Ihringer: "Will electric vehicles have air conditioning?"

Stefan Ihringer is IT manager at German automotive supplier Mann and Hummel. He studied mathematics and controlling before beginning his professional career as a software developer and database administrator in technical sales at a telecommunications company. After several positions at supplier Robert Bosch and Germany’s Telekom, he joined Mann and Hummel, where he has been vice president for information technology processes for the past 10 years. Ihringer spoke with automotiveIT.com recently about innovation management, IT consulting services, and the lack of flexibility shown by software supplliers.

Mr. Ihringer, auto suppliers are increasingly taking over development contracts from OEMs and are pressing ahead with innovations on their own. What is Mann and Hummel investing in research and development and what are your emphases?

Four percent of our revenue goes into r&d. We put a heavy emphasis on innovation management, which for example involves materials research and, of course, new products. We are also increasingly occupied with new technologies that help reduce emissions and those that are connected to the emerging field of electric mobility. In general, you have to keep presenting customers with new solutions ”“ and, what is especially important, stay close to the customer.You are among the customer’s preferred suppliers only when you produce customer-oriented innovations.

Where are the future fields of innovation forelectric mobility?

There are several areas. Will electrically powered vehicles for example continue to have climate control? Do you still need cabin air filters? What about the cooling system for the power electronics? We have these exciting questions on our screen and will certainly introduce our expertise into this area in the future. But ”“ and this must be clearly stated ”“ the internal combustion engine will be with us for years to come. So development is moving forward there, too.

You are now developing a diesel particulate filter.

That’s right. A new concept with a special material.Our pilot facility in Ludwigsburg, Germany, is already running.

Let’s devote ourselves to IT: What is IT’s importance today under new CEO Alfred Weber’s management?

IT already had very high importance and is closely integrated into business processes. Nothing has changed in that regard. I’ll give you an example: IT is an important precondition for internationalization. If Mann and Hummel plans a new facility abroad or undertakes an acquisition, we can rapidly integrate the location in the Mann and Hummel IT network. The crucial point is: You need IT to improve processes on a sustained basis. IT is the essential tool for that. And, even several years ago, this recognition was increasingly gaining acceptance in management.

”¦so not just a service provider?

Not just. The commodity areas are on one side, which you have to offer and control, so the complete infrastructure ”¦

”¦ but that’s precisely the service that people expect from you, in any case.

Right. You have to fulfill this task. Consulting services, tailored to Mann and Hummel requirements, are in addition to that.We especially support management with new ideas in production and logistics. To cite one example, we have been using an innovative pick-by-voice solution for about two years in the commissioning of goods ”“ a highly integrated system that has improved logistics quality. The warehouse employee is even precisely guided.In 2009, we also introduced pick-by-voice in a U.S. factory with great success. This is a solution that is based on consulting. IT introduced the idea. The same is true for making administrative processes leaner. At our company, auditing has been standardized for several years. It cuts costs and saves time when you turn to workflow systems with SAP integration, as they are offered from Open Text or SAP. Or think about live meetings on the web. You are also supporting the business with web conferencing. We provide consulting and select the innovations that the business needs ”“ and that can serve it.

You have recently launched a facility in China. Did you also perform consulting there?

This service was provided by our responsible parties in Asia. An explanation: We have IT consultants for every continent.They support the facility in planning and implementation. Our Asian consultants were involved in this new factory and planned ”“ and implemented with us ”“ the network, the server rooms, and the connection to Germany, together with our IT department in China and our experts in this country.

How many IT consultants do you have in all?

We mostly have two or three IT experts per facility (Editor’s note: Mann and Hummel has 41 facilities) and about 80 at our headquarters in Ludwigsburg.So we are very lean. In addition, we have two service centers, in the Czech Republic and India, providing support in their regions -- for example, at our facility in Japan. We don’t have our own local IT there for our sales and development activities.

If I understand you correctly, the importance of IT at Mann and Hummel is continually growing.

IT is clearly gaining in importance ”“ and it is growing every year. But our mission is clear: We must turn business requirements into technology and provide useful solutions. In the end, it’s essential that IT have the ability to get things done and that the strategy not just be on paper.

Then you surely don’t have a problem in budget negotiations?

We too fight over budgets, so we can provide services for our internal customers. But we aren’t being pinched. Rather, we adjust IT budgets to meet the need.

Can you give us that in figures?

