Here’s the picture: A multichannel company with sales of $20 million has an aging order management system that has been in place for over 20 years. While there are some things that the users like about it, they have basically outgrown the system. They need far better marketing information, e-commerce site to business systems interfaces, forecasting and inventory management, and the ability to deal better with light manufacturing and tracking sets and kits, which are a major part of their business.
The president authorizes a project to investigate replacing the system. Immediately a turf battle ensues. IT is already researching the Internet for the most technically up-to-date IT platform. The users’ comments are predictable: “They’ll pick the most expensive, technology-driven system out there regardless of whether it fits our business.” There is a proverbial glass wall between the two groups in many companies.
The outcome: After months of no progress, the president shrinks from his responsibility and says, “We’ll keep the current system.”
Unfortunately, this scene is played out on a daily basis in many companies both large and small. In defense of the IT department, they are often given responsibility for everything from telephone systems, to help desk, to advanced WMS systems, e-commerce systems and e-mail systems. Most often they are under budgeted. Management backs into a percent to net sales that the company can afford to spend. Additionally, the technology is diverse, complex and represents generations of different languages, databases and standards.
But in defense of the users, IT more and more takes a technological point of view rather than a business perspective. By a “business perspective” I mean that, in many cases, IT no longer knows the company’s business—not the mechanical things like how to enter an order. They lack knowledge of the industry overall. And they lack the understanding of how to help you grow and manage your business. Examples include details about what will make your marketing more effective; what do the merchants need to plan, grow and evaluate their merchandise selection; and how to help operations become more efficient. In many companies, IT often looks at application function as secondary to technology. Additionally, they hide behind a lot of technical jargon that pushes users away from them.
And systems software vendor salesmen are no better off. Gone is the day when talented sales and support people really understood the industry. Many barely know their company’s system, and many can’t even demonstrate their system without the aid of a support analyst.
The result of all this is a collection of negatives.
A technically advanced system or a system that fits the IT standard is selected. It may be a weak system from a business perspective. Technology by itself rarely gives an ROI.
The IT department’s lack of a business focus means that users don’t ever make high-level use of the systems in place, because they don’t know what applications and capabilities exist in commercial systems or in previous generations of in-house developed systems.
Another result is that there isn’t a partnership between the user departments and IT, which optimizes the full, untapped potential of IT. The company suffers because the rather large investments in critical applications don’t materialize or they are years off of the projection.
Tear down the wall
You will have to start thinking differently in order to change things.
- Is there failure to recognize problems with IT? This amounts to costly neglect. Ask, is IT an expensive utility or a necessity in your company? Your management team and IT need to have a clear understanding of the mission and charter of IT, to provide information systems that assist in company profit and growth.
- Is there failure to get IT to realize its role in the future of the business? Put IT management in place that understands the bigger picture of your business and the information that is required to manage and grow it.
- Is there failure to make your IT director an equal partner in your strategic planning process? There must be exposure to the company’s direction and an understanding of where IT plays the crucial role. Get IT buy-in early rather than just handing them a list of requests after many months of meetings.
- Is there failure to fully utilize IT resources? Develop internally, or hire, business analysts who are interested and dedicated to maximizing the user community’s use of the systems.
- Is there failure to hold users accountable? Don’t let the users hide behind IT flaws and shortcomings. They should know the business and they need to take responsibility for understanding the applications with which they’ve been provided.
Outside resources can help your company make this transition. In our consulting assignments, we have successfully assisted companies in making these types of sea changes.
We believe that IT—for good or bad (and ineffectiveness is certainly bad)—governs the productivity and profitability of this industry. How well is your company tapping its potential?
F. Curtis Barry & Company is a fulfillment consulting firm for catalog, e-commerce, and retail businesses. We offer clients expertise in business process and order management systems, inventory management systems, warehouse management systems; warehousing and distribution; call center services; inventory management and forecasting solutions; and strategic, financial, and operational planning for all business channels.
