Cover Story: Back to Basics - e-Business Finally Gets Real

Last year may have seen "pure-play" e-businesses retrenching or retreating, but brick-and-mortar companies continued to invest judiciously in solutions to streamline their operations as they grew their businesses. Where are savvy companies putting their IT budgets in 2002? In a desire to learn where e-business stands, iSource put that question to IT leaders at seven companies and got seven very different answers.

[From iSource Business, April/May 2002] Last year may have seen "pure-play" e-businesses retrenching or retreating, but brick-and-mortar companies continued to invest judiciously in solutions to streamline their operations as they grew their businesses. Where are savvy companies putting their IT budgets in 2002? In a desire to learn where e-business stands, iSource put that question to IT leaders at seven companies and got seven very different answers.

With the passing of 2001, one could almost hear a sigh of nervous relief emanating from information technology (IT) departments across the land. The new year promised, if nothing else, at least the possibility of a return to some sense of normalcy after two years (1999 and 2000) of frenzied e-business for the sake of e-business and one year (2001) of retrenchment, recession and real-world threats that transcended the concerns of one's own enterprise.

Yet, for all the talk of "B2B," now signifying "back-to-basics,"(implying a rejection of everything prefixed by an "e-") and for all that industry-watchers fretted over regarding IT spending last year, e-business initiatives continued apace throughout 2001 and into 2002. Perhaps it was because companies were reluctant or unable to interrupt projects already underway - but more likely because the IT leadership within those companies had never fallen prey to "e-hype" in the first place.

How are savvy companies spending their IT budgets in 2002, and how do e-business and supply chain enablement technologies fit into the mix of priorities for this year? To answer those questions, iSource Business spoke with IT leaders at a cross-section of brick-and-mortar enterprises - companies in sectors from automotive to office products, energy to electronics - with annual revenues ranging from $3 billion to $42 billion. The IT leaders included chief information officers (CIOs) or the equivalent for a particular company (vice president or senior vice president of information technology).

The picture that emerged from our conversations is one of a continued focus on e-business initiatives, both within and outside the enterprise. In addition, iSource gleaned 10 best IT practices for e-business being applied at these leading companies.

Getting Personal at Boise Cascade Office Products

Gary Massel doesn't want to be on the "bleeding edge" of technology. At Boise Cascade Office Products (BCOP), where Massel has been CIO for about two years, "We do not buy technology or implement technology just because technology changes." Rather, the $4 billion, Itasca, Ill.-based office products supplier has focused on maintaining a flexible IT architecture that it believes will allow the company to rapidly adopt advantageous technologies to keep BCOP ahead of the competition. "When we make changes," Massel says, "we want to be able to move quickly."

Given this emphasis on consistency, it is perhaps not surprising that this year's top IT priority for BCOP is the same as in 2001: the One Boise initiative to provide a personalized buying experience to the company's diverse and expansive customer base. No small challenge given that BCOP, a 13,000-employee subsidiary of the Boise Cascade Corp. with 13,000 associates worldwide, processes more than 100,000 orders daily.

The One Boise initiative stems from BCOP's realization a couple years ago that its competition had narrowed the gap in terms of service, as measured by such traditional performance indicators as line-fill rate and on-time delivery. "And when competitors caught up," Massel says, "the big discriminator became price." Rather than wading into a price war, BCOP undertook the One Boise initiative with the goal of raising the bar on service. The project, which began in 2000, involves a variety of technologies including customer-relationship management (CRM), campaign management, Web collaboration and enterprise data warehousing. The idea is to pull all the company's business data into a set of integrated, connected databases to provide a holistic view of each customer. A personal identification number ensures that the company can track and analyze patterns at the individual requestor level and respond with personalized services, such as predictive ordering, regardless of whether the customer is placing an order via phone, fax, salesperson or the Internet. (BCOP currently does 37 percent of its sales electronically and expects that figure to rise to 45 percent in 2002.) In 2002, BCOP continues to tinker with One Boise, which helped earn the company Gartner's first CRM excellence award last September.

