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 catalogue 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 Web site 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 favourable 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 scepticism of trends and a commitment to considering alternative routes is central to our — and our organizations' — success.

Mike Hugos is a partner in AgiLinks, a software company specializing in agile supply chains. He is the former CIO of Network Services and the author of Essentials of Supply Chain Management. He can be reached at mhugos@yahoo.com