When Alpha Industries Inc. merged with the wireless component manufacturing unit of Conexant Systems Inc. in June of 2002, many financial analysts saw dark clouds looming. Sure, the merger created the largest maker of semiconductors for cell phones, with a customer list that included Nokia, Motorola, Ericsson and Samsung. But the new $500 million entity -- to be called Skyworks Solutions Inc. (Woburn, MA) -- also faced major post-merger integration challenges.
Alpha, with headquarters on the East Coast, and Conexant, based in California, each had its own e-commerce, enterprise resource planning (ERP) and manufacturing execution systems (MES). Company officials knew that, unless Skyworks was able to combine those back-end systems quickly and present a single, seamless face to the world, the new company was in danger of quickly losing customers to the competition.
"It became apparent immediately that we had customers saying to us, 'You're one company now, so we should be able to place one order electronically with your company,'" says Kristofor Williams, Skyworks' electronic commerce program manager. "But, because of the post-merger challenges, we had sales people saying, 'If you want to place a sales order for a Skyworks West part, you have to send in a separate order for that. And, if it's for a Skyworks East part, you'll have to send in a separate order for that.' And that's because the manufacturing systems weren't linked up at the time."
So, soon after the merger creating Skyworks was completed, Williams and his team set out to quickly integrate Skyworks' back-end systems, providing customers with a single way to interact with the company. They were remarkably successful. Within six weeks, Skyworks had put in place an interim solution, using off-the-shelf data transformation technology, that allowed the company's customers to place and track orders from a single online mailbox. The project -- dubbed the Simplification Initiative -- allowed Skyworks not only to keep customers happy during the transition, but it also saved the company $1.2 million by replacing legacy systems such as redundant EDI translation systems.
And the project set the tone for what would become a surprisingly smooth merger. In October, Skyworks reported that revenues grew 27% to $784 million in 2004, its second full post-merger year. Earnings improved from a loss of $33.6 million in 2003 to $42.7 million in 2004. The Simplification Initiative also earned Skyworks top honors in the Data and Integration Mastery category of Managing Automation's 2005 Progressive Manufacturing Awards.
Key to the success of the Simplification Initiative was a decision by Skyworks' top management, soon after the merger, not to immediately attempt to migrate the legacy back-end systems of Alpha and Conexant onto a single application platform. Alpha and Conexant had different ERP systems and different e-commerce setups. And they had also built several custom-coded interfaces in Java that linked into suppliers' back-end applications and gave the companies information such as inventory and work-in-progress levels. Merging all of those systems onto a common platform, while it was Skyworks' ultimate goal, wasn't feasible right away.
"It was just impossible at that time to do it right away," says Williams. "We had to function as a business. We had to launch a new company, and merging onto one instance of SAP or any other large system takes a lot of time ... Initially, we wanted employees devoted to serving customers rather than working on internal projects."
So Williams and his team started looking for an interim approach that would give customers an easier, one-stop way to work with Skyworks in the short term. They decided to build what was essentially an order processing staging area that could be used to break down incoming orders, direct them to the correct order management/ERP system -- Alpha's or Conexant's -- and translate order information into the file format that could be understood by the correct system.
First Things First
The staging area consisted of a consolidated product database -- running on a Microsoft (Redmond, WA) Windows platform equipped with the SQL Server database management system -- and an extract, transform and load (ETL) engine, DataStage TX, from Ascential Software Corp. (Westboro, MA). DataStage TX acts like a data translation and routing service, taking in data files in a variety of data structures and transforming them into formats that can be understood by a target system. Then, using a series of built-in adapters, the ETL tool translates the files into the appropriate format.
Using SQL Server, Williams' team created a database that included information about all of the company's products, those from Alpha as well as Conexant. The database was updated every day with information pulled down from the Alpha and Conexant ERP systems. (In Conexant's case that was SAP. Skyworks officials declined to say what ERP system Alpha was using. It was later replaced.)
Each inbound order would then be directed to the consolidated product database. Orders for Conexant products would be reformatted into SAP iDOCs and forwarded to the Conexant SAP ERP system for processing. Orders for Alpha products would be forwarded to its ERP system in a different flat file format. Skyworks used the data typing capabilities built into DataStage TX to import meta data directly from the company's EDI system and two ERP systems.
That, said Williams, helped Skyworks save time and meet its six-week deadline. Skyworks could direct customers to one online ordering system, regardless of whether they were ordering Conexant or Alpha parts.
"It was a breath of fresh air when we were able to tell our customers that they could place a single order through one e-commerce pipeline," says Williams. "To me, the benefits seem pretty obvious. I can remember the confusion and frustration vented by both customers and employees about that before we fixed it."
The Sky is the Limit
But it wasn't just customers who benefited from the interim solution. The interim order management solution allowed Skyworks to eliminate duplicate EDI and online ordering systems right off the bat, saving the company $1.2 million.
Skyworks' integrated ordering solution is indicative of the kind of flexible, responsive approach to solving business problems that other manufacturers should emulate, says Navi Radjou, vice president of enterprise applications at Forrester Research Inc. and a member of Managing Automation's Progressive Manufacturing Award Advisory Panel. By working like a service that integrates customers with Skyworks' back-end ERP systems, the solution shares a lot conceptually with service-oriented architectures now being rolled out by vendors such as SAP.
"Skyworks is well-advanced among its peers in executing a SOA roll-out exactly as Forrester recommends," says Radjou.
But that wasn't the end of Skyworks' Simplification Project. After quickly creating the integration between Alpha and Conexant ERP and ordering systems, the company set about merging its two ERP systems onto a single platform and replacing the nest of custom-coded interfaces that linked the company to its suppliers. Skyworks decided to standardize on SAP as its ERP back end and, within 18 months of the merger, the company had deployed a single instance of SAP Version 4.6B across the entire company.
Creating simple, consistent links to its suppliers has proved more complicated and time consuming. Both Alpha and Conexant had built custom-coded adapters -- many in Java -- to reach directly into its hundreds of suppliers' systems. As those adapters multiplied, however, they became increasingly expensive and awkward to maintain, ultimately requiring three staff members to support the collection of adapters.
"Every time there was a change in supplier data, the thick Java adapters had to be recoded," says Williams. "And we had to start from scratch every time a new supplier came on board."
So Skyworks decided to migrate to a more scalable, standards-based approach to integrating with suppliers. Skyworks has mandated that suppliers begin using either EDI or the XML-based RosettaNet standard to communicate information such as work-in-progress levels. Once it receives those messages, Skyworks will again use the DataStage TX ETL product to translate the EDI and RosettaNet documents into file formats that can be understood by its MES system (Promis from Brooks Automation Inc., Chelmsford, MA) and its SAP ERP system. Ten of Skyworks' suppliers are scheduled to begin using the system this month, and the rest will follow, says Williams.
The benefit of the standards-based approach, says Williams, is that Skyworks and its customers will no longer need to build custom interfaces that, in the end, aren't scalable and don't allow businesses to respond to change.
"If you say to your supplier, 'We'll take data in any format you'll provide it,' at that point you've limited your ability to change business processes and have a scalable electronic commerce environment," says Williams. "The great thing about standards is that, if your business process changes or you need different data, the placeholders are already there, and the data and the rules are already defined."
Thanks to Skyworks' progressive approach to integration, many of the dark clouds that once loomed over its high-stakes merger have cleared to blue sky.