In addition, the office products provider is implementing a business intelligence strategy, also begun in 2001, to make better use of its operational information to allow for faster decision-making within the company. As an example, Massel says that with the system in place BCOP will be able to replace monthly reports on its delivery fleet of 1,000 trucks with daily reports showing efficiency, on-time performance and other key performance indicators for each route, allowing the company to respond to delivery issues on a daily basis rather than a month after the fact. Similar reports can be generated for service performance, warehouse operations, profit margins and other areas of operation.

Finally, for its third major initiative, BCOP is developing a supply chain management strategy, which is to be implemented in 2002 or early 2003, with the objective of increasing its inventory turns from the current level of 13. Massel says the system will link BCOP with its supply base and allow the sharing of the suppliers' manufacturing, scheduling and stocking information, as well as BCOP's forecasts and purchase orders. The company will collaborate with its suppliers on purchase orders, quantities and timing, and then be able to track orders from the delivery process to receiving. "We believe that if we put that in place, we and our suppliers will be able to jointly manage and achieve better performance in that supply chain," Massel concludes.

BCOP prefers to buy, rather than build, its applications. "We are really focused on integration, business processes and the integration of solutions to support those business processes," says Massel. Of his own job, he says: "The CIO's role, and IT's role, besides the implementation, is to ensure that we define and implement a systems architecture that, one, can effectively support these applications; two, is easily maintainable and supportable; and three, is very flexible, because we know that business is going to change."

Staying Flexible at Flextronics International

Mike Webb has the kind of problem that many CIOs can only dream about these days: dealing with his company's rapid growth. During Webb's three-year tenure as senior vice president of IT at $12 billion, Singapore-based electronics manufacturing service provider Flextronics International, the company has expanded from about 20 facilities and 15,000 employees to more than 100 manufacturing locations and 70,000 employees around the world. Consequently, the top agenda item for Flextronics' IT leader and his worldwide staff of 750 is, as Webb puts it, "to accommodate that growth in a very bleeding-edge, yet consistent, way."

The challenges are many. Much of the company's manufacturing now takes place in regions such as Eastern Europe and Asia that have lower cost infrastructures - namely because they have less infrastructure. At the same time, the electronics industry's foreshortened product lifecycles and limited lead times require that Flextronics be able to get production facilities churning out goods for the company's customers on short notice. "We have a company culture centered around the idea that, 'We can build a factory in three months, Mr. Customer, and be building your product,' because it's very important to get their product to market," says Webb. "So as the IT guy, you can't come along and say it's going to take six months to implement an enterprise resource planning (ERP) system in a facility like that."

These challenges have pushed Flextronics to develop a set of tools, including an ERP suite from Baan and collaboration tools from Agile Software, that it can implement rapidly to get a far-flung facility up and running on short notice. Meanwhile, the company has centralized its data, running its facilities around the world from a single data center, allowing for essentially instantaneous global updates for all its different applications. "That provides us with absolute consistency and allows us to get best practices out there very quickly," Webb says. For 2002 priorities, Flextronics' IT leader says his focus will be on vertical integration, both across the company's supply chain - where they are using tools such as Agile's design collaboration software to work with customers, suppliers and their own offices around the globe - and internally, to provide specialized IT toolkits for particular areas of the business, whether that be plastics, metal enclosures or printed circuit boards. A second priority is streamlining outbound logistics, which has become critical given Flextronics' widely dispersed network of manufacturing facilities. "It's OK to go out to the depths and beyond to build a product," Webb explains, "but then you've actually got to get it into the hands of customers."

Lastly, Flextronics' IT staff will be working to ensure the smooth flow of information among the company's many facilities. Webb: "The whole challenge is to get information from around the globe quickly and aggregate it so that you can make better decisions, to aggregate pricing and materials and quickly use that information in the day-to-day operations of the local facilities." The goal is to use the company's IT infrastructure as a key differentiator that will allow Flextronics to offer an expanding array of outsourcing services to its customers.

