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7 Rules for superior IT performance Snapshot of the book "DO IT SMART" by rolf-dieter kempis and jurgen ringbeck (free press) by rolf-dieter kempis, jurgen ringbeck --Make IT a priority in product development The use of software to perform simulations and calculations in product development is nothing new. But successful developers boost development output by using them earlier and more intensively. The application of simulation software to modeling is already cutting development time and cost, and its future holds even greater promise. Through rapid prototyping rather than convventional tooling up, an auto parts manufacturer managed to reduce manufacturing costs on a preseries of rear lights by 60 percent and shorten delivery time by 75 percent. The integration of data with tasks in the development process has much to offer. Key challenges in R&D management, such as reducing development time and broadening technical expertise, are forcing companies to integrate their own core processes and their development partnerships with other companies. A comparaison of companies'goals for product development and the application of new technologies in the coming years reveals that the gap between more successful and less successful developers in the application of IT will continue to widen. | ||
| --Integrate IT into marketing, sales, and service Traditionally sales is an area of low IT penetration. Management attemps to use management information systems to make the sales process more transparent have been met with skepticism from sales staff. Companies whose sales performance is above average tend to use integrated standard software more intensively, allowing them to to integrate sales data to a greater extent. Their sales information systems also provide direct access to data on capacity and production scheduling, so that the feasibility of any customer request can be checked before an order is placed. Some companies have gone further, allowing regular customers to enter their orders directly into their systems via electronic data interchange(EDI). When it comes to service, companies with excellent performance stand out because of th applications they employ and the customer and product data they have available. Partly as aresult of this broader range of applications, companies with the best service performance use their IT systems twice as intensively in the field as companies with poor service performance. |
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| -- Use selectively Use IT selectively to integrate order processing across the company Purchasing, materials management, and production planning have long been key areas for IT applications. By monitoring materials and comparing stock levels with production requirements, IT can help organize orders efficiently. Information systems are also indispensable for planning production jobs down to the calculation of daily job lists for individul production areas. Many companies feel their production planning and control systems are ineffective, inapropriate, and brittle. Companies with complex production planning programs and small batch sizes complain that their production planning software does not cater for their needs. Even manufacturers of standard products find their systems inflexible when orders change. IT has an important contribution to make to purchasing and logistics. IT-supported inventory management is standard; what makes the difference is the monitoring of orders between a company and its customers and suppliers via EDI. Today EDI is heavily used to handle orders between automotive suppliers and original equipment manufacturers(OEMs). So far, the use of EDI has not been widespread among second-tier suppliers and in otherbranches. However, more intense use of EDI for customer order calls leads to much lower logistical costs. |
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| --Shift the focus of IT in administration to business planning and management development Historically, administration-finance and accounting, controlling, and human rssources-was the first part of a compay to apply IT. All businesses now use IT extensively in this area, to the point that standard software seems to have largely exhausted its potential for efficiency gains. True distinction can be achieved, however, if IT in administration can move beyond these conventional data processing tasks to cater for a new understanding of corporate planning, systematic management development, and effective knowledge management. High performers have integrated executive information systems- giving senior executives daily, weekly, or monthly updates on key dimnsions of business performance- far more flexibly than their low-performing peers. Effective utilization of IT tools to mine the wealth of data avaible in base systems for short-term planning--and in special cases also for long-term planning--will be key in this shift of emphasis in administration. In addition, the more advanced players use IT extensively in human resources for staff development and assignment planning, and place greater emphasis on generating employee profiles and job descriptions. Emerging work flow management systems may even create fresh administrative roles in IT to manage and organize knowledge within the organization. |
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| --Make IT a top management affair Information management must receive the attention of top management. At IT stars, top managers devote time and energy to developing an IT strategy and get actively involved in the introduction of new systems. They play a critical role in defining projects and agreeing on measurable goals in specific business processes and technologies. Managers keep in touch with the progress of new projects, and spend more than twice as much time on IT training. Without this intimate involvement of top management in critical IT issues, information management rarely performs well. --Create a customer-oriented IT service network Traditionnally IT tasks are assigned to a central data processing departement. However, leading-edge companies heve reinvented their IT sevice structure. First, they create a network distributing IT service tasks throughout the company in dedicated units, committees, and project teams rather than assigning them to a single departement. They set up an information management group to concentrate on IT planning and consulting, including process redesign. Its head chairs a steering committee that makes decisions on key corporate IT issues. The core IT user team brings together leading IT users from all areas of the business, and defines user requirements in collaboration with the revamped IT departement, which now concentrates on providing infrastructure and operating the systems. IT users also play a critical role in adding pivotal resources to software implementation projects. Second, although third-party providers are a central part of IT service networks, IT stars are much more careful about what they outsource. Only 24 percent outsource operational IT services. When IT stars farm out IT tasks, they do not do so for efficiency reasons but in order to increase effectiveness. They also rigorously monitor providers, assessing their performance through external benchmarks and meticulous goal setting, and pay close attention to the negotiation of contract extensions. Third, IT stars are much more professional about their IT planning and control processes, relying on their information management group with its close links to top management. They understand their costs in greater detail. Less succesful players often set IT budgets purely on the basis of historical data, while stars conduct zero-base budgeting, reassessing projected and current tasks every year. Most IT stars study market systematically to identify important innovations. Armed with up-to-date information, they plan for the long term. Such detailed planning allows top performers to develop their IT capabilities deliberately and systematically instead of wasting energy on firefighting. --Introduce integrated standard software on a fast-follower basis-but redesign the business first In most situations it is better to use functionally integrated standard software than invest in proprietary solutions. Pioneering proprietary software is the right strategy only when it produces a clear competitive advantage, as with some product-specific simulation software. Companies should wait until early software bugs have been fixed and external consulting know-how has become available before making a commitment. But once new releases can offer greater functionality and user friendliness, companies should act fast. Over 60 percent of IT stars follow this approach. Laggards tend to adopt more reactive strategies. Because they also continue to use large parts of the old software after new systems are introduced, they experience many more problems with compatibility. |
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