Service-Oriented Architecture Gives Manufacturer Framework for Growth

As service-oriented architecture (SOA) takes a foothold at Black Diamond, the climbing equipment maker finds that IT modernization doesn't mean losing its eclectic culture.

When Joshua Dees became the head of IT at Black Diamond Equipment Ltd., a storied maker of rock and ice climbing gear, he spent much of his first year figuring out how to take the company to the next level. Although Dees was a rock climber himself, he had spent five years at The Boeing Co. learning how a major multinational enterprise handled technology. Dees wanted to bring some of that methodology to a company that had been famous in its early days for shutting down when its founder went off on climbing and surfing trips in the 1950s and '60s.

When Dees arrived in 2004, on some levels the company appeared not to have changed much. Even today, the CEO often shows up to work in shorts and flip-flops. The vice president of sales sports tank tops and is known to spread out on the floor to do stretching exercises at company meetings. Yet as laid-back as Black Diamond (BD) appears, the company is now a $65 million business, with operations in Europe and Asia. Growth has been in the double digits for a decade and shows no signs of letting up.

Dees was brought in make technology more central to the business so the company could continue to grow. Despite its reputation for creating cutting-edge gear, Black Diamond had not invested much in IT, and Dees had inherited a poorly integrated mishmash of systems. In the next few years, he would quadruple the IT staff, triple the IT budget and lay out an IT strategy that would replace much of the software infrastructure and move the company to a service-oriented architecture (SOA).

But first he had to explain all this to his colleagues.

"I spent months trying to write out what I wanted to accomplish in English," he says. "What I needed to [do] was to draw a picture."

Dees unfolds a business card-sized chart labeled "MIS Vision." It diagrams the company's transactional systems, such as the new product lifecycle management (PLM) solution, which feeds into a data warehouse and then enables analytical systems, such as an executive dashboard.

"As a joke, we had these printed up wallet-sized, but they've become useful," he says. "This is the diagram for governance. I wasn't big on the buzzword SOA, but when I drew up this doc, that's what it is."

And the response?

"It got a lot of laughs," Dees says. "It was not that well received. It took a while to educate people about what that document meant for them. We're not trying to put a suit and tie on BD; we're trying to streamline what BD does."

Forging a Company

In 1957, an 18-year-old rock climber named Yvon Chouinard began banging out handmade pitons, steel wedges that mountaineers pound into cracks and clip to ropes to catch themselves if they fall. He used them to scale pioneering routes on the steep walls of Yosemite Valley. Soon Chouinard was selling hardware from the back of his car. Thus was born Chouinard Equipment, based in Ventura, Calif.

Chouinard also revolutionized the nascent sport of ice climbing with innovative designs of ice tools, crampons and screws. Along the way he also started creating climbing clothing. The clothing led to the creation of apparel maker Patagonia, which eventually became the corporate parent of Chouinard Equipment.

But by the late 1980s, Chouinard Equipment was forced to file for bankruptcy, seeking protection from liability suits that accused the company of failing to adequately warn customers that climbing is dangerous. Chouinard asked Peter Metcalf, a marketing executive at Patagonia, to liquidate the equipment company's assets. Instead Metcalf came up with the idea of having the employees buy the company out of bankruptcy, thereby shedding the liability issues.

"I went to Yvon and said, 'Give me three months,'" Metcalf recalls. "It took nine."

Thus Black Diamond Equipment Ltd. was born, with Metcalf as CEO. It was 1989. Before long, the company moved from California to the edge of Salt Lake City, a location more conducive to testing rock, ice and ski gear than Ventura had been.

Patagonia kept the IT systems and Black Diamond had to start over with its back-office systems. The CFO, who also ran IT, installed Paragon's enterprise system for inventory management and fulfillment, but IT was not a priority.

"It was a pretty stressful couple of years," Metcalf says. "The best analogy is a Bataan Death March. When the choice was between a half-million-dollar laser cutter for manufacturing or computers and servers, IT got the short end of the stick." So much so, that when Metcalf gave a presentation to BD's board a few years ago, a member who had just joined from a large ski company remarked that the annual IT spend sounded about right for a company the size of BD.

"No," Metcalf corrected. "That's what we've spent since our inception -- 15 years ago."

Yet business was growing. BD added a European sales office, and began planning to open a factory in Asia. Suddenly, it became clear that the company's IT was lagging far behind.

"We realized IT was woefully inadequate," Metcalf says. "It was the definition of Rube Goldberg: tons of spreadsheets, weird one-off stuff held together with bubble gum and duct tape. We had the least we thought we needed to get by. Freedom is great, but the lack of integration moved from a strength to a liability. We had to change."

CFO Scot Carlson, who had been managing IT as well as finance, knew things had to change.

"I needed someone who knew more about IT than I did," he says. "We spent a lot of time debating whether it was worth making bigger investments into IT. The company [was] going to become more global and diversify, and we needed a strong IT backbone. We needed someone to figure out what we need to do to grow IT into a source of strength for the company and make sure it can carry us for another 10 years."

In 2004 Carlson hired Dees as an ERP consultant to help the company get more ROI from the system, which had been underused. Dees had the perfect background for the job. Eight years earlier, he had been managing a climbing gym in Ohio and gotten to know a BD sales rep, who invited him to visit Salt Lake City. Dees did and decided to move there two months later, going to work as a production supervisor on BD's ice line, where crampons and ice tools were made. Two years later, Dees quit the company to go back to college.

Dees earned a degree in computer science and got a job at Boeing as a software engineer. After five years at the aircraft maker, Dees went back to Black Diamond in the consulting job.

