Getting It Right - Hb Case

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Getting IT right

The main topic of this article refers to setting the informational technologies within the company and aligning it with overall organizational strategy. Since the IT is relatively “young” field with fast developing practice it is still misunderstood or even ignored by the top managing people in organizations. In contrast, other departments as manufacturing, accounting and finance, marketing and sales are today already generally understood practices by the members of management team.

Because of misunderstanding IT by the top management in the firms, as it is stated in this article, the IT is an expensive mess in many organizations. Almost $500 billion is wasted globally (based on Gartner research) on IT that doesn’t achieve desired objectives, mostly because there is no useful participation of top management.

The authors of this article say that a systematic approach to understanding and executing IT can and should be implemented. They say that there is no reason why business executives can’t learn to speak language of technology and why, in contrast, technologist can’t learn the language of business. According to them the implementation of IT should be organized along three interconnected principles: A long-term IT renewal plan linked to corporate strategy, A simplified, unifying corporate technology platform, and a highly functional, performance-oriented IT organization.

One of the authors as a CIO, Charlie Feld has effectively applied these principles to restore IT at a number of companies such as Frito-Lay, Delta Air Lines and Burlington Northern and Santa Fe Railroads. Based on his experience, he illustrated the outlined principles as a way for getting IT right through real life examples from above mentioned companies.

A Long-Term IT Renewal Plan Linked to Corporate Strategy

By this principle authors think that a renewal plan should focus the entire informational technology on the company’s strategic goals during a long term period.  This approach creates suitable investments focused on cutting costs in the short term, and produces a designed plan for long-term systems rebuilding and value making. IT gets most from a long-term, well-organized strategic vision and a right angled focus on accomplishing the company’s most important objectives.

As an example for implementing this principle it was mentioned a successful story of Frito Lay Company that aligned its IT to keep following the Herman Lay’s original business strategy to produce and deliver chips to stores and keep “real-time” customer, accounting and inventory information, all in one place. The company invested great amount of money, around $100 million for the databases and core systems and about $40 million for the handhelds that enabled the sales people to be able to manage price, inventory, and customer modifications in real time and connect to the supply channel. This implementation of new system was 4 years long and it enabled company to save 30,000 – 50,000 hours of weekly paperwork, to cut number of distribution centers, to decrease stale product by 50%, and increase its domestic revenues for 1,2 billion in three years. It is important to mention that savings that were result from enhanced control over sales data provided more than $40 million per year and funded the renewal of the core data systems.