Plant Closings and Layoffs Mean Heavy Lifting for IT Departments

When companies decide to close plants, lay off workers or otherwise cut back, IT must step up to dismantle infrastructure and reclaim smartphones.

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They got all the gear but it would have been smoother, he says, if the company had been using just one asset management package; it's consolidating now. Asset management systems are key to ensuring IT collects everything it should, says Frazzetto of Harvey Nash. The equipment itself is worth something and the material on it could be worth much more, she says. Every CIO has his own favorite tip about protecting information during a layoff. At Arch Coal, the accounts of outgoing employees in critical positions aren't immediately deleted. Instead, as a manager sits down with someone to tell him he's being laid off, IT, in its corner of the building, will change the person's system password. That way, e-mail doesn't bounce back to senders and the manager can later sort it and assign follow-up to colleagues as needed, Abbene says. An escort, who is usually the person's manager or someone from HR, will oversee the packing up of individuals deemed in "sensitive" positions, to help ensure they don't leave with portable drives, he adds. On Abbene's staff, one person in particular works with human resources on employee terminations. "Most of the time, she gets the word from HR before I do," he says. Discretion is critical, adds Phillips, Avnet's CIO. IT can do the work of cutting user access privileges invisibly to the rest of the workforce. In person, he urges his team, "Be honest and respectful to the employee. It helps them get on with their future."

Deadlines for this kind of work are aggressive to minimize disruptions, Jackson adds. "From a business point of view and a humane point of view, it's best to do it quickly."

Let Nothing Fall Through the Cracks

No one has it tougher right now than the IT group at Fleetwood. They're doing it all: closing factories, consolidating offices, moving handfuls of employees to new locations and laying off hundreds of blue- and white-collar workers in two countries.

To manage, the group treats each event as a separate project, opening service requests in Oracle's Siebel customer relationship management software. Each event template has six categories that Smith considers crucial: overall time line, network hardware, PC hardware, applications, security and Sox analysis. He gives business-unit managers weekly reports for each project, including percentage of the work competed in every category.

Sox concerns Smith because, he notes, no one had to worry about complying with it during the last recession. Sox regulations emerged, in part, to guard against financial fraud that compounded the 2002 downturn. This time around, as companies rush to respond to the dire economy, sometimes compliance isn't top of mind. Staffs are cut and survivors are handed more tasks to do, at times dangerously so. For example, an accounts payable clerk may take over the job of setting up vendor accounts, which used to be done by a colleague. But one person doing both jobs violates rules on segregation of duties, which say that no individual should control a business process end to end.

At Fleetwood, the IT group watches for those risks because other managers may be more focused on consolidating. "I tell all my people, from programmers to business analysts, to watch out for issues with controls. You see something, raise your hands," Smith says.

Once personnel are shifted around and their jobs are defined, he or another IT staffer will talk through the processes and systems involved to see if red flags fly. When they do, the problem can sometimes be fixed with a technology tweak—perhaps changing the order in which transactions run. When that doesn't work, IT will bring it to the business unit to work out a change of process, he says.

Smith has looked for software to model segregation of duties but hasn't found anything he likes. He advises other CIOs to stay on top of Sox all the way through a staff reorganization of any type, but especially during a cutback, when change can be chaotic. "There's only so much shrinking you can do without running into trouble."

Jackson's group at Rockwell tracks its consolidation work with Microsoft Project and Excel, noting who completed each step when: collecting hardware, removing software, wiping drives, redeploying, selling or recycling the machine. "The people on something like this tend to be same people we put on mergers and acquisitions. They just do it in reverse," he says.

Look Ahead to Better Times

When downsizing goes according to plan, savings materialize. After Avnet's fall layoff, several extra computers and laptops with life left in them were available, Phillips says. "Our PC spend in the first quarter was dramatically lower than it would have been."

Fleetwood normally spends about $1 million per year refreshing PCs. But because plant closures and layoffs have freed up machines, the company has spent "a fraction" of that in the last three years, Smith says.

Further, Smith expects to convert a key manufacturing system from a legacy VMS software platform to Oracle's JDEdwards and Siebel. To date, Fleetwood has either met or beat its schedule. "It's a terrible thing to say, but the best time for a major conversion is a downturn, when everything's quiet," he says. "It costs less, there are fewer plants to convert."

Still, even if IT's downsizing work is airtight and the projected savings materialize, it may not be enough. Some economists don't expect significant recovery this year, despite the combination of tax cuts, job creation and other stimulus measures that President Obama and Congress have enacted.

Time will tell for Fleetwood. Its shares were delisted from the New York Stock Exchange in January, after the company's market capitalization sank below NYSE's minimum of $25 million for more than 30 days straight. Fleetwood stock now trades over the counter, in pennies.

Smith, however, remains optimistic. "I've been working in manufacturing companies my whole career, 35 years. I've been through a couple of ugly downturns before. You have to stay positive and focused," he says. "This is where you figure out whether you can really manage or not. There's tons to learn if you don't get sucked into the black hole."

Copyright © 2009 IDG Communications, Inc.

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