Three IT Triumphs for 2001By Baselinemag | Posted 2002-01-28 Email Print
Technology wisely applied still yields returns. If these three examples are any indication, the year's biggest successes were in streamlining collaboration with suppliers.
When gauging the success of technology projects, numbers count.
But so does executive support.
"[Success] has very little to do with technology and lots to do with people," says Karen Larkowski, executive vice president of the Standish Group, a New England-based research firm that has studied some 31,000 technology projects over the past seven years.
"If you've got really good executive support and user involvement, you've already upped your chance of success by 40%."
Here are the stories of three companies Baseline identified that got it right in 2001.
Eastman Chemical Company's e-procurement efforts started to pay off last year, as the company radically cut its ordering timeby 86%.
Three years ago, Eastman Chemical knew it was time for a technology tune-up. The $5 billion Kingsport, Tenn.-based maker of chemicals, fibers and plastics was relying on an older version of business-software producer SAP's core product in its purchasing department. With $900 million a year earmarked for spending on more than 7,500 different indirect suppliers, Eastman managers knew their buying could be more efficient if it was automated.
The company added Commerce One EnterpriseBuyer application to track purchasing and workflow and its MarketSite application to manage transactions. To help handle online quotes, negotiate contracts and better select its suppliers, Eastman also installed Diligent Software Systems' SourceSelect.
Eastman worked closely with both companies, says manager Eddie Page, even suggesting how to improve their software. Slowly but surely, Eastman expanded the number of suppliers in its e-procurement system by roughly 30%.
Late last year, Eastman began publishing its purchasing needs to a private Web site for suppliers, and continues to reduce the overall number of suppliers it deals with.
Chevron saw a 100% return in 2001 on its $24 million investment within a year of implementing an online system that connects dealers at 8,000 gas stations with suppliers.
Chevron's 8,000 retail gas stations and convenience stores are the company's lifeblood. So there was a lot at stake with a $24 million project to move informationincluding company invoices, credit card data, product pricing and new program notificationsto a Web-based portal.
Chevron worked with database giant Oracle, Internet consultancy C-bridge, Web software maker BEA and others to build an application all retailers would use to deal with Chevron's 500 independent distributors. Now, retail workers log on to inquire about everything from getting a gas pump fixed to increasing a credit line or learning the status of an oil refinery shutdown. Instead of contacting 21 different suppliers, each station just goes online, to one point of contact.
Project manager John Caine says the rollout succeeded because advocates got key executive sponsorship and took time to explain the plan to retailers. "You have to get everyone to buy in," he says.
Mercedes-Benz España cut its lead time for getting information to suppliers from 14 days to one.
Mercedes-Benz España said "sí" to doing business on the Covisint auto exchange back in 2000 and is now reaping the benefits.
Mercedes-Benz España already conducted business on the exchange with Ford, General Motors, Renault and Nissan. But the company decided to test additional software at a new $300 million van plant in Vitoria, Spain.
The plant installed German software giant SAP's MySAP e-procurement application, intended to help the company improve its internal buying practices. The German automaker hired consultants to install software that would automatically translate XML, a Web language used in Mercedes-Benz España's SAP back-end business systems, to the Commerce One cXBL format used on the Covisint exchange.
Mercedes cut the number of employees checking invoices on 55,000 orders a year by nearly half, and the number of its suppliers from 1,497 to around 200. The company also cut its lead time for sending product specifications to its suppliers from 14 days to one.
So far, so good.
Written with Mary Jo Foley