by Kim S. Nash

What Getting IT Right Means to a CEO

May 18, 2010
ERP SystemsIT Leadership

Craig Smith, the CEO of Owens & Minor, an $8 billion medical device company, values CIO Rick Mears' industry knowledge.

Your company recently used Micro Focus tools to migrate your ERP system to Windows servers. But the project had been in discussion for years. Why?

This has been an ongoing conversation with the board for eight to 10 years. We’ve looked at this three or four times.

Rick joined in 2005 and was our third CIO [in eight years]. The other ways we were looking at this project were unacceptable. Rick was charged with finding a way to do it without bringing the business to a grinding halt for six to nine months.

We saw business partners go through similar projects, and they had serious issues with their supply chain. Then there’s cost. You start out with a dollar amount [budgeted], and it increases by 30 percent to 60 percent.

So the project didn’t get done back then. What else did you dislike about the other approaches?

We had 25 years of history and customization to our ERP system that we didn’t want to lose. [If we replaced it,] we would have had to throw away some of the custom data sets built over the years—to start over—and I was not going to do that. It would be way too disruptive.

For me, it was not a cost issue as much as it was a question of what we would we be taking away from our company. What would we be left with? What would we have to rebuild? I want to be able to swap out our financial package if something better comes along, without disrupting the other departments.

Where was the disconnect between business and IT?

I was president of the company, but IT didn’t report to me then. I had strong feelings about what I wanted to see. Usually the CIO is, for lack of a better word, out in left field trying to do the newest thing or from the old school of, “That’s going to cost too much and we can’t do it.”

Rick figured out, then, how to get more modern ERP features on a more flexible platform without much disruption?

Rick and I always philosophically looked at things the same way, even when he was with Perot Systems, one of our vendors. He has a very good commonsense understanding about what is going on in the medical supplies industry, some of the challenges that our customers face. Also he has a deep understanding of what technology can do for us and he has a great operational background, too.

That’s really hard to find

What does the alignment of IT and business mean to you?

That I don’t have customers or field leaders calling me and saying we’re too rigid and Rick won’t do what we ask him to do.

IT can be a black hole for a lot of companies. There’s a fiscal responsibility we all have. We’re not going to spend millions of dollars on programs that might make someone look good or are the soup du jour. But we sometimes forget what technology has done for us.

That’s my job: to get everyone thinking about how technology is going to make a huge difference for our company. I’m not a gigabyte guy, but Rick and I have conversations on a regular basis about what we’re doing for our customers, what we’re doing for the field. What impact new things have on how fast the system works and how fast someone can get an answer. That’s absolutely critical for me.

The ERP project saved $100 million. What have you done with some of that money?

A new application called OMConnect modernizes the way our customer service team works, filling orders faster and with better accuracy.

On the old system, you had to pull from 11 or 12 screens to get an answer. Now one screen provides all the answers when a customer calls in. This is a huge morale lifter for our people—not jumping through 11 or 12 screens and providing better service for customers. We don’t have to add a bunch more customer service people as the business grows. This is about strategy.