Asked what it is he looks for in a solution provider, Webb offers this: "On the implementation side, I look for a basic frankness and honesty from the company about what services they can provide and how best we can be complementary to that. That differs immensely from company to company." For instance, some smaller solution providers may have great technology but be unable to provide the support that a company as large as Flextronics would need. In those cases, Webb says he needs to understand how best his staff can work with the provider to build up the necessary internal expertise within Flextronics, rather than relying on the provider for support.

Using IT to Facilitate Relationships: International Truck & Engine Corp.

Art Data, vice president of IT at International Truck & Engine Corp. (the operating company of Navistar International), has a very simple explanation for why his company is being so careful with its technology investments these days. "In our industry," he says, "we haven't seen a downturn like this in 20 years, so we have been very focused on what we spend and don't spend." Little wonder, since the company, which is an original equipment manufacturer (OEM) of heavy trucks and a tier-one supplier of diesel engines, has been squarely in the middle of a depressed North American automotive and truck industry. Still, Chicago-based International Truck, with $6.7 billion in fiscal 2001 sales and 16,500 employees, has continued to invest in IT initiatives to cut its costs and grow the business.

The imperatives driving Data and his 600-person IT shop in 2002 include growing the business, particularly through a joint venture with Ford Motor Co. that will manufacture parts for both companies; continuing to reduce costs and turn fixed costs into variable costs; and building a customer profiling data warehouse initiative on the customer-facing side of the business.

Top IT projects for 2002 include the company's ongoing initiative with third-party logistics providers (3PLs) to establish bi-directional visibility between its suppliers and its production facilities through the exchange of demand, schedule and shipping information. Under a program that International Truck is putting in place at its engine facility, the plant's ERP system notifies a supplier of demand for a component, and the supplier ships the components to the 3PL. The 3PL electronically "sees" the plant's replenishment requirements, again through the plant's ERP system, and automatically replenishes the components as required, sending electronic shipping notices to the plant. Arrival of the components at the engine facility triggers an electronic receipts settlement process, with the plant automatically matching the advanced shipping notice with the requirement and generating a payment at the same time. The 3PL replenishes the componentry to the plant 18 times each day, and the supplier owns the components until the facility takes delivery. In 2002, International Truck plans to roll out similar replenishment systems at its other manufacturing facilities.

Data's company is focusing on visibility in the parts aftermarket side of its business, too. Currently International Truck's dealers are managing their fleet customers' inventory by gaining visibility into stock levels and replenishing as needed. That's good for the dealer, who becomes a preferred parts supplier to the customer, and for the fleet customers as well, since it takes costs out of their business. Meanwhile, International Truck is aggregating demand data from across its parts distribution centers and providing that data to the centers' suppliers in order to do automatic replenishment as a way to ensure high fill rates with low inventory levels. Now International Truck is working to collect inventory information from its dealers' business systems by applying to that data the same algorithms the company uses to manage replenishment in its own distribution centers (only on a smaller scale). The company anticipates being able to replenish both at the dealer and parts distribution center level, further reducing inventory across the supply chain.

Data, who began at International Truck as a process engineer in 1975, says that despite an agenda full of e-collaboration projects, his company does not let technology become the focal point of its business relationships. "Everyone talks about electronic collaboration, but our fundamental belief is that collaboration is a relationship," Data explains. "You can have all the technology in the world, but if you don't have good relationships with your dealers, or with your suppliers, all the enablers in the world aren't going to help you. IT facilitates what comes out of those relationships."

Johnson Controls Confronts the e-Standards Issue

As Subhash Valanju sees it, the problem with e-business today is standards - or rather, the lack of standards. "When you are trying to collaborate with people outside of your company, they won't necessarily be using the same tools," he says. "So who sets the standards, and how do you go about setting the standards to get something done?"

