.

In the classic understanding of design, there are three characteristic aspects; the visceral or how the design looks, behavioral relating to the designs functionality, and reflective qualities that provoke thought. In classic design beauty is also found. Good designs demonstrate beauty through harmony and fluid execution. As companies increase in size and complexity the problem of accessing knowledge becomes exponentially difficult. Communicating messages between the top intent and bottom action can become confused and misdirected if not properly managed. Thus, a reliance on finely tuned information technologies becomes an imperative.

Caterpillar has exercised deliberate efforts to employ information technologies that demonstrate good design. For example, a visual imaging company, Real D-3D, posted a company website an article regarding Caterpillars’s need to speed engineering projects to market by employing visualization technology in a project called “CrystalEyes”. According to this article a key feature of the CrystalEyes project was to make the information tool simple to use for engineers and clients alike that eliminated prototyping iterations as well as the tool also had to be cost effective, cross platform, and easily integrated with existing systems. These requirements demonstrated behavioral qualities of a good design. Real D-3D described “CrystalEyes” as a stereographic imaging tool that is an improvement beyond the ghostly holographic effects that met all the design criteria. They were describing for example, designs that can simulate in 3-D the full effect of parallax and other phenomenon related to stereoscopic imaging. Thus, “CrystalEyes” illustrated the visceral elements of a good design. The benefit CrystalEyes delivered was a high performance design visualization tool that eliminated physical builds until the very end. (Copy Editors, Real D-3D) Using the CrystalEyes tool afforded clients and engineers alike the ability to fully understand a design in work provoking thought or the reflective qualities of good system design throughout the engineering iterations.

Management Information Systems Build Decision Support SubSystems

Management information systems, MIS, are complex. These systems come in a variety of technologies and capabilities. One size does not fit all operations. In general MIS involves, at least, three elements; a network or hardware lay down, supported management concepts, then integrated decision analysis and reporting. Through the combinations of these elements companies are able to leverage themselves in competitive ways and provide the infrastructure for innovation.

Caterpillar leads the industry with decision support subsystems. Data is infused into the creation of products and services in support of growth that is collected from significant customer segments and Caterpillar’s geographically dispersed operations. The systems span over two hundred independent dealers globally and their proprietary networks. Caterpillar’s efforts include numerous projects and software tools that fuse these systems together and include but are not limited to:

• VIMS: Vital Information Management System is a vehicle borne alert system that assesses the equipment’s safe and optimal operating condition. When a problem begins to emerge or is discovered the system alerts the operators and owners then provides safe shut down procedures if necessary. This enhances the service life of the equipment and is an decision support subsystem.
• Product Link: A wireless system that simplifies the work of tracking the fleet providing assets management information. Product link couples with VIMS.
• Paperless Reporting: A wireless project that integrates Dealer Business systems and Service Technician’s Workbench with field service technicians reducing errors and streamlining data entry requirements.
• EquipmentManager: Software designed to report fleet performance and manage assets. This application is the owner’s frontend that presents the VIMS and product Link performance information on demand in meaningful ways.
• VIMS Supervisor: Vital Information Management System Supervisor Software provides custom fleet production and maintenance reports by extracting data from a VIMS Database.
• Caterpillars authoring system: A system that is both an information consumer and producer organized to streamline global technical publication operations.

The VIMs, Product Link, Paperless reporting, and the authoring projects are of particular interest as they are subsystems that impact a sequence of other systems ultimately feeding up to top level decision support systems.

Product Link Pools Global Equipment Performance Information

Caterpillar introduced a subsystem called “Product Link” that leverages equipment performance information collected by VIMS towards decision support. “Product Link” is a management tool that tracks and gathers information about Caterpillar’s earthmoving equipment. An online HUB Magazine article written by Caterpillar’s Information Centre discussed the subsystem as composed of two antennas, a data module, and interconnecting wiring. They explain that one antenna collects GPS data while the other antenna provides bidirectional communication with the network operations center. The data module referees the collection of performance and GPS data as well as instructions from the network operations center. Information collected is transmitted to a Caterpillar network operations center wirelessly through low Earth orbit, LEO, satellites. At the network operations center the information is further evaluated then reports are prepared and sent to the equipment owner. Equipment owners are able to access the information over the Internet using the “Equipment Manager” software.

The benefit to both parties is essential to asset management with improved service life of the equipment, reduced down time, and strengthened return on the investment according to Caterpillar. These have been principle reasons the customer purchases Caterpillar equipment. Therefore, understanding the equipment utilization, location, and performance data helps Caterpillar design heartier equipment meeting equipment owner expectations.

