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:

1. Bartlett PG, 1997, “Caterpillar Inc's New Authoring System”, SGML Conference Barcelona 1997, Retrieved October 15, 2008, http://www.infoloom.com/gcaconfs/WEB/barcelona97/bartlet8.HTM#
2. Caterpillar Public Affairs Office, 2007, “2007 Caterpillar Annual Report”, Retrieved October 10, 2008, http://www.cat.com
3. Caterpillar Public Affairs Office, 2007, “Shape: Sustainability Report”, Retrieved October 10, 2008, http://www.cat.com
4. Caterpillar Public Affairs Office, 2008, “Caterpillar Logistic Services Inc Web Site”, Retrieved October 12, 2008, http://logistics.cat.com
5. Christensen, Clayton M, (2003), “The Innovators Solution”, (1st ed), Boston Massachusetts, HBS Press
6. Copy Editor, ”Caterpillar moves Mountains in Speeding Time-To-Market using CrystalEyes and Stereo3D Visualizations”, Real D-3D, http://reald-corporate.com/news_caterpillar.asp
7. Copy Editor, July 2007, “New-generation Product Link system from Caterpillar improves asset utilization and reduces operating costs”, HUB, Retrieved Octover 18, 2008, http://www.hub-4.com/news/633/newgeneration-product-link-system-from-caterpillar-improves-asset-utilization-and-reduces-operating-costs
8. DeMuro, Mike, April 2005, “Michigan CAT Case Study”, Directions Media, Retrieved October 17, 2008, http://www.directionsmag.com/article.php?article_id=823&trv=1
9. Eckerson, Wayne W., (2007), “Best Practices in Operational BI: Converging Analytical and Operational Processes”, TDWI Best Practices Report
10. Hongqin Fan, 2006, “Data Warehousing for the Construction Industry”, NRC
11. Schwartz, Evan I., (2004), “Juice: Creative Fuel that drives World Class Inventors”, (1st ed), Boston Massachusetts, HBS Press
12. Sullivan, Patrick H., (1998), “Profiting from Intellectual Capital: Extracting value from Innovation”, (1st ed), New York, John Wiley & Sons, Inc.
13. Sweeney, Robert J., (2007), “Case Study: TeraData Data Mart Consolidation ROI”, TeraData Corp.

Healthcare Information Virtual Environment System (HIVES)

Comment:  This post was an outcropping of a project we worked in my Master's Program. The problem set was complex and required the project team to scope, identify, then management risks, objectives, and the projects necessary to implement the overarching project. 

Healthcare Information Virtual Environment System (HIVES)

by

JT Bogden, PMP

Healthcare information systems have a vast array of various equipment, clinics, labs, governmental agencies, manufacturers, doctor offices, and innumerable other organizations providing, collecting, and processing information. Classic issues of stove piping or 'Silos' have emerged causing inefficiencies in the industry such as multiple lab test and/or diagnostics being prescribed. The advent of a nationalized health records system increases the complexity of these networks as well. In order to gain management and control over these information systems, the American National Standards Institute (ANSI) hosts the Healthcare Information Technology Standards Panel, (HITSP). This is one of several cooperative efforts, between industry and government to create standards. However, all too often the standards result in a highly complex architecture and system design to the chagrin of efficienies. This is because early standards and architectures often focus on resolving major issues with little forethought into the broader architecture. Many argue that little information is known or that the project is far too complex. Years later, this results in an effort to simplify and streamline the system again.

Allowing a Frankenstein architecture to emerge would be a travesty when our initial objectives are to streamline the healthcare processes removing redundancies and latencies in the current system. The planners should design the system for streamlined performance early. Large scale projects like these are not new and history tells us many good things. The evolution of complex systems such as the computer, the car, and the internet have emerged out of a democratization of design. Literally, tens of thousands of people have contributed to these systems and those models are one approach to resolving the large scale complex information systems involved in healthcare. What we have seen emerge out of the democratization of design is a standardization of interfaces in a virtualized environment. For example, the headlamps are nearly identical for every car with standard connectors and mounts even though the headlight assemblies are artfully different on each car. The computer has standard hardware and software interfaces even though the cards and software perform different functions. The virtual computer is independent of vendor product specifications. Instead, the vendor performs to a virtual computer standard in order for their products and services to function properly.

Let us take a moment to explain that virtualization is the creation of a concept, thing, or object as an intangible structure for the purpose of study, order, and/or management. The practice is used in across a breadth of disciplines to include particle physics and information science. Within the information realm, there are several different virtualization domains to include software, hardware, training, and management virtualization. My interest is not in the use of any specific virtualized technology but instead in exploring healthcare virtualization management as a practice.

I propose a need for a Healthcare Information Virtual Environment System (HIVES), Figure 1, which is essential to reducing complexity and establishing a standard for all those participating in the healthcare industry. The virtual environment is not a technological system. Instead it is a management system or space in which medical information is exchanged by participating objects within the virtual environment. Real things like clinics, offices, data centers, and equipment sit on the virtualized backplane or space.  HIVES would have a set of standards for participating equipment, clinics, hospitals, insurance agencies, data centers, etc... connecting to the environment in order to exchange information. Many may remark that these standards exist. I am able to locate dozens of vendor products and services supporting hardware, software and even service virtualization which are not a standard virtualized management of the overarching healthcare environment that is what the nationalized healthcare system is attempting to manage. I have reviewed HITSP and noted there is no clear delineation of a virtualized managed environment.

Figure 1: HIVES

In such an environment, I envision data being placed into the environment would have addressing and security headers attached. In this way, data is limited to those listening and who have authorization to gather, store, and review specific information. For example, a doctor prescribes a diagnostic test. An announcement is made in the environment of the doctors request addressed to testing centers. Scheduling software at a testing facility participating in the environment picks up the request then schedules the appointment. It announces the appointment in the virtualized environment in which the doctor's office software is listening to receive the appointment data. Once the patient arrives the machines perform the diagnostics placing the patient's data back in the environment. A analyst picks up the record reviews it and posts the assessment in the environment. In the meantime, a data center participating in the environment that holds the patient's record is listening and collects all new information posted in the environment regarding the patient then serves those records to authenticated requests. The patient returns to the doctors office which request the patient's record from the data center through the environment.

The advantages to having such an environment whether called HIVES or something else are astronomical. The patient's records are available to all participating in the environment, security levels and access can be administered in the environment efficiently to ensure HIPPA and other security compliance standards, bio-surveillance data is more readily available with higher accuracy in the data centers, the environment can be an industry driven standard and managed through a consortium, and the government could be an equal participant in the environment.  

Moreover, to be a participant, the manufacturer, clinic, lab, hospital, doctor office, data center or any others have to meet the clearly defined standards and become a consortium participant at some level. Thus, complexity of the architecture and systems interfacing can be tremendously reduced achieving the stated objectives of healthcare reform and streamlining.