Valanju is vice president and CIO at Johnson Controls Inc., the $18.4 billion tier-one automotive supplier and facilities management services provider. The company employs about 110,000 people, operates some 270 plants in 23 countries and does business in more than 40 other countries. With that many employees at that many facilities around the world, it's no wonder that Valanju views standards as a key precondition to enabling collaboration both within the enterprise and between trading partners.

This emphasis on standards informs Valanju's view of Johnson Controls' IT priorities for 2002. For example, he cites security as the top priority for the company and notes that as the number of applications in use within the organization increases, users will need a single sign-on capability to allow manageable access to Johnson Controls' computing resources. Similarly, while Johnson Controls is looking to use "visualization" tools to gain real-time insights into its internal supply chain (to monitor inventory levels and orders between different units within the company, for instance), Valanju says that standards must be set for how data is classified in disparate systems across the enterprise, how often information in those systems gets updated and how information is presented to end users.

And that's just within the enterprise. When it comes to collaborating with thousands of geographically dispersed suppliers that have varying levels of technical sophistication, standards become even more critical, Valanju says. "If a supplier is going to serve 10 customers, and the customers have 10 different systems, the supplier is going to go bananas. If everyone displays things differently, if there is no standardization of terminology, what's the poor guy supposed to do?"

Valanju believes that the automotive industry ultimately will create standards for e-business in the same way that the Automotive Industry Action Group (AIAG) set standards for batch-oriented transactions through electronic data interchange (EDI). With auto industry standards still to come, Johnson Controls' CIO sees the company focusing on its internal supply network first, implementing supply chain solutions to increase efficiencies between its business units. Then it will begin to move outside the "four walls" toward greater trading partner collaboration later in 2002 or in 2003 - assuming that the necessary standards do get set.

That timetable also depends on the availability of the necessary supply chain solutions. Johnson Controls is not looking for an all-encompassing, ERP-type system to run its supply chain, but Valanju says he has not seen the kind of point solutions he is looking for yet. "Solutions are available on the connectivity and technical infrastructure side, but the application integration side is where there is a lack," he laments.

In the near term, Valanju is more optimistic about the prospects for addressing the language aspect of global e-collaboration. With business dealings in more than 60 countries, Johnson Controls might have a U.S.-based executive meeting over the Web with colleagues or partners in Japan, Germany and China simultaneously. While all the participants may speak English to one degree or another, the company is looking for software tools that can translate messages back and forth into the participants' native languages as a way to accelerate the pace of a meeting and ensure effective communication. Valanju says the company has seen software that might be up to 80 or 90 percent accurate, which may be sufficient to keep meetings moving and enable multilingual collaboration. Johnson Controls will continue to investigate these tools in 2002.

Asked about the changes that he has seen in his six years as CIO at Johnson Controls, Valanju notes that the company has doubled in size during his tenure and continues to grow (2001 marked Johnson Controls' 55th consecutive year of sales increases). Then he adds, with a laugh, "My stomach lining grows thinner and thinner, and I used to have more hair than I have today."

PolyOne: Looking Backward and Forward

When Ken Smith, CIO at $3 billion polymer services company PolyOne, talks about e-commerce, he's really talking about both ends of the supply chain, "because it's forward to our customers, backward to our suppliers." Add to that PolyOne's involvement in chemical industry e-marketplaces Elemica and Omnexus and you have the makings of a busy year ahead for this CIO.

Cleveland-based PolyOne emerged from the union of plastics companies Geon and M.A. Hanna, which came together in 2000 to form North America's largest plastics compounder. One might expect that IT centralization would be a priority for a newly formed company, and, indeed, Smith says that in 2002 PolyOne will continue rolling out the company's SAP ERP implementation, expanding the system from the 50 sites and 3,000 users covered in 2001 to 25 more sites and 800 additional users this year.

