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Manufacturing Software: Get innovative in dealing with IT

March 28, 2003
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Point IT to places in operations where there are technology-based opportunities.



From an operations perspective, centralized corporate IT organizations can take on all the characteristics of a fortress under siege. In the food industry, most of the larger companies and many others have implemented large Enterprise Resource Planning (ERP) programs.

Back in the plant, oftentimes these large and time consuming IT projects have yet to show much benefit. Despite increased IT budgets and staffs, it’s still difficult to get operations-related IT projects in the queue.

To get more of your IT organization’s attention, you may want to consider another strategy. Traditionally, IT builds action plans and budgets that support the operational business plan. In other words, react and align IT with the business plan that is in place. But there is a second perspective to consider. You may be better off if you can point IT to places in operations where there are technology-based opportunities. According to Yvonne Genovese, research analyst with the Gartner Group, “Aligning IT with the business objectives is key to getting the maximum business impact from your IT investments. Unless IT understands where the business is going and how it will get there, the business cannot expect them to contribute.” IT and your overall organization can often benefit from conscious strategy to find “good” opportunities for information technology.

In the early 1990s the American Productivity and Quality Center (APQC), Houston TX, conducted a number of pilot projects to determine methodologies for improving white-collar productivity. One of the major findings of the study was that real, measurable improvement in productivity occurred only in those pilot projects that were designed to work on problems in the interface between organizations.

The APQC studies found that projects designed to optimize productivity inside a department ended up making more work for the down- or upstream departments that were involved in the work flow. On the other hand, when two or more organizations worked together on improving the handoff between their organizations, measurable productivity results developed.

This conclusion shouldn’t be too surprising given the way managers are usually held accountable for departmental results and not encouraged to manage beyond the “walls” of their organization. Ken Pyles, an IT manager at the Idaho agribusiness giant J.R. Simplot Company observed, “IT projects that focus on departmental productivity improvement are really hard to measure. When we have projects that are funded by several departments that work on improving an entire business process, that’s when we find real economic benefit.”

It is also important to look for opportunities outside of the parameters of currently installed package software. ERP packages in particular tend to have a departmental/functional focus. Many of the opportunities for added IT value will come at the edges of the interfaces between standard ERP components and the unique requirements of your business.

Operations managers need to consider that IT alignment and ROI from IT projects are two sides of the same coin. If IT isn’t aligned with the corporate strategic objectives, the ROI associated with those projects will not be attributed to IT. If IT generates projects that have high ROI but are not aligned with corporate strategic objectives, IT will not get credit for their contribution. When operations management can lead IT organizations to the interfaces where IT initiatives like ERP projects can interface with operational needs, there will be a win-win proposition for the enterprise.

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