Here’s one figure: We spend about 2 percent of revenue on IT. If revenue drops as it did last year, we in IT naturally step on the brakes.

Experts advocate special interfaces between IT and the business, to improve cooperation. What do you think of that?

You definitely have to work on that, since you generally have two views on it: one from IT and one from the business. It is essential to overcome this gap. Two conditions have to be met for this: First of all, communication is extremely important. That applies as much to communication between the facilities and the headquarters as on the local level between IT and the specialized areas. We are working on that. That’s also one of the jobs of our IT consultants supporting the companies. Besides communication, it is also essential to run the operating business cleanly. Central system failures do not exactly increase the business’s acceptance.But we manage many issues on the IT management committee. Representatives of the business area and the IT functions sit together on the panel, and we set the IT strategy there.

Keyword strategy: In your opinion, what are the prominent issues for information technology for the next few years?

Certainly the improvement of production and logistics processes. We are very involved with the roll-out of MES systems, to provide machine data for controls in factories. We need a uniform IT platform for that. The issue of detailed planning is also very important, so we can carry out even better production planning in a manner favorable to our customers. The management of the company at all levels is also on the agenda ”“the key phrase is business intelligence. In addition, our attention is basically focused on process improvement and ”“ not to be forgotten ”“ the issue of web 2.0.

Is Mann and Hummel already on its way in social networks and web worlds or isn’t this issue important?

We examine all the possibilities that make sense for us as a company. Web 2.0 will create more and more offerings that we can use. The next generation of our employees is already familiar with these tools from their school and studies. There is no question that we must ultimately react to this.The private realm is already leading the way. So it’s imperative to find solutions on this.

A new study has found that many auto suppliers frequently do not make calculations correctly and thus give away earnings. The key term is data of insufficient quality. What is Mann and Hummel doing?

Previously, we were still doing calculations with Excel based on a calculation guideline. Unfortunately, this had systematic weaknesses. That’s the reason we selected standardized calculation software with an interface to SAP several years ago, and rolled it out globally. This way, we are calculating on a uniform basis. That, in particular, increased the calculation quality in the proposal phase.

Another point from the study: the flow of information between the OEM and supplier must be improved, so you can react more quickly and perform better calculations.

Our information flow is actually quite good. When we look at it more closely, it involves product development based on common CAD systems and EDI in production and logistics. This works. It is not relevant if I look at the product calculations. That calculation stands and falls with the quantity that is accepted. And that cannot be influenced by an IT interface. For that, you would have to know what the customers will be accepting in terms of quantities three or four years down the road. That is not an issue of information flow.

You are active in the CIO working group. What issues are defining the current discussions in the working group?

Over the past 18 months, the crisis and its effects on companies, without a doubt. But one of the major issues was the prices increase for maintenance at SAP ”“ it was drastic.

Has the problem been solved?

The large software providers generally do not meet our requirements. The maintenance and software license models are rigid and do not map fluctuations in usage.A good example: In 2009 we had to introduce reduced working hours and thus were able to use SAP and Microsoft software less.But the licensing terms do not reflect that and, for this reason, both companies didn’twant to reduce their maintenance bills. Smaller companies do that.

What are people in the working group hearing on the issue of passing on or selling licenses? It’s an issue that is hotly debated in the industry.

It’s hard to make a general statement. We have discussed this a great deal and the same names keep coming up: Unfortunately, SAP is not especially flexible and it is even bureaucratically rigidon this issue from time to time. That doesn’t exactly make things easier. That’s not the case for Microsoft. With CAD providers, a sale is practically impossible due to the license terms. Dassault is an example of this ”“ in turn, PTC is a positive exception. But the larger problem is the software manufacturers’ expensive and inflexible maintenance contracts. An adaptation to customer needs is urgently needed here. This has had the effect that you consider whether to ever use products from companies that are already in nearly monopoly positions.SAP, in particular, certainly has not done itself any favors with its behavior.

In conclusion, how significant is the SaaS issue to your company? Does it really permit the reduction of expenditures on costs, administration and implementation? Your assessment:

That is a hype issue. We use it too, but it doesn’t yet play major role for us in the company. There is certainly still homework to do here, in particular with regard to the individualization issue. Ultimately, the costs are a core issue: Either I get the same performance for less money or greater performance for the same price. I don’t see either right now with SaaS. But that could change in two or three years.

Interview by Hilmar Dunker