Supercharging Your Information
It's been three years since you implemented that highly anticipated technology project that promised to free up 20% of employee time for more value-add activities. Walking around the office, you notice that the same people are doing the same job with the same results. What's going on? Why have the expected benefits from the new technology not been realized?
In spite of high expectations and price tags, many IT projects come up short. Add the management distractions, the lost momentum, and the drop in employee morale to the dollar investment and you can see why failure is so costly. For many companies, the reasons why their tech investment failed remains unresolved and are likely to plague future projects. Knowing what went wrong and what can be done to ensure that future technology related projects succeed is vital to the longevity of your business.
Elements of Success
Take a closer look at the reasons for a technology project failure. Most likely you will find the shortcoming to be caused by some combination of these core issues: lack of strategic alignment, lack of clear management sponsorship, poor interdepartmental coordination, and automating inefficient business processes.
Strategic Alignment: A few years ago during the rise of internet retailing, Levi Strauss spent over $80 million on a best-in-class direct to consumer retail website. With 360 degree product views, fabric close ups and virtual sizing, it was the slickest thing in the market. The website was so good, in fact, that Levis' regular distributors and resellers threatened to sever their business with Levis unless they pulled the plug on the site. In this case, Levis' management did not do the necessary strategic thinking to determine how the website would integrate with their core business and might jeopardize longstanding relationships.
Clear management sponsorship: In another example, a pharmaceutical company spent over $ 24 million for a sales force effectiveness CRM package that promised to increase sales rep efficiency and pay back in 2 years. The initiative was driven by a junior vice president of marketing intent on supercharging his sales force. Senior management were skeptical of the technology, however, and did not fully endorse it to the reps. Because of this lack of support, only 14% of the sales reps were using the CRM technology by the end of the first year. The company eventually decided to scrap the program and go back to their traditional sales methods.
Interdepartmental coordination: Several years ago, the production design department of a major US based pharmaceutical company purchased and installed $35 million in process equipment inside a coveted production facility to produce a newly approved drug. Once the equipment arrived and was installed, the manufacturing technology group was brought in for final validation. Upon closer inspection, the group found that certain aspects of the equipment could not be validated for FDA compliance. The company had to outsource the production of this drug, and the equipment and the facility have sat unused for two years as management figured out what to do with it. If the two departments had coordinated the planning and design up front, the company would have been able to assemble the right equipment to produce the drug in-house and avoid costly delays caused by the outsourcing process.
Automating poor business processes: Automating bad business processes can also be the cause of bad results. In 2000, a regional healthcare management company purchased a new system to automate their inefficient accounts receivable process. Management figured that the $2 million investment would pay back in 18 months and greatly improve nagging cash flow issues. In their rush to get started, however, the group forgot to improve their existing accounts receivable process. After the technology was in place, they had an automated, inefficient process that relied on operators to feed information into the system. The new system was even slower than the original and caused cash flow issues to get worse before it got better.
Should these examples of failure mean that you should shy away from critical IT initiatives? Far from it! Like it or not, effective adoption of productivity enhancing technologies is a requisite to competing in nearly every industry. What this does mean, however, is that you should carefully consider the critical elements that need to be in place to ensure success. Best practice companies have overcome these systemic problems by paying attention to the following factors:
1. Clearly define the business need and ensure it is tied to critical
business issues and objectives
2. Ensure clear sponsorship (IT and Management)
3. Ensure the right resources are committed, available, and held accountable
4. Don't implement in silos - cross organizational boundaries
5. Understand and optimize the business process before automating
6. Establish and enforce clear standards and business rules
7. Utilize well-defined project systems and life cycle methodologies
Should you find that any of these seven critical success factors missing, proceed at your own peril. However, once these factors are in place you are well on your way to success!
Derek Martin is a consultant with The Pacesetter Group, a management consulting firm specializing in business strategy and organizational performance improvement within the pharmaceutical and financial services industries. For more information, contact Derek at firstname.lastname@example.org and visit www.pacesettergroup.com .
Many more articles on technology in The CIO Refresher in The CEO Refresher Archives