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ZIFFPAGE TITLEContinuity Counts

By Larry Dignan  |  Posted 2005-10-19 Print this article Print

Keep it simple; don't overanalyze; focus on results and stick with your plan; manage business first, technology second; keep teams small and focused, according to Cathy Tompkins, David Johns, Mitchell Gregory, Werner Vogels and Mike Chandler

Continuity Counts
David Johns of Owens Corning has navigated the company's Chapter 11 filing by keeping focus on key projects.
By Kim S. Nash

CIO, Owens Corning
Lesson: Continuity counts; focus on results.

Owens Corning has cut its information-technology staff by more than half, consolidated its technology and supply chain distribution units, and weathered a Chapter 11 bankruptcy filing. One constant: David Johns, chief information officer.

Johns' ability to keep Owens Corning's application development and software projects on track while cutting elsewhere has produced calm amid change. While the average tenure of a CIO is about three years, Johns has been the company's information chief for seven.

Continuity matters, especially when you're trying to smooth the Chapter 11 experience, Johns says. According to Johns, Owens Corning performed well amid turmoil because it paid attention to how different departments interlock, kept its employees focused on shingles, insulation, windows and other construction products, and weighed technology projects partially based on how they would impact other parts of the business. For example, a supply chain manager may want to switch to a low-cost trucking company. But he must also figure out how the change would affect customer service and what technology tweaks might be needed. Cutting shipping costs is good, but not if it jams up delivery schedules, Johns says.

The results are impressive. The company was No. 5 in the Baseline 500 and No. 1 in the manufacturing sector with Information Productivity of 494.9%. "Owens Corning has done a fantastic job of separating the Chapter 11 process from the way we operate the business," he says. "Our life has not changed that much."

Owens Corning isn't a typical bankruptcy case. The Toledo, Ohio, company posted a modest $209 million profit on $5.7 billion in sales for 2004. But five years ago, it petitioned for Chapter 11 protection as shelter from billions of dollars in asbestos liabilities. The company, which stopped making insulation with the cancer-linked substance in 1972, spent the 1980s and 1990s dealing with hundreds of thousands of lawsuits.

By 2000, it carried $2 billion in long-term debt and started selling subsidiaries to fund legal settlements. Voluntary bankruptcy protection seemed a better course. The company could reorganize while the bankruptcy judge set up a separate claims process for asbestos suits—liabilities that now amount to $7 billion. Owens Corning is aiming to emerge from bankruptcy later this year.

All along, Owens Corning managers tried to manage as they did before the filing, Johns says. Contrast that to rival U.S. Gypsum, which filed for Chapter 11 in June 2001 over asbestos lawsuits; the company cut technology spending and then, in 2002, the CIO position.

But some things did change at Owens Corning. Network support and the help desk, among other tasks, were outsourced to MCI and Siemens, largely accounting for the company's technology head count of 200, down from 500 in 1998. It also merged its supply chain, customer service and technology groups—about 750 people—in part to save $92 million in the effort's first two years.

However, Johns says application development wasn't slashed. Installations of SAP manufacturing and logistics software, Oracle databases and Microsoft applications, which were begun before bankruptcy to standardize systems worldwide, have rolled on because these projects could cut costs.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
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