P>Computer Sciences Corporation surveyed companies in the automotive industry about their supply chain planning and attitudes toward Information Technology. Here are some of their findings.
Top strategic and information technology priorities:
- Integrating systems -- 40%
- Connecting to vendors, customers, and dealers -- 38%
- Re-engineering business processes through Information Technology -- 34%
Surprisingly, the survey found that companies with revenues with in excess of 1 billion dollars are far more likely to have formal Information System strategic plans than companies of lesser size.
The survey also asked the companies whether they saw their Information Technology expenditures as a cost or as an investment. Respondents came down equally on both sides, but there is an interesting distinction. Smaller companies were far more likely to see their information technology expenses on supply chains as a cost. Larger companies were far more likely to see them as an investment. That's probably because the smaller companies are the ones having supply chain information standards dictated to them by the larger ones.
WALLY's COMMENT . . .The other finding in this survey that I felt was fascinating was that CSC asked respondents what the return on investment their business was actually getting for its Information Technology expenditures. Forty-five percent of the executives surveyed replied ""unknown.%
I'd really like to know how those respondents broke out. In my own research I found that 2 distinct types of executives/companies would tend to respond in the unknown category.
First of those are the companies who just haven't got a clue. They don't track things well, don't measure return on investment,and see it more as a record keeping bother than an important metric for their business. Those folks don't measure or rely on?? much of anything.
The other group is the group that sees their Information Technology investment as so obviously profitable that it's a waste of time to do a separate R O I study. Companies like Hewlett Packard fall squarely in this group. Engineer Bob Peck said almost exactly that when I interviewed him a couple of years ago.
I'd asked him what the return on investment was for a particular initiative that H P was using in its manufacturing area in one particular division. He replied that they hadn't bothered to measure it specifically because it was so clearly profitable for them. In this case, it gave them several additional weeks advantage in time to market with each day and week valued at several million dollars in profit. Having the metric of time-to-market, for that HP division, eliminated the need for a detailed accounting study of the technology.
Think about when you're looking at how your company is going to measure your returns here. If a critical measurement for you is time-to-market, look at what you can do to reduce time-to-market and then consider your effort a success if you've got a clear improvement there.
In my experience, detailed measurements requiring long studies usually only result in the accounting fictions that justify bad decisions. When you've made a change that results in major profitability increases, everybody knows it pretty quick, and you can almost always use the surrogate measure of one of your core performance dimensions.
Date Published: 15 November 1999
Note: The survey results mentioned above are fairly old but the basic analysis and recommendations still hold.
Reviewed: 2/15/03
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