Smith and his full-time IT staff of about 125 (plus 30 contractors) also are looking to build on the ERP capabilities that they established in 2001, adding advanced planning and optimization functionality in an effort to improve the company's supply chain and reporting capabilities, including business warehouse reporting, using SAP modules. And third, the company is also updating its "desktop infrastructure" - the systems running on end users' PCs around the company - moving to either Windows 2000 or Windows XP, with the associated upgrade of their Microsoft Office suite to the 2000 edition as well.

Beyond these internally oriented projects, PolyOne is focusing - as Smith's "backward, forward" formula implies - on connecting with partners on both sides of its supply chain. On the backward side, the company has established ERP-to-ERP links with eight of its top suppliers. On a nightly basis, PolyOne sends forecasts and firm purchase orders to those suppliers automatically. The suppliers process that information "hands-free," automatically generating a sales order and sending back order confirmations, advanced shipping notices and invoices to PolyOne, which handles accounts payable with these suppliers through electronic funds transfer (EFT). For 2002, PolyOne is looking to extend its ERP links, most likely to cover its top 10 suppliers.

On the customer-facing side, the company's vinyl compound group already allows customers to enter orders online and check order status and order history. With the move to a common ERP system, PolyOne will be able to extend this capability to its other businesses and product families. The company is also working with two plastics e-marketplaces in which PolyOne is an equity investor, Omnexus and Elemica. (PolyOne is also an equity investor in ChemConnect, another industry e-marketplace. Smith says PolyOne has Beta tested connections with ChemConnect but has not pursued integration with this marketplace to date.) PolyOne conducted its first transaction as a supplier on Omnexus in mid-January 2002, completing an order for a long-time customer, and the company is committed to making the connection to Elemica sometime in 2002, according to Smith.

PolyOne's CIO says he works closely with the company's other business units to ensure that the IT strategy supports the overall business strategy. (See the sidebar "An IT-Supply Chain Dialog" at the bottom of this article.) As for choosing solutions to support those strategies, Smith says PolyOne emphasizes keeping its business processes simple. "Because of that, and because we have a pretty robust system from SAP, the amount of times we go out looking for point packages is really very few," Smith says. "We try to understand the process and see how we can make it fit within the context of the capability that we already have."

Subaru of America Gets Closer to Its Dealers

"Subaru" means "unite" in Japanese, so it is perhaps fitting that Robert Mayo's current priority as CIO at Subaru of America is to replace a legacy vehicle distribution system with new solutions that will link the company more closely with its dealers and customers by providing a real-time view into the Subaru of America distribution network.

Subaru of America is the $4 billion, wholly owned U.S. distribution subsidiary of Japan's Fuji Heavy Industries. The American company, based in Cherry Hill, N.J., employs about 750 people directly but works with a network of some 600 franchised dealerships across the country that sold just shy of 186,000 of Subaru's trademark all-wheel drive vehicles in 2001.

As a distributor, Subaru of America doesn't manufacture vehicles. The company takes possession of the vehicles either when they hit U.S. ports coming from production facilities in Japan or when they roll off the assembly line at the Subaru/Isuzu plant in Lafayette, Ind. Currently Subaru of America manages the forecasting, allocation and movement of those vehicles to its dealer network through its so-called "vehicle system" running on the company's last remaining mainframe, a system that was built in-house and deployed in the 1980s. (Subaru of America replaced its other mainframe systems in the run-up to the year 2000 to address Y2K issues.) The vehicle system also tracks inventory (with data stretching back to 1968, when the company first incorporated in the United States) and information on Subaru owners for purposes of warranty and service after the sale.

In 2002, the priority for Mayo and the 55 full-time Subaru of America employees in his IT shop will be replacing the mainframe-based vehicle system with two client-server solutions that the CIO says will both reduce the operating costs for the system and allow the company to get vehicles to consumers faster. The project, Subaru of America's largest IT initiative to date, went into deployment in November 2001 when the company began implementing an optimization solution from software provider Manugistics. This solution will handle the logistics involved in moving the vehicles out to the dealerships from its two port offices (in Vancouver, Wash., and Lafayette). The company also is counting on the software's planning and sequencing capabilities to enable improved allocation of labor and capacity to process and accessorize vehicles before they get shipped. In addition, by the end of 2002 Mayo expects to have solutions in place from software provider Oracle to handle order management and sales and inventory tracking.

