Creating Business ValueBy Kevin Fogarty | Posted 2008-02-21 Print
Baseline 500 companies handle the economic ups and downs with focused IT spending. You should too.
The end result, creating business value, should be the top priority. “Spending less is great,” says Chris Potts, director of Dominic Barrow Services, an IT strategy consultancy, “but you haven’t actually created more value. You’ve only burned a little less [money]. As a strategist, I don’t care [about cost-cutting] because I can come up with a strategy that will succeed either way, but first we have to know where we’re going so we’ll know whether we’ll be creating value or creating cost.”
And “value” is highly specific to an organization, especially when some of the enterprise’s employees would prefer sticking with older, trusted technology, rather than moving to something more modern, says Dave Ennen, director of MIS at Winnebago Industries, a recreational vehicle maker.
Like Ruby Tuesday, Winnebago (Baseline 500, No. 84) is in an industry that depends on disposable income and is highly sensitive to fluctuations in the economy. “We haven’t cut back on anything,” Ennen says. “We did meet with the executive staff and go through a business-impact analysis to figure out their pain threshold [in the event] we had a problem. They gave us a new disaster-recovery initiative—72 hours, when it used to be 10 days. Our budget did go up a bit, but mostly because of the disaster-recovery contract.”
Much of the development budget is devoted to a years-long project to wrap a Web services framework around the company’s mainframe applications and put browser-based network terminals on the manufacturing floor and in dealerships, while leaving the mainframe and a number of the green-screen interfaces in its headquarters untouched.
Many companies wouldn’t view green-screen-based mainframe applications as acceptable technology, but most Winnebago employees have been there so long (10 to 16 years on average, with some there more than 30 years) that they prefer the traditional mainframe interface because it’s familiar. “And we know our business rules [in the mainframe applications] work because we’ve been depending on them for a long time,” Ennen adds.
Most companies are not that patient, and effective IT depends as much on timing the results as designing the systems, Ruby Tuesday’s Ibrahim points out. “No company is going to spend two or three million and a couple of years on [a project] and not want to see something work,” he says. “Any project that’s taking more than a year to show results is a failing project.”
For example, a multiyear CRM project with a data warehouse component and automated point-of-sale (POS) at retail locations should be broken into one-year milestones, each of which delivers a huge result, Ibrahim says. Rather than working a year on a data warehouse and another year on CRM, roll out the data warehouse with quick, flexible data-mining tools to let marketers “see who ordered burgers, and who ordered burgers who was under 25 years old in this location.Then you start on the CRM; then you do the POS.
“Every milestone is a huge morphine shot for the users, giving them something they can use quickly.”
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