E-BMC Says E-Business Enablement Begins with Strategic Planning and Budgeting, Not Technology"

The power of e-busienss technology to out perform traditional "brick and mortar" business processes has made the need for companies to become e-business enabled inevitable. Companies that learn to integrate IT resources into their strategic business plans will have a significant competitive advantage over those that lag behind. Companies that ignore this reality will find it increasingly difficult to communicate with customers, vendors and business. Many will fail. The fourth quarter is the time of the year to engage in strategic planning and budgeting. Company CEOs need to include IT in this planning and budgeting process.

Vernon, NJ (PRWEB) November 22, 2003 -- The fourth quarter of the year is the time when many companies engage in the strategic planning and budgeting to support business priorities for the coming year. It also represents a time when CEOs can rethink their use and deployment of information technology (IT) assets.

Most CEOs have come to realize that the future viability of their company will depend on learning to use IT resources to reduce costs, increase operating efficiency and deliver quality service to their customers. Indeed, they know the need for change is inevitable. However, many CEOs have found it difficult to find a practical strategy to guide the transition from brick and mortar" to enterprise wide e-business enablement. Dr. John T. Whiting, the Managing Director of Vernon, NJ based E-BMC notes The mismanagement of this critical process can lead to significant consequences, loss of business and unnecessary costs to the company that engages in this process without access to the right knowledge and methodology."

Dr. Whiting explains, There are three basic reasons why companies have experienced risk and loss related to the purchase and deployment of IT resources. First, the decision was made at the tactical technical level of the company, not the strategic business level. Second, IT was not integrated into the strategic business plan and treated as a strategic resource; and third, the use and deployment of IT was not managed at the CEO/P&L level following the same due diligence applied to other mission critical resources." He notes further E-business enablement starts with strategic planning and budgeting, not technology."

Dr. Whiting offers two examples of failures that could have been prevented had they been managed as strategic initiatives, the Hershey Food Corp ERP failure that occurred in 1999, and the McDonalds Innovate Project failure in 2003. Dr. Whiting observes that Apparently many of todays companies have not learned the lessons from the Hershey failure."

In the first instance, Hershey invested $112 million in an ERP program. When the system went live in July of 1999 it failed. The failure caused Hershey to miss much of the prime Halloween, Christmas and Valentine Day sales experiencing $150 million in lost sales, 19% drop in profits and a drop in stock value from $58 in August 1999 to $38 in January 2000.

Dr. Whiting notes Wisely, Hershey top management did not place the blame on technology. By escalating IT decision making to the strategic business level Hershey was able to achieve a turnaround in performance." How was the turnaround achieved? A representative of the ERP service provider stated We made sure we had alignment between information technology and the business." Its not seen as 'were going to do a technology project. It sounds simple, but a lot of companies dont get there.... In this project, we had the proper management commitment."

McDonalds, the worlds largest fast food company, experienced a similar fate. McDonalds had planned to spend $1 billion over a five year period to tie all of its restaurants into a global digital network. After spending $170 million it became clear that the project was not going to succeed. In January 2003 the company terminated CEO Jack Greenberg and announced that it would take a $170 million right off caused by the failed project. They did not learn from the Hershey experience.

Dr. Whiting observes that McDonalds duplicated the mistakes made by Hershey 3 years earlier. They approached Project Innovate as a tactical technical project, not a strategic business initiative; they did not integrate the project into their strategic business plan and did not manage the project at the CEO/P&L level."

What are the lessons to be learned from these failures? Dr. Whiting advises that If CEOs are going to avoid risk and optimize ROI they must escalate IT decision making from the tactical technical level to the strategic business level, integrate IT resources into the strategic business plan as key driver of business goals and closely manage IT at the CEO/P&L level based on management by objectives (MBO) and return on investment (ROI) criteria."

This can be more easily accomplished than most CEOs realize. Dr. Whiting notes The E-BMC E-Business Enablement Methodology was designed to guide CEOs in integrating IT into the strategic business plan based on MBO and ROI criteria." He further states The starting point is the adoption of corporate policy that directs that IT be purchased and deployed within the framework of the strategic planning process."
If your company is engaged in the strategic planning and budgeting process during the fourth quarter it might be time to capitalize on the lessons learned from Hershey and McDonalds by integrating IT into your strategic planning and budgeting process.

Dr. Whiting is a pioneer in the area of e-business enablement and was recognized by the New Jersey Technology Council (NJTC) with the publication of an white paper on the subject. You can learn more by visiting the E-BMC web site at http://www.e-businessmanagement.com
Contact: Dr. John T. Whiting, Managing Director/E-BMC
Contact Telephone: 973-764-0375
Contact E-Mail: john.whiting@e-businessmanagement.com