Mayo says that, with no mainframe to maintain, the new software will reduce Subaru of America's IT costs. But as important, the planned vehicle system will provide benefits on the business side. "The old mainframe-based software does not have the ability, from a logistics standpoint, to really track the vehicles efficiently and help us to pick the best distribution paths for the vehicles," Mayo explains. "We recognize the potential associated with the new technology." Mayo's company believes that by using the optimization features provided by the Manugistics software, it will be able to route vehicles more quickly from the port offices to dealers by selecting the best mode of transportation (rail or truck) and route. "We think that we can trim delivery dates by at least a couple days," Mayo says.

The system will also provide real-time data on a vehicle's delivery status. Currently, dealers do not have visibility into where a vehicle is in the delivery process from the time it rolls off the assembly line to the time it shows up at the dealership. With the new software in place, sales staff at dealerships will be able to go to a dealer-only Web site, check the status of a particular vehicle to determine exactly where it is in the pipeline and provide that information to a waiting customer. "We think that is going to offer huge customer satisfaction benefits and, hopefully, in the long run, customer retention," Mayo concludes.

Keeping up with Change at UtiliCorp

The biggest challenge for Kris Paper, vice president of IT and CIO at Kansas City, Mo.-based UtiliCorp United, might well be keeping up with her company. "We always are investing, we always are optimizing, we always are monetizing, which means that the company is pretty fluid," Paper says. Indeed, energy provider UtiliCorp United, which reported sales of $42.3 billion for the 12-month period ending September 30, 2001, has grown by acquiring other companies at home and abroad and by offering a slate of new services. For the CIO, keeping up with that growth means staying on top of the various IT-related initiatives under way in the company's business units and ensuring that UtiliCorp's technology infrastructure keeps up with the demands of an enterprise that, in Paper's words, "is always morphing itself."

UtiliCorp's IT priorities in 2002 include CRM initiatives designed to maintain a close relationship with the company's customers while also cutting costs. By allowing consumers to pay their bills online, for example, the company has the opportunity to close offices in some of the smaller communities it serves. "You still want customer convenience," Paper says, "but we're trying to use technology to offset that."

On the risk-management side of its business, through a subsidiary called Aquila, the priority is developing new products and services, such as GuaranteedWeather. Through this program, UtiliCorp is seeking to leverage its extensive knowledge of the elements to offer hedges against the weather for such industries as agriculture and manufacturing, as well as municipalities. Paper and her IT shop of 280 provide the technology support for these projects.

Lastly are the projects that fall into what Paper calls "the infrastructure bucket." These include moving to a new desktop operating system and looking at virtual private networks for the company's wide-area network. This "bucket" also covers the company's e-procurement projects because, Paper says, they are primarily internally focused. UtiliCorp uses PeopleSoft for its human resources, payroll and financials modules, and the company connects through PeopleSoft to an e-marketplace operated by eScout for its basic e-procurement needs. In addition, UtiliCorp is working with five of its suppliers on e-procurement projects to streamline the ordering process for technology products.

A large part of the CIO's job is just keeping up with the many initiatives going on within the company, Paper says, adding that her IT group and the business units within UtiliCorp are constantly finding new ways that technology could be used to address a particular issue. "You're always figuring out better ways of doing things and different things to do," she says. Will the company ever reach a point at which it has all the technology it needs? Paper doesn't think so: "You only have enough code if the business stands still. Business continues to evolve and move, and you have to have the flexibility to make that happen. Because you're not static, you're never going to be done."

