What your business results are telling you about your IT environment

daniel_dorr.JPGBy Daniel Dorr

 

(Daniel Dorr leads HP's CIO Agenda workshop program. He is responsible for conducting workshops to help CIO clients prioritize key business initiatives, the technology to address those problems and the financial impact of doing so. To participate in HP’s CIO Agenda workshop, contact your account general manager.)

 

Want your IT organization to have an impact on the business and deliver real value? Don’t look at your IT environment to figure out what your priorities should be. Look at your 10-K.

 

As a leader of HP’s CIO Agenda workshops, I work with a lot of CIOs to identify the business value that technology can bring to their enterprises. One thing we’ve seen over and over is that business symptoms point to IT solutions. Take your business results and benchmark against your peers. If you’re lagging behind market leaders, look at the technology at use in those areas – that is where you’ll find the greatest potential for improvement.

 

What key business indicators can tell you about IT

In a recent HP workshop with a retail CIO and his team, we quickly saw how technology issues often lead to business problems. When we analyzed our client's business we immediately saw how this particular retailer compared with the market leader. The retailer:

 

  • Carried inventory longer (52 vs. 40 days)
  • Turned inventory slower (7 vs. 9 times)
  • Had more Days Sales Outstanding (31 vs. 4)

As we investigated the issue with the CIO and his team we quickly identified the problems: two ERP systems and poor business analytics. 

 

The retailer was using SAP in one region and Oracle in the other; it was almost impossible for business leaders to effectively track and manage inventory at the same level as their competitors. After seeing their organization, we set the goal of helping the client improve cash flow by $25M for every day improvement in inventory and $32M for every day of Days Sales Outstanding. 

 

Investigating IT’s impact on revenue

But the ERP systems only represented part of the challenge. We also saw that, on average, customers of this retailer purchased fewer products per trip compared to the figures of their retail peers. And revenue showed a clear decline because of this.

 

The marketing team needed assistance making sure the right product was in the right place at the right time. They needed better and faster information about their customers and current marketing programs. As we investigated this, we learned that it took this retailer too long to run batch reports. By the time the data was available it was too late to switch out poorly performing products or update ineffective marketing programs while they were still in market.

 

These business problems are fixable, and the ROI on these projects can directly impact CEO-level metrics, including return on assets and return on equity. 

 

4 steps to improving business results

What you can do in your organization to achieve similar insight?

 

  • Take a look at your financial results. Compare your results to your peers and market leaders.
  • Review your historical financial results to get a sense for what might be possible.
  • Brainstorm possible IT opportunities with your team to improve areas where the company is losing ground vs. peers or historical success.
  • Don’t just focus on cost savings, but look at revenue-generating opportunities as well.

The lessons learned from this retailer are applicable to any organization in any industry. If you’d like help and guidance when it comes to your individual situation, your HP account rep can discuss the opportunities the HP CIO Agenda workshop provides. Or visit these sites to learn more about HP’s solutions for information optimization and application transformation.

 

For more insights on the future of IT and how you can optimize IT performance to drive business results, subscribe to the Discover Performance ezine.

 

Related links:

Blog post: What you can learn from the way revenue leaders handle enterprise security

Blog post: 4 things revenue leaders do differently when it comes to managing information

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