impossible for ideas to compete in the marketplace if no forum for
Contributed by: Agile360, Inc.
Sometimes you have to give to get something back. When businesses need to get things done, itâ€™s expected that to accomplish these missions their IT organizations must spend at least some money on technology infrastructure. But is everyone on the same page concerning that spending?
You have got to spend money to get solutions or products to keep things up to date, but do you have a roadmap to ensure that the IT organizationâ€™s solutions are in lock step with the business requirements?
Why is IT budget planning so difficult for so many organizations?
Unless the profitability of your company is completely based upon your Web site, more than likely your IT organization is disconnected from your business organization. The IT organization may know what widgets you make, but not necessarily where the business makes its money. Are you the low-cost leader? Are your widgets that much better than everyone elseâ€™s?
Meanwhile, business may demand changes to existing technology requirements. IT has to deal with many moving parts as well as try to forecast a moving target.
Why can IT be viewed as a money black hole?
IT managers have been trained and now only deal with keeping their costs low. This leads to solutions that meet the minimum requirements of the business. This also has led to the current state of IT where most organizations spend a majority of their budgets on just ‘keeping the lights on' spending very little on projects or technologies that improve processes or increase profitability of the organization. If you only buy the short-term solution that meets the minimum requirements to get you over the hump, you may find that after a year youâ€™ve outgrown this solution, ultimately resulting in exceedingly high costs.
What are some ways to avoid the black hole?
An IT roadmap is crucial. Itâ€™s about eliminating poor decisions that result in buying a solution that only meets the minimum requirements without looking to the future, which is what most organizations do. Every IT person knows to ask a vendor about a roadmap to learn how future features will affect the landscape. If IT has a roadmap for your business, they accordingly can start to roadmap the IT infrastructure to meet those requirements. If youâ€™re the low-cost leader, then IT needs to be low cost. There can be no room for lost budgets and projects that donâ€™t come to fruition. If youâ€™re the technology leader, then IT needs to keep improving that process so you stay ahead of the game. IT has to know what the business side is doing to provide the best solutions.
What kinds of events should be considered when developing a roadmap?
An IT roadmap that spells out where the company is going in the next three to five years makes it more efficient for management to approve appropriate IT spending. For example, if you know youâ€™re going to divest the company in half or in five pieces in the next five years, you need to build your IT organization so it can be divested very quickly. If youâ€™re a company in acquisition mode, then you need to buy solutions that will be flexible so, when you bring a company in, you can integrate the entities as fast as possible.
Will this alleviate concerns management has with IT spending?
Absolutely. If you only looked at the total price column, you would never buy a high end car because itâ€™s too expensive. But when you look at what the total price gives you in return, an expensive model might not be so bad after all. It may have been just what you needed, meeting all of your requirements. Get out of that sticker shock mode. Look at what you require out of IT — a robust, yet flexible computing and data environment that meets the needs of the users of today and tomorrow, all while reducing cost and providing a measurable ROI. Such an environment demands a proper amount of planning and budget to deliver on those requirements.
What strategies will help integrate IT and business goals?
Meet with your IT organization and qualified consultants and understand what the ‘widgetâ€™ is and how the organization makes money. Assess your current infrastructure to figure out where you are losing time and money. Meet with multiple levels of the business to see how IT can better serve them or your clients. Organize this information and prioritize tasks that decrease your costs or provide you another source of revenue — possibly an additional service or new capabilities that allow you to increase prices. Some of these solutions may require the purchase of new technology, while others may mean using what you already have or perhaps just improving the existing process. Then you can extend that same view into the future to create a roadmap for IT. Itâ€™s important to review that IT roadmap each time budget comes around. Some things may suddenly become less of a priority, and other solutions that were years away may become this yearâ€™s biggest project.
Virtual inventory management becomes a reality rather than a dream as the partners are operating closely to meet delivery needs without excess inventory. The overall focus is on the “perfect order” with all partners working back from consumer and customer needs to provide the best possible solutions. Metrics are established to measure these perfect orders and used to solicit new business from other customers. in Level 5
Not all firms need to progress as far as Level 5, which has been termed “Build an Advantage.” The opportunity is to achieve more benefits, particularly in terms of customer and consumer satisfaction. This area is for the most sophisticated of networks, requiring the formation of joint logistics models and involves full communication connectivity across the extended enterprise. Total logistics costs are evaluated through the connecting electronic communication system. Since the firms have applied activity based costing and balanced scorecard techniques to determine the costs per unit across the end-to-end network, they work together on the most cost-effective methodology while keeping customer ratings at industry-best standards.
A robust integrated multi-tier capability is what distinguishes the linked players, as all key members are working together online, in a real-time basis to match deliveries with actual demand. Simulation techniques are applied to study, evaluate and test alternative delivery scenarios, and to alert partners of relevant changes occurring within the system. Tight upward and downward propagation with regard to plans and changes are an element that brings further advantages.
In conclusion, logistics is maturing as a business technique, especially as a key element of creating the most effective supply chain network. Most firms progress through five levels of improvement maturity, although not all firms need to achieve the highest level of that progression. Models help guide the progress as firms carefully put the internal house in order and then select trusted partners to build advanced systems. Overall logistics costs decline in the process and customer satisfaction increases as the linked partners find the way to best any competing network in meeting actual delivery and replenishment needs.
Search Our Site
Search the ENTIRE Business
Forum site. Search includes the Business