By this time, BD had moved to an ERP system made by Navision Software (now owned by Microsoft and sold as Microsoft Dynamics NAV). This system had promised to make manufacturing more efficient, but the company wasn't using all of its capabilities. "My goal was not to modify the system," Dees says. "I wanted to help the process owners using the system discover the functionality. Other systems had been built in-house that the ERP system was intended to do. [I focused] on user training and cultural change; this is a company full of a bunch of rock climbers. We're still exploiting new things from the ERP system."

Revamping IT

After a year of consulting, BD offered Dees a job as director of MIS, reporting to CFO Carlson. He spent most of the next year learning what BD needed and trying to formulate his IT vision for the company, which in 2006 had grown to include the factory in China. In two years, Dees increased the staff from three to 12 and more than tripled the budget.

"It was a classical open source, mixed-bag environment," he says. "Linux Red Hat, app server, Windows 2000 servers. Disparate apps. It was clearly one of those shops that had been built on minimizing costs. But well done. Most everything was done in-house. We've switched to a model where we'll buy it and bring it in."

Before long, Dees was VP of MIS, reporting to the CEO. One of his first tasks was to integrate IT into the running of the business.

"We're not the three guys who never come out of the room anymore," he says. "We're part of the organization, trying to accomplish strategic goals. There's a definite transition in how IS behaves. We were the guys you didn't need until things went bad. Now we're consulted when the business has a desire to move in a certain way. Our opinion is requested at every strategic decision."

Another of his early priorities was to beef up the company's infrastructure, including networking. In 2006 BD rolled out a virtual private network (VPN).

"There are integration issues with our three offices," Dees says. "We didn't have a wide area network [WAN]. Now we have a global WAN that makes three offices feel like one entity. That was a prerequisite for a lot of other things to work, like our PLM. We looked at point-to-point circuits and MPLS. The decision was made to roll our own site-to-site VPN on Cisco. It was very cost effective."

Dees hired MIS mangers in Europe and China and holds weekly teleconferences with both. Each location has its own version of the Navision ERP system, although Dees plans to eventually put the company on a single platform. The China site, for example, still uses spreadsheets for human resources.

"Next year they won't. That begs for a SOA," Dees says. "A sales and marketing office can run autonomously. But when you open a manufacturing plant, the relationship has to be more tightly knit if you want it to be as good as [that with] the plant 200 feet away. Now it's a global entity that has to work like an enterprise."

PLM

In a lab at BD's headquarters, a quality control tester puts an aluminum carabiner into a pull test machine. Slowly, the machine tugs at the carabiner, which stretches like a wet noodle before snapping in half, the amount of force being in excess of what the protective device is rated to withstand. The company cranks out 160,000 carabiners a month.

"We spend an inordinate amount of money breaking our own gear," Dees says.

BD excels at making rigorously engineered hardware but until recently IT hadn't had much influence on the company's manufacturing processes. The company has state-of-the-art computer-aided design systems, but they don't talk to each other. There's a lot of duplication and replication, with data living in different systems, including three PLM modules from the same vendor.

Now that's changing as BD is rolling out a new PLM system, Teamcenter from UGS, which was acquired by Siemens AG.

"We were interested in software that could handle everything from napkin sketches to manufacturing to sell-through and archiving, looking at things from concept to death," Dees says. "We're trying to normalize our product lifecycle. That's big, and it'll be an ongoing project. It touches so much of what we do that you just can't snap it into place."

When the PLM rollout finishes in 2008, the system will become the heart of BD's transactional systems, which will enable the deployment of other tools such as new forecasting software. Currently BD uses Demand Works Co.'s forecasting system. The company also must decide what its next ERP move will be: upgrade or deploy something else.

"Are we going to go to a big enterprise system?" Dees asks. "Do we like this platform? There are a lot of decisions to make."

Embracing SOA as a means to unify these systems, he says, makes sense.

"SOA comes from the way we think about, implement, and use those systems," Dees explains. "If you think of each system as offering a service to the others, then you can implement the right transactions in each of them and then build interfaces to them that gather key information they produce. An example: ERP provides the service of planning and accounting for the actions we take to produce our products, our Demand forecasting system offers the service of producing a forecast for our product portfolio, and PLM offers the service of managing what products are in our portfolio. With that, you can, through a SOA, bring together that information in a meaningful and cohesive way."

Dees says he's considered buying an "uber" system that does it all but found that these systems attempt to do too much and don't meet the specific needs of the business.

"With a good SOA in place, you have the flexibility to source and implement a smaller system that better supports your business needs and still exploit the benefits of the cohesion offered by the 'uber' system," he says.

Another huge benefit, he adds, is that if you build your SOA correctly, you also isolate the disruption if you change out one of the smaller systems. As long as the new system can meet the interfaces previously required, the change is isolated to only a small piece of your infrastructure.

"SOA is almost required because we have such an eclectic culture," Dees says. "We like flexibility to accomplish things differently at different offices. SOA helps us keep our culture."

Today a poster-sized version of the "MIS Vision" chart hangs in the office of CEO Metcalf, looking somewhat out of place amid black-and-white photos of soaring, ice-clad mountains.

"IT had to become a bigger part of the business," says Metcalf, as a small dog runs around his office. "We're 100% banking on IT. There are light-years of gains to be made. We can do so much better."

Yet even as BD matures, the company's essential DNA remains unchanged. At 3 p.m. a cry goes out in the IT department: "Is it climbing time?"

It is. Half an hour later, two members of the IT staff and a visitor are putting on BD harnesses and tying into a rope in Little Cottonwood Canyon.

Michael Ybarra is a contributing writer for SearchCIO-Midmarket.com. Write to him at editor@ciodecisions.com.

This was first published in December 2007

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