While most pundits debate the timing for an economic recovery, one thing is certain: Companies are changing how they buy and consume technology.
Several manufacturers, distributors and retailers, for example, are still exploring modest technology investments for reducing costs, increasing sales and creating competitive advantage. But their focus has turned to high-value, rapid return on investment (ROI).
In particular, companies are capitalizing on the modules in their existing software packages and new, purpose-focused software to help address various aspects of transportation, workforce and inventory — all to deliver hard, quantifiable gains that can pass muster with their chief financial officers.
Gartner’s revised outlook on IT spending bears witness to this trend. While the research firm projects global IT spending will decline 3.8% in 2009, it does forecast a small increase in software spending for the year.
Retailers and their supply chain partners have good reason to spend strategically on software. The key is to avoid the projects that are too broad or all encompassing, because they often result in protracted rollouts with long time-to-value.
Right now, any spending on IT needs to result in quick hits that address specific pain points in the business. For this reason, software in the form of modularized value packs can be a useful way to approach IT investment.
For companies with supply chain and retail operations, those quick paybacks often come from technology investment in inventory, transportation and workforce management solutions.
Investment in these areas can have a quick, positive impact on a business, and help companies gain a competitive advantage in efficiency and productivity. Improving these operational areas can put a company in the lead position now, as well as when the economy bounces back.
For instance, in the inventory management area, a distribution company may be looking to become more efficient in moving its containers. It may still have trouble figuring out where its containers are located.
By implementing a yard management module at one location, the company can solve that problem and also achieve a quick time-to-value based on the bite-size scale of the project. It can then point to the quick results and use the returns to fund other projects, either additional sites or additional modules.
For retailers, workforce management is critical now, because many stores are operating with reduced headcounts. With limited personnel, managers need sophisticated scheduling technology to make sure the right people are on the floors at the right times, doing the right things. This investment also gives time back to managers so they can spend more time on the floor, where it counts.
Transportation has also sucked up a lot of cash this past year. There is often a lot of room for improvement that can be addressed with a modular rollout of a transportation management module.
Within a short time, an IT investment can yield substantial reductions in reduced fleet operating costs, major improvements in delivery speed, and more coordination between the distribution centers and the stores.
FINANCIAL MANAGEMENT MODULES
Another quick-value project for retailers is rolling out a financial management module to help them protect the business, starting at the point of sale. Retailers today must quickly identify cash shrinkage and areas of risk so that immediate action can help minimize theft and fraud.
Rolling out a financial management module on a regional level can be done in a few weeks. Compare that with a total ERP system; such a system can require years to work out the kinks and provide an ROI.
Of course, the most important thing in any modular rollout is to design specific goals that you can meet — goals that will provide a great time-to-value in the CFO’s eyes. If that happens with financial management (or yard management, automated demand-sensing replenishment, or any other value-pack module), companies can replicate that success across their other divisions in a distributed enterprise.
What starts as a small, regional upgrade in one corner of your business can quickly be adopted as a full-throttle implementation that delivers high value across the entire enterprise. And that helps provide the competitive advantage your company needs now — and in the future.
Jim Hoefflin (firstname.lastname@example.org) is executive vice president, products and marketing, at RedPrairie, a Waukesha, WI-based provider of productivity systems for inventory, transportation and workforce management.