If you can identify reasonably simple IT projects that will bring in significant benefits, the board will hand over the cash in no time. Liz Warren reports on five organisations which have reaped the rewards of spending wisely.
This year looks like it is going to be tough for many companies. Yet past experience has shown that those companies which continue to invest during a recession are the ones best placed to exploit the opportunities when the economy picks up. The trick is to find low-cost, quick projects which allow you to build on previous investments and get the most out of your existing environment.
Tim Jennings, research director at IT analyst Butler Group, suggests three areas to look at. The first is infrastructure consolidation. “People have spent a lot of money on systems and buying more servers or storage to support them, but they don’t understand the capacity they have and they don’t take a business-centric view of what that means,” he says. “In these introspective times, you are forced to ask what you really need to support that number of people with those kinds of response times.”
Taking a better look at what is going on in the business can reap rewards outside the IT department as well. Business intelligence tools supplier Cognos can cite numerous cases where the ability to analyse what is going on in the business can provide big benefits. Royal Doulton, for instance, was able to save £26m over three years by identifying and scrapping the 80% of its product lines which were unprofitable.
The second area Jennings identifies is integration of diverse applications. “Having made investments in customer relationship management, enterprise resource planning or e-commerce, you need to get those elements to work together better,” he says. “A survey we carried out in early 2002 found that 70% of organisations had no integration or just point-to-point links and that means every time you upgrade a system, you are starting from scratch. Laying down an integration architecture will allow you to handle each integration need more efficiently and will definitely stand you in good stead if we do go into another wave of investment, because you will be able to take on new systems much more quickly.”
Steve Rees, e-commerce product manager at ERP specialist Geac Enterprise Solutions, suggests using web-based standards such as the data language XML to facilitate integration with external partners.
These kinds of technologies will also help in the third area identified by Jennings: content management and exploitation of the “knowledge capital” tied up in documents, e-mails and people’s heads. “Until now, knowledge management has been seen as a big budget investment,” Jennings says, “but there is now more realism and a raft of second-tier suppliers focused on quick wins and implementing content management in a more modular fashion.”
The same is true of other big-ticket items from recent years. For instance, Rees says, CRM no longer needs to cover every aspect of the business and deliver the same information to every user. “More and more businesses are now looking to use elements of CRM to help with specific business problems such as managing leads,” he says.
Here, we present five project ideas for 2003 that should leave your operations more able to face the future or that pick some of the best elements to come out of the boom years.
Case study: Littlewoods Retail
Business-to-business extranets were all the rage during the dotcom boom, but it was never clear just who would benefit from the investment. Littlewoods Retail, the UK’s second-largest home shopping business and fourth-largest high-street retailer, has developed an extranet to share financial documents with its 2,000 suppliers which costs suppliers little to use but offers savings and better service to both sides.
“We have a continuous improvement programme exploiting new technology to reduce transaction processing costs while improving the level of service we provide,” says Geoff Maitland, director of accounting at Littlewoods Retail. “We have initiated several self-service projects to enable us to introduce electronic workflow processes and realise productivity improvements within our finance function.”
The ability to share financial documents is particularly important to Littlewoods because it operates a self-billing agreement with its suppliers. This means it generates most of the documentation relating to each transaction.
Now, instead of posting documents, Littlewoods can automatically send e-mail notifications when new documents are available. Suppliers then log onto the extranet to view documents. An audit trail allows Littlewoods to demonstrate to Customs & Excise that suppliers have received and read tax invoices, provided as PDF files to prevent tampering.
The system uses Macro 4’s Columbus products to draw data out of Littlewoods’ existing finance systems and was implemented in just three months. The project cost less than £100,000 and Littlewoods says it will recoup this within nine months, thanks to reduced printing and postage costs. The number of telephone queries to the finance department has fallen significantly, freeing Littlewoods staff to spend more time on other, value-adding activities.
Benefits: reduced administration costs and more time for value-add activities
Case study: Natural History Museum
When budgets for new developments are limited and the emphasis is on “business as usual”, it is a good time to look at improving your existing operations, especially your base infrastructure. For the Natural History Museum in London, that meant rationalising its storage with a storage area network.
“We had numerous servers, each with its own storage, and most of them needed their storage upgrading,” says Chris Sleep, head of the information systems department at the museum. “We needed to look for something that would allow us to deal with our storage needs in a maintainable, future-proof fashion, rather than just slotting new discs into each server in turn.”
Introducing the San means the museum can update its servers and discs independently and can dynamically allocate storage between machines. “With individual storage packs attached to a particular machine, one machine might be at its limit while another is barely being used, but it is hard to switch storage from one to another,” Sleep says. “A San does this easily.”
