As corporate profits fall and companies adapt to a more sober reality in the wake of the September 11 attacks, spending on e-business initiatives is getting more focused--with a renewed emphasis on projects that promise a quick return. Internet outlays are expected to rise by 9% this year, compared with 3.7% for tech spending overall. Here's what's still getting funded.
The problem: For years, Casino operator Harrah's (HET) has had a database of customers it woos with cheap hotel rooms. But getting promotions out meant using snail-mail. The info wasn't connected to the Web, so it was hard to craft timely offers.
The solution: Harrah's linked the database to its Web site, allowing customers to go online and book rooms at discount prices based on their past spending habits.
The payoff: After September 11, occupancy at Harrah's flagship Las Vegas hotel fell by 25%. The chain sent e-mails with bargain offers, filling 4,000 rooms that otherwise would have stayed empty and bringing the hotel back to near-100% occupancy by Sept. 30.
The problem: With the chemical industry in a slump and DuPont's (DD) earnings expected to slide by half this year, the company needed to cut costs.
The solution: One $15 million initiative will streamline DuPont's purchasing of everything from software to sulphur dioxide. The project eliminates faxes and purchase orders, moving procurement online, where employees can order goods from suppliers that sell to DuPont at a discount.
The payoff: The company has cut procurement costs by $200 million--a 5% reduction--this year, and expects another $200 million in annual savings by 2003. Now, a typical order is processed in one day instead of five.
The problem: Getting results of building inspections in Miami-Dade County was too slow. Inspectors schlepped to construction sites with pen and paper, then submitted reports to data-entry clerks. Results were available 48 hours later.
The solution: Today, inspectors fill out their reports on a wireless handheld computer, then zap them off to a Web site where they're posted minutes later for builders to see.
The payoff: The county estimates the $880,000 project saves at least $175,000 in payroll and other expenses annually and frees the data-entry clerks to field inquiries about permits and other matters.
The problem: Dealers for office furniture maker Herman Miller (MLHR) had to phone company reps to track orders, get shipping dates, or product information--waiting up to a week to make final arrangements.
The solution: This summer, Miller completed a $1 million project that links it to its 400 dealers via the Web, giving them easy access to info.
The payoff: Dealers say it helps them better serve customers by giving them instant access to order and shipping info without having to call. The company says facilitating access by dealers will encourage them to recommend its products over those of other makers.
TUNING UP PRODUCTION
The problem: Mexican steelmaker Hylsa's Bar & Rod Div. needed to improve customer satisfaction and lower inventory costs at its two plants.
The solution: Hylsa spent $800,000 on software, computers, and consulting to automate the process of planning production, managing inventories, and scheduling deliveries.
The payoff: The new system helped improve on-time deliveries from 70% to 88%, and boosted inventory turns--a measure of efficiency--from 2.2 to 2.8 times monthly. Next, the division plans to hook up electronically with its suppliers to coordinate production schedules.
The problem: Bank of America (BAC) was spending nearly $100 million annually on human resources paperwork such as enrollment for its retirement programs. Simple changes often required weeks to complete.
The solution: The company moved those programs to the Web. Managers now log on to record promotions and raises. And all 140,000 employees can change doctors, monitor retirement accounts, and submit travel expenses online.
The payoff: The bank is saving with the system. Some processes, such as benefits enrollment, now take just minutes to process because they're done online. That's down from months under the old system.
Data: AMR Research, Deutsche Banc Alex. Brown, Company reports, BusinessWeek