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A huge IT project is rolling down the rails, hell-bent for disaster. What can you do to apply the brakes or switch to a safer track? An open leadership question for CFOs.
Susan Cramm, CFO.com | US
November 21, 2011
There's a chill in the air; the chill of fear.
Sales and profits are down. A new CEO is in town. The head of manufacturing is gone, and the supply chain head may be the next to roll — unless she can deliver some wins. She has a plan: rationalize the vendors, realign accountabilities, and roll-out new technology to the field.
But, as the CFO, you know these changes won't reverse the decline. The Internet has shifted the balance of power in the marketplace to the customer and dramatic, albeit unknown, changes to your business model are required. While the powers-that-be work on envisioning a new future, the rank-and-file focus on survival.
And survival is all about increasing the bottom line.
Your inner-bean counter knows how to control costs. But it's not so easy to control the supply chain head, who reports to the COO. Her plan comes with a hefty price tag. She wants to develop a custom vendor management and procurement solution. Initially, the estimated price tag approached half a million dollars, but further analysis points to substantial integration costs that will raise the ante to $3 million and counting. Adding insult to injury, a good chunk of the investment will be spent replicating the functionality of your existing multi-million dollar ERP technology.
The head of supply chain isn't stupid: she just got tired of waiting for IT to give her what she believes she needs. Now, she has its attention but, as far as she's concerned it's too little, too late. She's hired her own IT expert and now she's calling the shots.
Last night you had dinner with your IT counterpart. He's a good guy but he's at a loss for a strategy to get a handle on the developing situation with the supply chain head. You both agree that her "IT expert" isn't an expert, and that the procurement and field organizations don't have the IT-smarts necessary to convert that $3 million custom vendor management and procurement system investment into something that will realize significant cost savings or drive revenue.
You both agree that as currently conceived this roll-your-own procurement solution is a waste of precious time and money. And there's nothing you can do to stop it.
The question now becomes: What can you do to help make sure that this investment pays off?
Let me know.
Susan Cramm is an executive coach and president of Valuedance, an executive-coaching and leadership-development firm specializing in information technology. She is a former CIO and CFO, and is the author of the book The 8 Things We Hate About IT: How to Move Beyond the Frustrations to Form a New Partnership with IT (Harvard Press). Susan can be reached at www.valuedance.com.