SIDEBAR: 10 Best IT Practices for e-Business

Although they work in different companies and operate in different industries, the CIOs interviewed for this article shared many of the same best practices for making e-business work within their enterprises. Here's a look at the top 10 best IT practices offered by our featured IT leaders.

1. Plan accordingly.

UtiliCorp CIO Kris Paper uses a strategy model to ensure that her company's many IT initiatives mesh with each other and jibe with the energy provider's broader business strategy. Paper's model consists of a large circle broken into four quadrants labeled "enable growth," "exploit technology," "optimize the operation" and "add value." Concentric circles inside the larger circle represent activity for the three consecutive years that comprise UtiliCorp's IT planning horizon. Finally, business lines for each of the quadrants are further broken down each year. The model provides a foundation for understanding and discussing what each business line is doing in each quadrant for the three years ahead, helping Paper and her IT staff to understand how separate IT initiatives will affect each other and the IT infrastructure necessary to support the initiatives.

2. Formalize a process for evaluating IT initiatives.

PolyOne CIO Ken Smith offers a step-by-step template for evaluating IT-related initiatives: identifying the need, talking to the internal customers, framing the business case, framing the technical alternatives, validating assumptions, getting business approval, proceeding with implementation and following up to track the return on investment.

3. Establish business ownership of the project.

Says Paper: "We've really pushed the idea that the business unit has to own the project, and we're an enabler for the business. We partner with them. Someone in the business is the sponsor, and IT is the project manager to get the infrastructure in place."

4. Keep your business partners in the loop.

That means customers and suppliers. Flextronics' Mike Webb says he spends about 25 percent of his time working with customers to explain Flextronics' information strategy and the advantages that both parties can accrue, for example, by adopting engineering collaboration tools.

On the supplier side, International Truck & Engine Corp. has supplier and dealer councils that provide a forum for discussing business and IT issues. In addition, Art Data says the company's IT department works closely with business units to communicate International Truck's IT strategy up and down the supply chain.

5. Communicate with your solution providers.

Webb says his company has worked closely with Baan to help the provider design and architect its software to meet Flextronics' evolving requirements, which are changing rapidly as new models emerge for manufacturing in the electronics industry.

6. Keep an eye on your business goals.

"You have to have complete visibility of the business strategy, and you have to be able to comprehend that and translate that into your IT strategies," says Johnson Controls' Subhash Valanju. Not that he has a methodology he could put down on paper: "It is more intuitive," he acknowledges, "and there is still some art to it."

7. Watch out for smaller projects that snowball.

"People want to be creative," says Art Data. "Some people will always want the latest widget that's out there, but then it becomes a one-off in your infrastructure. At the end of the day, you don't gain any scale on it, and it becomes an ongoing maintenance problem. It just adds complexity."

8. Delegate to stay up to date.

All 308 people in UtiliCorp's IT shop have a particular "surveillance topic" that they must track. Each IT staffer periodically provides a two-page write-up of some trend, solution or development in his or her own niche. Good ideas that bubble up get further study and may turn into new projects. Similarly, Massel, at Boise Cascade Office Products, has organized his IT shop into centers of excellence responsible for tracking network technologies, platform technologies and databases, as well as transaction-oriented applications and business-intelligence applications.

9. But don't jump on every technology trend that comes down the pike.

Webb believes that, while it is important to select so-called "best-in-class" solutions, once an enterprise adopts a particular application, it is often best to stick with it regardless of the new bells and whistles that may emerge in the technology over time. "I say to my guys all the time, we could spend our lives evaluating solutions and come up with software that is 5 or 10 percent better than what we are currently using, but there's a time to evaluate and there's a time to implement. So when we get committed to a platform, we'll stick with it."

10. Re-evaluate e-business priorities on a regular basis.

George Reilly, a research director at technology consultancy Gartner, advises companies to reassess their e-business priorities periodically. Most companies break the IT portion of their e-business initiatives into three- to six-month time frames, he says. When one of those checkpoints arrives, Gartner recommends a company look at each project not only internally, in terms of project performance, but also in light of overall corporate goals and strategy.