The museum also no longer needs to run separate back-up jobs for each server – a process which used to take three nights – but can run a single back-up of all data in just six hours. All this has allowed Sleep to cut the time he spends on storage management by a third.
The museum worked with IBM San partner Sagitta to develop a suitable storage network architecture and install the San hardware and the software agents which run on each server, but handled the migration of the data itself. The implementation took about three months once a budget had been agreed and the main cost was £65,000 for the San hardware and new discs. The legacy discs attached to each server are now used for temporary storage and develop-ment work.
Benefits: storage can be allocated between machines and back-ups can happen collectively
Case study: European Court of Human Rights
Document management solutions and knowledge management initiatives are often introduced as separate projects with very different objectives, yet they can frequently be two sides of the same coin. That has certainly been the case at the European Court of Human Rights, where the introduction of a document management system has allowed further benefits to be obtained from an award-winning knowledge management initiative.
The court judges cases brought by individuals or organisations who claim to be victims of violations of the European Convention on Human Rights, which has 44 member states as signatories. In 1998, the ECHR implemented a knowledge management system to make court judgements accessible on the internet, slashing the cost of posting judgements to interested parties. The next logical step, according to John Hunter, the ECHR’s head of IT, was to link the knowledge management system to the document creation process. This has allowed the court to automate the process by which judgements are made public and make more documents available online to relevant parties.
Internally, the system has brought the typical benefits offered by workflow and scanning of incoming documents.
Hunter says the ECHR “always had a long-term strategy based on phases, which would allow any investment to be used in the next phase. We chose our software supplier Hummingbird partly because it had a lot of third-party partners which could provide integrated off-the-shelf solutions that we would need in subsequent projects.”
The first and second phases took just six months to implement and cost a total of £400,000. A third phase will shortly introduce agent technology to allow documents to be pushed to users by e-mail and apply the knowledge management technology to other collections of information, creating a knowledge portal giving access to a wider range of information.
Benefits: documents are made available to more people more rapidly
Case study: Woolwich
Even sophisticated transactional websites do not fully replicate the high-street experience: you are usually left to wander around until you have to pay. Woolwich, one of the UK’s leading providers of financial services, has added instant messaging/chat technology to its website to allow it to mimic the way its staff would approach customers in the banking hall.
“It is a lead procurement tool, getting people to do business with us who would not have done so otherwise,” says Lewis Hopkins, sales operations manager at Woolwich.
The system, based on Collabor8’s Netrep system, analyses visitors’ behaviour and uses previously developed profiles to identify browsers who may be receptive to an approach. The conversation is initiated by sending them a virtual business card, which receives a response rate of about 30%. Research by the bank has found that more than 90% of those entering into conversations liked the system and would use it again.
The system took about four months to implement once Woolwich made the decision to purchase. Hopkins says the main technical issues were the complexity of linking Netrep to the bank’s legacy systems and untangling the security issues involved in passing traffic through its firewalls.
The bank has tested the technology in a number of product areas and found it to be most effective in areas such as mortgage enquiries where people want to find out how their specific circumstances relate to the bank’s lending policies.
In addition, the rate at which customers are approached is linked to the number of staff available to enter into chat sessions, with the facility to turn the system off completely if necessary. “We control it carefully, because the last thing we want to do is to have an engagement with a customer which isn’t a good experience,” Hopkins says.
Benefits: improved customer service and the ability to proactively generate sales leads
Case study: Saffil
Implementing a business-wide system like enterprise resource planning is a huge undertaking. And once it is in place, there is a tendency to let it stagnate. Saffil, a manufacturing company with a turnover of about £12m, has discovered that upgrading its ERP has brought big business benefits at a fraction of the cost of a new implementation.
Ray Williams, Saffil’s finance and IT manager, says the upgrade was partly driven by contractual issues but also by Saffil’s recognition that its business systems needed a revamp to allow the business to move forward. “We had started looking at other systems but the contract issue prompted us to look at more closely at the new version of BPCS. The cost of moving to a new system in terms of hardware, software and training was much greater than upgrading BPCS to get the same benefits.”
The upgrade has allowed Saffil to halve the number of steps involved in handling a customer order from receipt through to invoicing. On the shopfloor, procedures for issuing and tracking work orders have been simplified while the finance department has been able to dispense with some third-party software modules while gaining greater flexibility and improved reporting. All this has cut operating costs and freed staff to spend more time talking to customers.
Introducing the upgrade took about five months and cost less than £50,000, including new hardware, software, user training and a mini business process re-engineering project to create processes which take advantage of new system functionality.
Benefits: reduced operating costs and improved customer service