Forget about major e-commerce build-outs or fancy infrastructure projects with bells and whistles for 2002. The big IT spending of the past few years projects such as Y2k remediation, Web-enabling legacy environments and e-commerce applications is history. Instead, 2002 is shaping up to be a year of hunkering down and consolidating, say IT leaders.
A sagging economy and previous investments in Web-based applications, among other factors, have these leaders focused not on adding major new capabilities in 2002, but on tweaking and optimizing what’s already in place.
Take Royal Caribbean Cruises Ltd., the country’s second-largest cruise company, for example. Before a severe spending cutback triggered by the events of Sept. 11, CIO Thomas H. Murphy had planned to spend this year piloting a high-flying US$180 million overhaul of the $3 billion company’s entire IT infrastructure.
Among other things, the effort was to have yielded new reservation, customer information and supply chain systems running on a diverse new architecture comprised of mainframes, Unix servers, Windows boxes and software from several vendors. The goal was to improve the bottom line by cutting costs, improving processes and giving the company a more comprehensive view of its customers in order to better sell to them.
However the priorities for 2002 suddenly changed when a post-Sept. 11 spending cutback forced the Miami-based company to shelve the project in mid-September and lay off nearly half its 400-person IT staff.
Now, the agenda is to do whatever it takes to keep the business running on Royal Caribbean’s aging and nearly maxed-out systems, Murphy says. That includes making small infrastructure enhancements and upgrades where necessary, cutting overhead where possible and rolling out small application integration projects designed to break down the information silos that characterize the business today, he says.
“Even though we are not going to be executing on incredibly exciting projects, we want to be the best at whatever it is we are charged with doing,” Murphy says.
Glenn Palmiere knows the feeling. As CIO at G. Pierce Wood Memorial Hospital in Arcadia, Fla., Palmiere’s immediate challenge is to keep the hospital one of four state-run mental health institutes running optimally in the midst of project- and morale-busting budget cuts.
Palmiere’s IT unit recently implemented an automated browser-based system that allows hospital staff to access admission, discharge and patient history data from any computer at the hospital. Among other things, the system has sped up information access and reduced the need for the different types of training previously required to access such information.
Palmiere and his team were about 20 per cent of the way to rolling out a similar Internet-based system connecting the other Florida hospitals when the budget cuts came. Now the challenge is to finish the project with fewer employees and a freeze on new hardware spending.
“Providing the same or better levels of service with less money” is clearly going to be challenge No. 1 for 2002, Palmiere says.
To keep up with service demand, Palmiere and his team are developing more applications that automate tasks previously handled by staffers. The added work has had a demoralizing effect on the remaining employees, he says. “The need to keep my staff continuously motivated has really taken a toll on my marketing skills,” he says.
The key is to keep in constant and open communication with employees. Explaining the critical nature of their tasks and stressing the importance of staying focused on the job at hand is crucial to keeping morale up during tough times, says Palmiere.
A dismal economy is hardly the only reason some CIOs say they will be focusing on the technology they already have rather than on building new functionality. Others who spent big in past years will be protecting and maximizing those critical investments.
Knoxville, Tenn.-based Plasti-Line Inc. has spent the past two years building Web applications that allow customers and business partners access to its systems for tasks such as order verification, checking project status and requesting quotes. The $150 million company is the nation’s largest manufacturer of illuminated signs, with customers that include General Motors Corp. and Honda Motor Co.
As part of its Web effort, Plasti-Line has developed individual online catalogs for each of its major customers. Sign-installation companies can now access data on all jobs coming their way and upload photos to show proof when an installation is completed.
The new capabilities have enabled Plasti-Line to cut the time it takes to complete these tasks and reduce communications costs, says Steven T. Hammond, vice-president of information services. The task at hand is to ensure the continued robustness of the underlying infrastructure that supports this new functionality.
“We are stepping back [from any major new build-out],” Hammond says. The effort now is to “stabilize some of the hardware issues and upgrade versions of software” to ensure optimal performance, he says. “The issues all have to do with reliability, scalability and responsiveness.”
It’s crucial for companies to focus on infrastructure robustness, especially those that have opened up their internal systems to access by customers, suppliers and business partners, says Steven J. Matheys, senior vice-president and CIO at Schneider Logistics Inc., a $2.5 billion transportation logistics management company in Green Bay, Wis.
The company, whose customers include Wal-Mart Stores Inc. and Chrysler, has spent the past two years Web-enabling nearly every core aspect of its business. Everything from order offer and acceptance to pickup, delivery, billing, payment and reporting to tracking Schneider’s huge fleet of tractors and trailers is now done online. Schneider’s new site also offers electronic ordering, billing, price quotes and shipment tracking information for not only its customers, but also for customers of other carriers that contract with the company.
The project has resulted in improved customer satisfaction, efficiencies and lower costs, Matheys says. It has also allowed Schneider to expand its reach and supplier base, he adds.
Now that the system is built, the team must ensure that the underlying infrastructure scales well enough and is reliable enough to handle the new capabilities.
“As opposed to previous years where the focus was on building new functionality, hardening the infrastructure is what will dominate my time next year,” Matheys predicts.
Divvying UpThe Workload
Keeping the infrastructure humming isn’t going to be easy, especially in an environment where budgets are tight and the emphasis is on justifying every nickel spent on IT projects, say several users.
Infrastructure technology issues are so complex and interdependent that sometimes it can be a struggle just to identify the issues that need to be resolved, says Bob Palmer, vice-president of Lenox Collections IT at Lenox Inc., a Lawrenceville, N.J.-based maker of tableware and giftware. Here are three tips for getting by on a tight budget.
1. IDENTIFY YOUR BUSINESS’s CORE COMPETENCIES: “The biggest pitfall is to try and do everything yourself,” especially in areas that aren’t your core competencies,” cautions Palmer. The important thing is to properly identify the issues that need to be addressed right away, make a business case for them, figure out how much can be done internally and be prepared to seek outside help if needed, says R. Bruce Johnson, director of information services at New York-based law firm Robinson Silverman Pearce Aronsohn & Berman LLP.
2. CHOOSE OUTSIDE HELP THAT UNDERSTANDS YOUR BUSINESS: “My advice is to use consultants, but use them sparingly,” says Johnson. Work with firms that understand both the technology needs and the specific business context in which the technology is being applied, he advises. Use them for strategic planning and for developing an overall sense of what needs to be done, he says.
3. TIE BUSINESS VALUE TO TECHNOLOGY PITCHES: It’s also important to emphasize business value when pitching infrastructure projects, says Bill York, chief technology officer at Comergent Technologies Inc. a Redwood City, Calif.-based software developer.
“The key is not to go to people with a technology pitch but with an ROI-based approach,” York says. “If you meet resistance, get up, walk to the other side of the table and see what the other person’s priorities are.”