Making Innovation Pay Off through Info Tech BW interviewed company IT gurus and teamed up with analysts at Cap Gemini Ernst & Young to produce a guide to success
Companies on the BW 50 are using IT as the wellspring of innovation. They're harnessing its power to restructure their businesses or communicate better with their customers. BusinessWeek interviewed company IT gurus and teamed up with analysts at Cap Gemini Ernst & Young to produce the following guide to success
MAKE INFO TECH PART OF BUSINESS PLANNING
When Oracle (ORCL
) wanted to boost operating margins last year, it automated such functions as office supply purchasing. That helped keep the workforce stable at 41,000 even as sales soared 30%. The company saved about $1 billion, and margins jumped from 20% to 33%.
USE INFO TECH AS THE BASIS FOR NEW PRODUCTS
Merrill Lynch (MER
) is about to offer customers personalized real-time market information on a PDA device. When its IT and business planners meet, they focus on making IT contribute to earnings and not be just a cost center.
GET THE BEST DEAL
General Dynamics (GD
) outsources its IT operations, figuring that's a better way to invest its resources for first-rate service than to spend the money in-house. Duke Energy (DUK
), in contrast, does IT itself. The company developed software for giving its energy traders critical real-time data on trends such as electricity demand across the entire energy grid. The company also is developing software that would anticipate market shifts and make trades automatically.
GET MORE VALUE FROM YOUR OWN DATA
Capital One Financial (COF
), a credit-card issuer, conducts tests--45,000 last year--of varying mixes of rates, credit limits, fees, and terms. It then uses complicated computer algorithms to analyze the resulting terabytes of data, enabling Capital One to better target its marketing campaigns. The company also improves customer service by automatically identifying customers calling in, predicting why they're calling, and routing them to the best-qualified customer reps.
MANAGE INFO TECH AS A BUSINESS
Phillips Petroleum's (P
) IT unit competes with outside vendors for internal sales and is treated as a separate company in a range of areas, from budgeting and purchasing to operations analysis and billing. Phillips benchmarks IT's operations and has found them to be highly competitive with other service providers. The department's mission is to be the preferred IT service provider for the company's business units, and it has largely achieved that goal.
BE ADAPTABLE
Tyco International (TYC
) has been growing rapidly through mergers. But Tyco doesn't tinker with the financial systems software of the companies it buys. Instead, it uses Hyperion software to map the financial accounts into a standardized Tyco general ledger. On the business side, when Tyco buys a company similar to a current unit, it folds the new operation into an existing SAP enterprise resource planning program. Other acquisitions keep their business systems in place but develop interfaces for linking sales, customer orders, and other critical data with Tyco's own systems.
CONNECT WITH CUSTOMERS AND SUPPLIERS
Xilinx (XLNX
) uses IT as its link to the outside world. Using the Internet, it can take orders from customers or distribute software updates through the Internet. Customers can get their keys to activate new software through the Web. The company keeps track of distributors' inventory online. And manufacturing partners use IT links to get product specifications and orders from Xilinx.
Data: Cap Gemini Ernst & Young, Companies, BusinessWeek
Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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