IT Department Cheating on the Board … Again
I’m a board member at a large insurance company. We set the strategy for the company and approve budgets based on annual goals. For the past few years, the IT department has obtained funding for several projects, but did not use the funds as they were originally intended. Rather, they used the money for their own pet projects, which they then told us are much better for the company, but had no ROI figures to back up their claims. We aren’t getting the IT capabilities we thought we paid for. How can we rein in these IT mavericks?
Watching the Money Disappear in Delaware
Dear Watching the Money Disappear:
It seems that the business and IT sides of your company aren’t communicating very well. There’s a lack of communication between the strategists and those who execute IT programs, and no way to connect the strategy to IT funding. This isn’t surprising; business people don’t often speak “IT language” and IT people don’t always understand business needs.
The solution is to get the two groups to speak the same language. Tie the IT architecture and IT capabilities to the company’s strategic vision, through an enterprise architecture program that will create transparency and visibility into all company processes and resources – IT included. This enterprise architecture program will also open up very needed communication, so that discussions about IT resources continue throughout the year, not just at budget time. This should stop the money disagreements.
Cleaning up the Mess on the Floor
I recently started working for a large manufacturer and worked for a similar company before. I am absolutely amazed at how this company still relies on manual operations. For example, we have a guy who walks the floor and looks at the product supplies that are stored in 20 silos before they are released onto conveyor belts to go to the manufacturing floor. He has to remember where each silo’s contents enter the process to determine which switch to throw next. There’s absolutely no automation for measuring, release times, calculations, etc. When manufacturing shuts down, they sometimes don’t notify the supply side, so the product keeps coming on the belts, spills onto the floor, and creates a huge mess. How can I convince the old guard that there is a better way?
Amazed in Omaha
Dear Amazed in Omaha:
Unbelievable! Sounds very much like the “I Love Lucy” episode with the chocolate candies on the conveyor belt. That was funny, but this is costing your company a lot of money.
If both groups understood the plant processes better and had visual diagrams that showed them each step of the manufacturing process, it would be easy for them to insert a “stop product flow” signal into the chain of events before shutting down manufacturing. Then you wouldn’t have an expensive mess.
The company should document its processes so that both groups can see exactly what happens when and where, and what changes are needed to stop wasting product. With a clear understanding of process and business requirements, the IT group could propose tools such as cameras, automated measuring scales, and conversion tables to solve this dilemma and improve productivity. An enterprise architecture software solution would make it possible to visualize the manufacturing process through diagrams and alternative “what-if” scenarios. With all information in a centralized repository, it would be easy to change it if processes changed. Tell them to join the 21st century and use software tools that will move the company forward.
We Thought We Fixed It
I work for a very progressive bank that is always trying to serve its customers well and remain profitable. Some time ago, we eliminated sending checks back to customers in the postal mail and converted to scanned images online. This was supposed to save money. However, after the first year, costs in this area increased by nearly 10%.
We found out that no one told the groups that had mailed the checks previously that their processes had changed. The bank was essentially processing all checks in both ways – scanning and mailing.
While we’ve solved that problem now, it cost a lot of money. What can we do to avoid these types of mistakes in the future?
Oops in Texas
Dear Oops in Texas:
You need better communication and more visibility into your processes, so that when new procedures are implemented, you’ll know which old ones to turn off. Do you have any documentation on the bank’s processes? Do you know the individual steps in each process? Is this information shared throughout the company? If not, the best solution would be to develop an enterprise architecture program, using specialized software that will help you evaluate how things get done at the bank, in all departments. You’ll be able to see which processes affect others and what resources are needed to support those processes. Best of all, when changes are made, you’ll have this information at your fingertips.