Naw, really. I'm half-serious. Luggage, candy, underware...the stuff of life...what makes you think semis and networking equipment or what have you can't or won't be next?
computerworld.com
The main event
IT's sideshow days are over. Our projects can make or break a company.
By Frank Hayes
11/08/99 The future arrived a little early for Hershey Foods. In July, to be exact, when a botched big-software project meant the chocolate maker literally couldn't deliver the goods. The screwup jacked up product delivery times from five days to 12, increased inventory costs by 29% and kicked the props from under Hershey's third-quarter sales (a $150 million drop, or 12%) and profits (down almost $20 million, or 19%). After a catastrophe like that, could anybody still believe IT can't have a big impact on the business?
Sure they could. In fact, for both business and IT people, it's an article of faith that IT isn't really critical to business operations.
Businesspeople dismiss IT's impact because real business is about making, selling and delivering products, while IT is just
about data, reports and PCs. And IT people dismiss IT's impact because, hey, we like being a sideshow to the real action. If a project is late or doesn't work quite right, as long as it only annoys users inside the company, that's no big deal. Who wants to be on the firing line?
So we didn't believe things had changed in 1996, when a $5 billion wholesale drug distribution company in Dallas called FoxMeyer Corp. went bankrupt after a new ERP system generated $15 million in erroneous orders that got shipped.
We didn't believe the future had arrived in early 1998, when toolmaker Snap-on Inc. couldn't ship half its orders due to a bungled ERP installation. Quarterly earnings fell $16 million, a terrifying 42%.
Or in July 1998, when Samsonite Corp.'s new enterprise systems came online and all but halted product shipments and invoicing to retail stores. Samsonite lost almost $30 million that quarter because of the foul-ups.
Or a few months ago, when high-end hi-fi maker Bang & Olufsen went live with its ERP project and then had to halt all product deliveries for eight days, losing the equivalent of $14 million in cash flow.
And these are just samples of the highest-profile flops, the ones so bad they had to show up on financial reports. There are lots of smaller failures buried in the budgets of companies around the globe.
But the failures are getting bigger. And they'll keep getting bigger, because IT's impact on business operations will keep growing.
The IT problems we all know about but don't like to think about -- that almost every project comes in late, over budget and short on functionality, that software vendors almost always slip their schedules too, that consultants are actually worse at getting jobs done on time than we are -- now cost us real sales and profits.
That's the future we're colliding with right now. We don't want to believe it, but we're already neck-deep in the real business of making, selling and delivering products. Supply chains and just-in-time and zero-inventory targets mean if a project fails, we're not just burning the project's price tag -- we could cost the company a lot more.
Right now, we're all sweating out the last eight weeks before Y2K zero hour. Nobody on the business or IT side has any doubts about how big an impact Y2K can have on every piece of the business.
But that impact won't end with Y2K. IT's sideshow days are over. Our projects can make or break the company. From now on, we are on the firing line.
Whether we want to believe it or not.
Hayes, Computerworld's staff columnist, has covered IT for 20 years. His e-mail address is frank_hayes@ computerworld.com. |