This subsystem has seamless operation with the equipment reporting to the Network Operations Centre where the data is collated and eventually is rolled up to into top level decision making support systems demonstrating beauty in the design’s fluidity. The information provided to the owner through “EquipmentManager” answers concerns about utilization, security, and uptime according to Caterpillar further illustrating functionality and reflective utilization of the design.

Paperless Reporting Links Field Service Technicians Into Global Systems

A case study was researched and published in Directions Magazine by Mike DeMuro, Product Support Manager for Michigan Caterpillar, regarding a Michigan Caterpillar’s paperless project initiative. According to the article Michigan Caterpillar field service technicians were experiencing time consuming and error prone process in their dispatch system reporting. Technicians were using an antiquated process of paper forms that were transcribed onto the system in the classic data entry manner. In some cases, information was passed verbally and transcribed days later. Often the information was incomplete or erroneous. Caterpillar sought to streamline the process. A statewide centralized dispatch system was in order to form a mobile office assesses DeMuro.

DeMuro explains that the design of the system utilized an enterprise data integration service that offered both cellular and satellite coverage. Caterpillar’s Dealer Business System and Service Technician’s Workbench was integrated into the enterprise data integration service and Microsoft Outlook. After data was entered once into the system, technicians could drop and drag data into Outlook templates and distribute the data without error prone re-typing. The emails were received by servers and scripts parsed the data into the other systems further reducing errors and increasing productivity. This created a paperless culture of online forms that transmitted data wirelessly between service vehicles equipped with the system and staff functions. DeMuro further claims the benefit of this innovative approach radically improved billing cycles, accuracy, and timeliness of data reporting. Other first order benefits lead to reduce overhead for data re-entry, increase productivity and revenue generating hours, timely parts delivery, and seamless integration of systems. This resulted in secondary effects of improving cash flows and accounting for receivables explains DeMuro.

Again Caterpillar was able to achieve beauty in its seamless design for field service technician reporting. The error rates were subject to initial data entry and additional entry was eliminated leading to very productive functionality of design. The data gathered is cascaded through to higher level systems for further evaluation.

Technical Authoring System Forms Intellectual Assets

Caterpillar was experiencing problems with the technical publications accuracy, timeliness, and availability. There were over 300 products with some having lifecycles as lengthy as 50 years. Compounding this immense data requirement was operations in 35 languages. Therefore, in the late 1990’s Caterpillar envisioned a need for a better method of managing this labor intensive effort of technical documentation. They pursued innovation by taking advantage of emerging Standard Generalized Markup Language, SGML, standards that overcame the limitations of the existing methods. The introduction of the new approach delivered levels of efficiency based on reuse and automation that had never been observed.

Caterpillar began by creating a Technical Information Division, TID, that had the global responsibility of producing the documentation necessary to support operations. They expanded the technical documentation staffing by 200% then organized the automated publishing system, the structural capital, which enabled the staff’s effectiveness to deliver the technical documentation or intellectual assets. These assets included maintenance manuals, operations and troubleshooting guides, assembly and disassembly manuals, specification manuals, testing and special instructions, adjustment guides, and system operation bulletins.

In the design of the authoring system, Caterpillar took a modular approach to information creation and automated where possible. The system designers built on top of industry standards and even utilize MIL-PRF-28001 for page composition. They utilized reusable ‘information elements’ that are capable of being utilized in multiple formats and forms. This approach drastically reduced cost associated with creation, review, revising, and translating information. Through automation of a document formation and information elements, Caterpillar was able to achieve collaborative authoring that trimmed time-to-market and permitted increased focus by subject matter experts that strengthen the quality of the product. The efficiencies achieved staggering improvements in work flow and analysis, document development, style sheet designs, and legacy conversions. In the end, Caterpillar experienced accuracy, timeliness, and availability of technical information that became of immense commercial value and competitive advantage.

Caterpillar’s copyrighted technical documentation is of such immense value that criminal elements have attempted to exploit this information. In May 2002 Caterpillar’s digital library of parts and product catalogues, service manuals, schematics, tooling data, and product bulletins was compromised. U.S. customs reported that they had seized a half million dollars in counterfeit Caterpillar technical documents. This criminal activity demonstrates that the value of well designed intellectual assets can be of significant value as well as vulnerable.

Data Warehousing Efforts Consolidate Enterprise Data

Designing solid data management methods are critical to business success. MIS approaches decision making generally from the process such as a purchase order process whereas decision support systems tend to focus on conduct and behavioral characteristics such as fuel consumption trends. This requires data gathered to be stored, parsed, and analyzed in ways that support strategic decision making over operational management of the operations. The outcome of a well designed data warehousing system is equipment managers shift their focus from operational level decision making to corporate level strategic decision making regarding asset management.

