Spurred by stretched-out budgets, IT managers want to get the most business bang for their IT buck. That means delivering bottom-line impact and business value as quickly as possible.
“Speed is competitive advantage” in 2007, says Rich Penkoski, a partner at Deloitte Consulting LLP in Atlanta. “It’s very easy to lose organizational interest in programs that take extended periods of time. The market doesn’t stand still. Competitors don’t stand still.”
The 252 respondents to Computerworld’s quarterly Vital Signs trends survey said data management, antivirus protection, e-mail/groupware, voice-over-IP (VOIP) and storage-area network projects yield the fastest payback. The technologies that respondents said produce the most visible payback were ERP, e-mail, Web services, data management, business intelligence, and wireless and mobile systems.
Many CIOs have seen these quick-fire results firsthand. They offer the following advice for getting big-bang projects queued up and done right and describe how they measured success.
FAST PAYBACK: VOIP projects
The Hickory, N.C., municipal government was tired of its old phone service. IT Director Jeff Brittain wanted to bring 21st century technology to city hall, which serves a community of 40,000 residents. He also wanted a system that was more manageable and offered better features for users. Knowing that there is steep competition in the telecommunications market, Brittain expected to get a good deal.
At the time, the city paid a monthly fee for phone service using its vendor’s equipment. “We didn’t own anything. We had to call them to make a change. They had full control of everything, and we were just a customer,” Brittain explains.
By capitalizing on the city’s existing infrastructure and vendor relationships, Brittain was able to implement a VOIP system in about six months, and he expects to recoup the city’s US$165,000 investment in three years.
First, the city divided the request-for-proposals process into hardware and service bids. Brittain first invited a dozen hardware vendors to a group meeting where all prospective bidders could ask questions and hear the same answers. “That way, it was fair across the board,” he says.
Once the RFPs were collected, the city looked at upfront costs, maintenance costs, knowledge transfer, training needs and infrastructure. Several years earlier, the city had recabled its old administrative building using Category 6 unshielded twisted-pair cabling. “It would support whatever we decided to do,” Brittain says.
Brittain ultimately awarded the hardware contract to the vendor that had installed that cabling and other infrastructure, even though it hadn’t submitted the lowest bid. “The project went a little faster, and was a little cheaper, because we went with familiar hardware. The learning curve is also shorter,” Brittain says. The project also moved quickly thanks to a requirement in the RFP for vendor engineers to help with installation and knowledge transfer as part of the package, he adds.
The city then bid out the service portion of the project and decided to stay with its existing phone company. “It was easier not to change. But [the company] significantly lowered our cost because they knew it was a competitive bid,” Brittain explains.
THE PAYBACK: The combination of a new phone system and ownership of the hardware saves Hickory up to $52,000 a year. When VOIP expands to the city’s two libraries this spring, Brittain estimates it will save the municipality another $7,000 to $8,000 annually.
BRITTAIN’S ADVICE: If you’re looking for a fast-payback project, you should rely heavily on existing partners who know your infrastructure and needs. “If it weren’t for our [existing] partnership, I’m not sure we would’ve made that transition easily,” Brittain says.
HIGH VISIBILITY: ERP projects In the spring of 2006, the first phase of a massive financial systems transformation took place at Nationwide Insurance Co. in Columbus, Ohio. The new system consolidates more than a dozen general-ledger systems down to a single platform. The project took 24 months from vision through deployment — a fast turnaround, considering the mammoth size of the insurer, which has $157billion in statutory assets.
One of the keys to its success, says Deloitte Consulting’s Penkoski, who worked on the project, was defining a unified vision at an executive level. “They started in 2004 with defining the vision for finance and the road map — what moves in what sequence to provide technology and platforms for the entire organization,” he explains.
After developing its vision of the finance function, Nationwide implemented a single general-ledger, accounting and allocation system; added a Teradata-based data warehouse to integrate information from more than 200 source systems; and deployed an application to improve data visibility.
THE PAYBACK: The project’s success has been measured using a balanced scorecard, looking at the progress that company executives have made against each element of their vision, Penkoski says. “In finance projects, tangible benefits are going to be accrued by other parts of the organization,” he says.
“It was a tremendous launchpad … to prove that they can make substantial change in a rapid amount of time,” he adds. “[Company executives are] now much more aggressive about time frames because they know they have the ability to do it.”
PENKOSKI’S ADVICE: Projects will move quickly only if a senior executive drives them. “Only they can do whatever is necessary to remove the normal organizational roadblocks … or implement a major change in a rapid amount of time,” Penkoski says.
What’s more, the organization has to understand the vision that the program is trying to support. “If it’s high ROI or a big impact on the organization, you’re usually trying to do something more transformational,” Penkoski says. “You have to share a vision of how the individual functions are going to look when it’s done.” And, of course, be willing to make a substantial technology investment, he adds.
FAST PAYBACK: Data warehouse projects CIO Jon Elsasser doesn’t like quick IT projects, period. But as The Timken Co. quickly grew into a global manufacturer of engineered bearings and alloy steels with 2005 sales of $5.2 billion, the business needed a fast fix.
The company is in the process of implementing SAP globally to handle orders and production operations in 27 countries. But in 2004, “we were in a production capacity crunch, and we really needed information about our global orders and capacity, but we didn’t have a global system yet,” says Elsasser, who is also senior vice president at the Canton, Ohio-based company. So Timken quickly assembled a makeshift data warehouse system to capture order information from more than a dozen transactional systems around the world.