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TOYOTA MOTOR SALES:

Toyota Motor Sales, headquartered in Torrance, California, handles U.S sales of Toyota and Lexus vehicles for its parent, Toyota, in Japan. In 1998, Barbra Cooper became CIO and found no IT architecture, no development methodology, no application integration, and no standards. Each part of the business had its own applications, information, and technical architectures. Cooper thus formed an architecture group, drawing from her applications group, headed by her most senior  technology manager and reporting directly to her.
 
The Business Environment:

One of the dilemmas Karen Nocket, chief architecture, faced as head of the new group was the shrinking business cycle. In the 1970s and 1980s, Toyota’s business cycle was 5 to 7 years, thus its IT cycle time could be 3 years. In the 1990s, though, Toyota’s business cycle time plummeted to 9 to 12 months, so IT’s had to shrink likewise, to 6 to 9 months. For 2002 to 2010, Nocket sees the business cycle time shrinking to 3 to 6 months, so IT’s plans must be 1 to 3 months. “How do you optimize 3-month plans into an IT plan?” she asks.
 
Nocket notes that competitors are addressing the shortened business cycle and other changes in the business environment by emphasizing online sales, moving to shorter delivery times, letting customers configure their own vehicle, and moving toward a “no hassles” sales experience.
 
Another issue facing the architecture group was IT’s approach to building systems the old fashioned way: supporting silos (sales and marketing, parts, accessories, warranty, HR, finance, and so on). Costs were higher because functions were duplicated in numerous systems rather than drawing from common systems.

Creating an Architecture:

Nocket’s group chose six initial projects: create a first iteration of an enterprise IT architecture, review it, then review development tools, look for infrastructure patterns, create an e-commerce architecture, and work on security.
 
In creating the first iteration, the architecture team quickly discovered that Toyota’s most immediate need was a standard, integrated application development environment so that all systems would be developed using the same methodology. Nocket’s team chose a methodology that includes tools as well as  a development process. The process gives Toyota a way to move from business requirements to IT standards and strategies. This link is important because it helps business folks understand how IT supports them and why an enterprise architecture is important to them.
 
The architecture group then developed a global reference architecture. This architecture defines the current goal: Toyota’s “to-be” IT architecture. It consists of enterprise services and products that support five tiers of services:
 
1) Presentation services: user interface, Web servers
2) Application services: logic specific to a business unit
3) Business services: reusable enterprise components
4) Integration services: access to legacy data sources; mapping to a common XML structure
5) Resources services: data resource managers, relational DBMSs
 
To develop this to-be architecture, Nocket used her budget to have her group describe the as-is architecture of Toyota’s six largest systems. From these  six, the group defined Toyota’s as-is enterprise architecture. From it, they defined the global to-be architecture.
 
Nocket and her group have also carefully defined their focus (they do not build systems), understood the true business benefits of having an architecture (discussed later), and promulgated an architecture-first approach to developing systems.

Nocket has learned that a key to success in IT architecture is having a domain architect for each domain to create the plans to migrate their domain to the to-be architecture and then see that everyone follows the plans. “Having domain architects assigns accountability to a single leader’’, says Nocket. However, having only technical  people on the architecture staff has not fully gotten the message out, so she recently hired a project manager whose job is to foster communication among the numerous parties in a project. “He’s our communication link to the world. He brings people together,” she says.
 
Benefits of the Architecture:

Through the development and use of the architecture, Nocket and her group have come to understand that the architecture can bring the following kinds of value to Toyota.
 
Improving Legacy Systems. Both the as-is and to-be architectures have proven valuable in remediating legacy systems. Using a system’s as-is architecture, Nocket’s group can give business units alternatives to totally replacing a system. Her architects can show for instance how the user interface tier is separate from the data and application tiers. Pieces of code can be remediated, for ex, by being rewritten in Java, to migrate the legacy system toward the new architecture, leaving the rest of the system as is. One business unit recently accepted this approach to upgrading a major legacy system. The architects are now detailing the as-is architecture to determine which code needs to be replaced. They will then prepare it to fit the new architecture.
 
Keep System Designs Robust. Using the new architecture-first approach to building systems, integration between the new system and other systems must be demonstrated in the design stage (rather than uncovered in the final system-integration stage). The new approach forces “design breaks” to appear in  the design phase, where they can be fixed by redesign. When such errors are not caught until  system integration testing, after the system has been built, the only solution is patching, which often  destroys the system’s original design. The architecture-first approach thus results in a much more coherent and
maintainable design, and the architecture risk areas are addressed first, which is the only way to keep an architecture relevant.

Deliver Applications Faster. In understanding the “patterns” of applications to create the architecture, Nocket and her group are using  the patterns to develop new applications much faster because they have turned silo infrastructure elements into services that can be reused. The global reference architecture thus addresses a major business pain point applications not being delivered fast enough-thereby demonstrating the architecture group’s value to both business folks and to IT project teams. To shift a new development approach; the architecture-first approach, both groups must see the value of an architecture. That value has been devilishly difficult to demonstrate in most companies.
 
Permit Future Flexibility. Nocket’s group has successfully architected Toyota’s three e-commerce Websites-Toyota.com, Lexus.com, and Financial.com-using the “UNIX pattern” in its new architecture. Because the three sites share the same infrastructure, Toyota can easily bring the one hosted outside back in-house, if desired. Furthermore, the company will be able to more easily integrate other systems in the future, for instance, allowing vehicle owners to manage their own vehicle warranty from the Website.
 
More recently, IT architects from the three Toyota regions (Europe, North America, and Asia) have worked together to develop a second iteration of the architecture, as well as review, as a group, the architecture of two Japanese applications. Nocket believes that the move to standardization and architecture on a global basis, which these two recent efforts demonstrate, will give Toyota a real competitive advantage.

Required:

a) What are the shortcomings that the new CIO observed and what are the implications of these shortcomings in IT&IS management?

b) How did the prevailing business environment complicate IT&IS development at Toyota Motor Sales?

c) Briefly, discuss the choices that most companies normally have for improving Legacy systems.

d) Which approach Toyota selected, and discuss the steps that Toyota adopted?

e) Why was this approach considered to be the most appropriate?

f) Describe the benefits of the new IT&IS setup at Toyota.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M95928

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