Data marts are working subsets of larger primary database systems used to present unique views on subject matter topics. These data marts are then organized in a way to permit multi-dimensional modeling of the operations. This multi-dimensional model is called the data cube. Online Transaction Processing, OLTP, and Online Analytic Processing, OLAP, usher data routinely into the data cubes and conduct ongoing analytic evaluation of the data in support of on demand or real time review. These tools have also been advanced over the Internet permitting decision support system authorized users to conduct the analysis they are seeking.

The benefits of data warehousing involve better end user control of the data analysis, improved tooling for identification and investigation into problems, strengthened strategic decision making, and improved knowledge discovery. Data warehousing is the foundation of computer aided construction equipment and asset management.

Caterpillar has sought a global data solution and chose TeraData Inc as its business partner in March 0f 2008. TeraData business decision support solution is comprised of component products built on top of the “Active Data Warehouse” product. The component products provide intelligence, analytics, and other support services to decision making.

The Active Data Warehouse product is the underpinning of their services and refers to the technical aspects required to achieve the desired objectives of the data warehouse. This database is designed to receive the feeds from mature MIS subsystems such as Caterpillar’s VIMs, the paperless reporting, and Authoring subsystems. This results in a repository of data that possesses high confidence of data accuracy. The database can be utilized in ordinary MIS support to ecommerce, portals, and other web applications but has greater impact when coupled with decision support applications. With the confidence in the data accuracy, complex reporting and data mining that can be generated on tactical or short notice queries in near real time makes this solution a powerful tool. This capability originates from TeraData’s strategy built on the findings of a 2001 Gartner report that data marts cost 70% more per subject area than a comparable traditional data warehouse. (Sweeney, 2007). TeraData seeks to consolidate data marts, reduce redundancy, and streamline the data loading process into a centralized analytic source in effect creating a massive sole source data mart equivalent to the enterprise wide data set. This streamlining is consistent with Caterpillar’s desires to innovate through technology resulting in the 2008 agreement to improve Caterpillars decision support.

Business Intelligence Products Strengthen Decision Support

TeraData’s component products include a suite of applications that utilize Caterpillar’s enterprise wide data warehouse for analytic and intelligence reporting. Tools in this suite includes strategic and operational Intelligence applications, data mining tools, modeling software, and analytical tool sets that handle extremely large datasets looking for criminal conduct as well as emerging trends. Included also in the suite are maintenance and management tools.

Bringing Information Technology Projects in Focus

Caterpillar brings together disparate systems into a symbiotic global information presence through network operation centers, communication networks, and data processing methods and systems. The elements of good design are observed throughout the systems at Caterpillar and create a culture that promotes innovation whether that is technical publication, engineering, or field management of the equipment. With this foundation in place Caterpillar began a process of increasing vertical accuracy across their systems into decision support systems. The disparate enterprise data is rolled up into the decision support systems data warehouse and requisite set of tooling establishing a formidable competitive instrument. Agreements with TeraData in early 2008 lead to solutions to implement near real time reporting with increased accuracy. As an outcome, Caterpillar has propelled to the forefront of heavy equipment manufacturers to become the industry leader with growth projections that eclipse the competitors. Nonetheless, Caterpillar is restless. Becoming number one in the industry is simply not enough for this giant.

The Future is Bright

Caterpillars positioning in the industry as the leader is not the end state for this company. One concept of business is that no company makes a profit over the long term. The purpose of any business is to be a vehicle that provides income and dignity to human life. In executing this concept principles and moral responsibilities are assigned to companies and governed a cooperation between government and industry. Caterpillar has taken on the next evolution of large corporations, corporate governance. They define their vision in a sustainability report called “Shape”. The term shape is a key notion that is inclusive of the forces that forge innovation in the shaping of knowledge into business plans. Caterpillar has identified the pillars of its “Shape” initiative as:

• Energy and Climate: Caterpillar realizes the importance of energy security and the impact energy consumption by the equipment has on the ecology.
• Growth and Trade: Expanding economies and international business are important to sustainable operations.
• People and Planet: Caterpillar equipment builds economies and lifts people out of poverty.
• Further and Faster: Shape take form over time then accelerates as the vision organizes. Caterpillar must be willing to drive the vision beyond that which is currently known in order to embrace the future of sustainability.

Using caterpillars systems and technologies, the company is actively seeking and organizing a plan to reach for the moral high ground and is embracing corporate governance. Caterpillar’s equipment is known to move mountains. In time, as corporate governance takes shape Caterpillar will emerge as a social force that levels societal inequities while elevating human dignity around the globe. Humans will have jobs with disposable incomes, improved roads, hospitals, and strengthened economies built by Caterpillar’s equipment and backed by Caterpillar’s social conscience.

References:

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