Letting IT Do It

Like many companies today, Elf Atochem North America Inc., is juggling several different strategic initiatives at once. While the Philadelphia-based $2.2 billion chemicals manufacturer, part of Elf Aquitaine Inc., pursues profitable and steady growth globally, it also seeks synergies by pooling production, research and development, and other resources. At the same time, it is attempting to protect its customer base from new Internet-empowered competitors. "You used to know who your competition was, but today with electronic business activities, you no longer do, because companies from all over the world are selling into markets you thought were yours," says Robert Rubin, Elf Atochem's chief information officer. Under Rubin, Elf Atochem's IT unit has aided many of the company's consolidation and cost-cutting efforts. For example, in the past, payroll came under human resources and finance while IT was in charge of managing data and ensuring all the numbers were correct. But this approach caused problems. "When we tried to determine the cost of manufacturing for a particular unit, we'd find that our books didn't match with the manufacturing costs for people," Rubin says. The reason was that the company's HR or finance departments didn't always make the code changes and send them to IT when a worker was transferred from one unit to another. Consequently, the first unit was still being charged for a worker who was no longer there, while the second unit wasn't getting charged at all. To resolve this, IT took control of the entire payroll system. "We realized that all the hand-offs between HR, finance, and IT were too complicated," says Rubin. "Now we run our payroll system for the entire company for less than it cost just to run it for corporate headquarters a half dozen years ago. IT is responsible for everything from entering the data to producing the paychecks, so there is one entity that's responsible for balancing everything instead of three departments." To deal with payroll and create additional synergies and attendant savings by consolidating R&D and business IT, Rubin created a processing center under operational support. "Creating the processing center is one of the things we've done that's fairly innovative," he says. "It provides us with an organization that does most of the back-office functions for the company. We have not found any outside service bureau that can run IT cheaper than we can." The cost savings generated by this centralized approach have enabled Elf Atochem to expand on a number of fronts. As an example, the company just took full control of a Plexiglas business it had shared with Rohm and Haas Co. "Part of the reason we did this is that we thought we could provide the IT services to that business unit far cheaper than when they weren't with us," Rubin says. "Indeed that made the difference on the bottom line as to our pursuing the deal." Rubin has used IT to expand and change the business in other ways as well. He found that in heading up the company's reegineering and enterprise resource planning efforts, he could achieve savings and efficiencies by having both the business and technical people involved in the effort report to operational support. With the 'Net, Rubin has been able to develop new lines of business and strengthen ties to customers. Today Elf Atochem uses the 'Net to sell chemicals that were not economical to sell previously in small quantities. "Now with the 'Net we're able to sell some of our fine chemicals that are used in manufacturing for pharmaceuticals to researchers," says Rubin. Elf Atochem is using a sophisticated system involving computers and electronic telemetering probes situated at customer sites to manage customer inventory and effectively take over the entire supply problem for some of its best customers. "We did this a year or two ago in response to the question, 'How can we provide better service to our customers?'" says Rubin. "Internally we're doing the same thing to cut costs because the more money we spend on internal processes the less we have to devote to our customers."