SIDEBAR: What a CIO Wants? ROI!

Lorrie Scardino, a research director at technology consultancy Gartner, believes the economic downturn in 2001 has made provable return on investment a key factor in any IT solution selection process. Here's Scardino's take on what CIOs will want from solution providers in 2002: "The CIO's organization needs service and solution providers to be able to validate the return on investment they claim to be able to deliver via the solution once it's deployed. Many CIOs are getting beat up within their organization to help their enterprise cut operation costs and to use technology to achieve greater business value. At the same time, they're being pressed to lower the cost of their service contracts. So the CIO is in a position of having to justify technology expenditures, with a renewed, kind of obsessive, focus from the enterprise on return on investment. "The takeaway from a service provider perspective is that they have to get better about stepping up to the plate and committing to performance objectives that are going to deliver that value to the enterprise. Clients are going to be more demanding on the service providers to demonstrate that return on investment. A lot of providers have a problem doing that. They have difficulty putting together the business case for what the return on investment is going to look like and then actually committing to deliver that return."

Will this emphasis on ROI favor larger, more established solution providers? "Certainly the larger, more experienced service providers have stronger methodologies to pull together business cases and demonstrate return on investment. They have much more familiarity in that realm and can work better with clients to achieve that. But a lot of times they are also more expensive because they can do that. The flip side is that a solution Provider with a tightly scoped solution that can be implemented relatively quickly and that can demonstrate some level of return may be the choice because it costs less and can get done in less time."

SIDEBAR: An IT Supply Chain Dialog

How can a company's IT and supply chain departments work together to support each other and the enterprise's broader business goals? To learn how it works at polymer services company PolyOne Corp., iSource spoke with Ken Smith, PolyOne's CIO, and Doug Grimm, director of supply chain management for the company's Plastics, Compounds and Colors Group.

iSource: Ken, how do you balance the different IT initiatives that the business units are pursuing within the company?

Smith: The two best practices are making sure it's a business-sponsored and -led initiative to ensure ownership, and second, that the business case is thorough and documented and there's accountability for obtaining the results.

iSource: Who tracks the ROI for an initiative?

Smith: That's primarily the responsibility of the business unit, but that's not its exclusive responsibility. As an IT organization, we share a responsibility to drive value and deliver benefit to the organization, and that's one of the ways we measure ourselves internally. If we don't do those kinds of things, we really haven't differentiated our services and our abilities from those of an outsourcer.

iSource: What does the IT organization bring to the table during an implementation?

Smith: We bring a pragmatic view of the operations and business processes that are being executed and an understanding of the framework and technology necessary to enable that. We have a good fundamental understanding of the technology and capabilities, but a lot of folks could provide that capability. The differentiator that I like to think we bring to the table is that we understand the information flow and what really happens on a daily basis to ensure that those transactions and activities are completed.

Grimm: Ken's team hones in on the capabilities not only today but down the road, because a point solution may look great for one customer but might not work for other customers.

iSource: Does IT serve as a bridge between business units to ensure that technology initiatives within the different units all mesh together?

Grimm: Ken's group does provide that policing activity. They look for disconnects, for areas where we may be diverging not only in requirements but also in capabilities. [In addition,] I'm part of a business team that combines functional and commercial leaders of the groups. We come together and talk about these things. So if there were an initiative to do customer relationship management, I would be involved in that in some fashion.

iSource: Doug, do you feel a sense of urgency to be pursuing e-business initiatives?

Grimm: Quite frankly, I don't see a lot of pressure, at least on my end, to be grabbing the latest and greatest technology. We need to stay out in front of it. But more important is that we ground ourselves in the business processes and practices. What do we have to be able to do day in and day out to execute flawlessly? We meet with Ken's group and talk a lot about how we do that, how we do that simply, how we lock in continuous improvement. That's really what we want to use the technology for.

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