by Mike Hugos

Standing Out in the IT Crowd

Sep 15, 20066 mins
IT Leadership

At times, a leader must be a bit of a contrarian. A confident, knowledgeable CIO sees past strong prevailing opinions in IT circles to identify other ways her company can use technology—or not use it—to stand out from the crowd. It’s the CIO’s job to find new ways to use IT to advance the fortunes of her organization. But this obligation can also put you on the horns of a dilemma. You may find that both your business colleagues and your own IT staff are reluctant to reject the wisdom of the crowd. Things are complicated enough, they say; why make it worse by doing something different?

Yet sometimes trying something different is exactly what needs to be done. These days, the fast pace of change causes many tried-and-true ideas to lose their effectiveness. CIOs don’t necessarily have to blaze new paths on their own, but they do need to keep a sharp watch for companies that succeed with new approaches to technology. Leadership means being quick to recognize a good idea—wherever it comes from—and being quick to act on it. The ability to try new approaches and capitalize on emerging opportunities is a vital part of succeeding as a CIO.

Get Away from the Crowd

Consider, for example, the popular notion that consolidating a company’s operations to run on an all-inclusive ERP system is the best way to be efficient and profitable. If I am to believe the advertisements I see in airports from Chicago to Frankfurt, just about every company will soon be running such a system. The contrarian leader ought to wonder whether it’s wise for her company to follow the crowd and spend millions on ERP when there may be other IT investments that have bigger payoffs.

The last company I worked for had two large competitors. One of their biggest challenges (as well as our biggest challenge) was to integrate respective business units so they could collaborate to service our national accounts. We all had to face the fact that our organizations were composed of many different units using different ERP systems to run their internal operations.

Our competitors followed the conventional wisdom. One company spent more than $150 million trying to standardize on a single ERP system. The other spent tens of millions of dollars (what it cost then) to build a proprietary Web order entry and product catalog system—another popular idea at the time.

Although the CEO and CFO backed my recommendation not to invest more in ERP, there was a lot of pressure on me to deploy one of those proprietary order entry and catalog systems. The consultants who were facilitating our strategic planning process pushed hard for us to hire them to build it. But I thought that if we followed their advice we would spend most of our money on a plan that, at best, would give us only the same capabilities our competition had. I saw a different and much less expensive way to integrate our business units and provide an online ordering capability. Taking this alternative path would make money available to develop other systems that would provide us with capabilities our competitors didn’t have and thereby provide a competitive advantage.

My contrarian instincts were backed by a deep understanding of my company’s business and my knowledge of IT. My expertise gave me confidence in my convictions when I presented my ideas to the board of directors. I showed them how to get what the company needed faster and for a lot less money than if we took the conventional path offered by the consultants. The board was swayed and approved my plans.

The Rewards of Taking a Different Path

We left our business units’ different ERP systems in place, and we built a simple Internet-based data-transport system that enabled these applications to exchange documents such as purchase orders, invoices and advance shipping notices. The data transport system provided the connectivity we needed between ERP systems. Then I signed on with a hosted Web order entry and catalog system, which we used on a pay-as-you-go basis. These approaches saved tens of millions of dollars. We took some of the savings and invested in an enterprise data warehouse and a business intelligence system. Once these were deployed, our customers could go to our website and generate reports as needed, showing their purchases by product, supplier and location over any time period from one day to two years. That made us stand out from our competitors.

Later, we added a business process management (BPM) system to monitor data transactions flowing through our systems, so that we could catch mistakes our customers made when entering their orders. Our customer service people could define the types of errors they wanted to categorize (for instance, whether cups were ordered without lids). If the BPM system identified an error, we were able to contact the customer and correct the mistake.

These decisions produced a couple of very favorable results. The first was that my company was more profitable for several years simply because we didn’t squander our hard-earned cash on expensive IT projects. The second result was that these systems enabled us to be more responsive to the unique needs of our customers. We offered suites of supply-chain services to go along with the products we sold. Our business intelligence system enabled customers to better manage their own planning, budgeting and spending on the products they bought from us, and our business process management system enabled us to maintain consistently high service levels. We charged slightly higher prices for our products and still won new business because customers wanted the services that our competitors couldn’t provide.

The lesson is this: Whatever company or industry we work in, whether we’re in the public or private sector, as CIOs we’re all pursuing the same fundamental goal—to use technology to make money and make our organizations more competitive. There will often be many paths to achieving that goal. As technology leaders, it’s our responsibility to determine which one is best. Having a healthy skepticism of trends and a commitment to considering alternative routes is central to our—and our organizations’—success.