Today, business is moving at breakneck speed. And there is no better example of this acceleration than in the automotive racing industry, specifically the jewel in the industry crown, Formula One. Racing teams are in the business of innovation, which requires agility, a focused mindset, and the ability to switch gears at a moment’s notice – even if that requires you to drop everything you’ve been working on. How does an organization like this plan a systems upgrade, when the picture of tomorrow’s needs will surely change in the next moment? This is exactly the challenge Lotus F1 Team’s COO Thomas Mayer faced as he realized their systems were possibly holding back innovation.
Foreseeing and eliminating obstacles: Making way for innovation
Few businesses move as swiftly as a Formula One racing team – literally. With speeds of up to 220 kph, the performance of the cars built and raced by Lotus F1 Team is dependent on state-of-the-art production. However, a siloed culture inhibited both agility and innovation for Lotus F1 Team. Each different production department worked in isolation and, once they completed their task and handed it off, there was little communication between teams. Explains Mayer, “There was no understanding of what was going on up-stream nor was there any down-stream feedback. Once a department got their work done, they’d throw it over the fence.”
Since more than 70% of each car produced by Lotus F1 Team had a limited life span, and improvements were made to those parts within each season, sometimes even made between races, the parts team was in perpetual production. The team worked on 23,500 parts drawings in 2014, and Mayer knew that in 2015 the number would be even higher. “To do more in the same amount of time, we needed more sharing of information and more collaboration,” says Mayer. “We knew that with better analysis, we could have increased insight into when new parts were needed. This would help us establish more educated production cycles, prioritizing the right parts in the right order,” says Mayer.
In recent years, regulations changes have created new technology and financial challenges for the Formula One community. “Last year, the cost of racing increased substantially. New technology, particularly in the power unit domain, has made the sport more expensive,” says Mayer. Switching from simply making cars fast to also taking cost into account created the need for more sophisticated planning tools. “We had very simple cost modeling in terms of costs and paying salaries, but we required quite a big change in culture in terms of developing a cost awareness at every level.”
Creating a more agile environment hinged on increasing visibility and communication across the business; Lotus F1 Team departments needed to be able to cross-functionally plan and share, while business units needed insight into costing. To establish this transparency, Mayer went in search of a robust, yet quick to deploy, technology ecosystem.
An agile, iterative implementation allows the team to remain agile
“We needed a suite of tools to replace our aging systems and automate manual processes, reducing the time it takes to function in the different daily roles with up- and down-stream benefits while also providing visibility and transparency,” says Mayer. In 2012, Lotus F1 Team forged a strong partnership with Microsoft to establish a strategic, phased plan to deploy Microsoft Dynamics AX across the organization.
So how does an enterprise moving and changing at this velocity do a large-scale enterprise software implementation? While a holistic business transformation was the ultimate goal, Lotus F1 Team wanted to benefit from the implementation immediately – with additional roll-outs providing added capabilities and flexibility. As an organization adept at integrating design improvements in cars, Lotus F1 Team welcomed a plan that included several iterative phases to hone and optimize the system.
First, the team implemented Microsoft Dynamics AX functionality across the traditional ERP functions – finance, expense, budgeting, material management, purchasing, HR, and payroll. The quick gains there encouraged the team during subsequent deployment phases. Says Mayer, “Next, we tied Dynamics AX in with everything from design release to consumption of parts on the car at the track, this included project-based manufacturing and design engineering – the production of the car.” In the future, Lotus F1 Team plans to deploy Microsoft Dynamics CRM to tie in sales and marketing. This integration will enable increased insight into how Lotus F1 Team can better service their partners, manage sponsorship contracts, and engage with their fans.
In the past, Lotus F1 Team had to manage and support more than thirteen disparate systems for parts manufacturing and production. After implementing Dynamics AX, their total number of systems is six – and Lotus F1 Team believes this is a core competitive advantage. “At the end of the day it’s about outperforming our competitors, in terms of using our available resources to get the utmost performance. Nothing is more valuable than having the facts on the table,” explains Mayer. All in all, with Microsoft as the backbone of their business, a Dynamics-based ecosystem will provide Lotus F1 Team a 360 degree view of their business.
Collaboration optimizes manufacturing
With a better understanding of where parts are in their lifecycle – in design, in production, or on the car nearing the end of their life – Lotus F1 Team now has more agility when integrating design changes during production. “We are institutionalizing and systematizing hundreds of human years of gut instinct. When you do that, you remove the ambiguity and can get deep business intelligence on the trends of the business and what any given change can mean to all the interdependent parts,” says Mayer.
By gaining insight into where parts are in their lifecycle, Lotus F1 Team is also increasing manufacturing efficiency. “We’ve timed development to replace parts as they wear out. Now we don’t have more parts on hand than we need. Optimally, we’re working toward a just-in-time manufacturing process, because we now have an understanding of where each part is in its lifecycle, as well as clarity into when that part will expire.” explains Mayer. And timing is critical in Lotus F1 Team’s environment of constant innovation.
Fiscal Awareness Ingrained
Dynamics AX is helping to usher in a new cultural dynamic of financial accountability at Lotus F1 Team. A large-scale change in culture and mind-set like this is very difficult for any organization to adopt, much less in an organization moving this fast. Dynamics AX makes it possible by putting costing data directly into each team member’s hands during the decision-making process. “Now, before they make a decision, each team member can extrapolate their decision’s financial impact using Dynamics AX,” explains Mayer. “We can input data from anywhere so business insights are up-to-the-minute and shared across departments.” The robust transparency allows employees to quickly and accurately measure the fiscal effects of potential opportunities as they strive to balance operational excellence with innovation. This increased fiscal awareness allows Lotus F1 Team to spend their money more efficiently, getting the most out of every penny.
In all organizations, if groups start to become siloed, information stops flowing, which can quickly bring innovation and agility to a crawl. Dynamics AX helps Lotus F1 Team maintain their fast moving, agile culture by sharing a granular level of information broadly across the organization and holding each team member accountable to document what they’re doing. This effectively shares how each team member’s contributions will affect the car, and their team-mates up- and down-stream. “It’s vital that we maintain this dynamic. We are not a blaming culture, but rather an open creative culture. We have debriefs, we have a stand-up after each race to discuss what went well, what went wrong. If the car is successful, everyone feels a part of the win,” says Mayer.
After the first race of the 2015 season in Australia, Lotus team is already thinking about the next technological step: leveraging all the data coming from the car’s telemetry system. The team envisions utilizing predictive analytics to create patterns and matching, leveraging machine learning to plough this insight back into a car’s development. For this innovative next step, Microsoft will be with them every step of the way.
“Change is in our DNA; it’s a basic tenant of the racing world. We only hire personalities that can tolerate rapid change. We can compete at a higher level because of it. The secret is creativity; it’s the willingness of our employees to innovate and evolve,” explains Mayer. “All of our employees are good at what they do. We’re a family even though we’re 500 people, work ethics are very high. Does this give us a competitive advantage over F1 teams? Absolutely, yes!”