Modest technology investments often offer a quick ROI.
Companies are changing how they buy and consume technology.
Quite a few manufacturers, distributors and retailers, for example, continue to explore modest technology investments for reducing costs, increasing sales and creating competitive advantage, but their focus has turned to high-value, rapid return on investment (ROI).
In particular, companies are capitalizing on the modules in their existing software packages and new, purpose-focused software to help address various aspects of transportation, workforce and inventory—all to deliver hard, quantifiable gains that can pass muster with their CFOs.
Gartner’s revised outlook on IT spending bears witness to this trend. While it projects global IT spending will decline 3.8 percent in 2009, it does forecast a small increase in software spending for the year.
Thoughtful retailers and their supply chain partners have good reason to spend strategically on software. The key is to avoid the projects that are too all-encompassing because they often result in protracted rollouts, with long time-to-value. Right now, any spending on IT needs to result in quick hits that address specific pain points in the business. For this reason, software in the form of modularized value packs is an increasingly useful way to approach IT investment.
For companies with supply chain and retail operations, those quick paybacks often come from technology investment in inventory, transportation and workforce management solutions. These are areas that can have a quick, positive impact on their businesses, and help their companies gain a competitive advantage in efficiency and productivity. Improving these operational areas can put a company in the lead position now as well as when the economy bounces back.
For instance, in the inventory management area, a distribution company may be looking to become more efficient with the movement of its containers. It may still have trouble figuring out where its containers are located. By implementing a yard management module at one location, the company can solve that problem and also achieve a quick time-to-value based on the bite-size scale of the project. It can then point to the quick results and use the returns to fund other projects, either additional sites or additional modules.
For retailers, workforce management is critical right now because many stores are operating with reduced headcount. With limited personnel, managers need sophisticated scheduling technology to make sure the right personnel are on the floors at the right times, doing the right things, which enables mangers to spend more time on the floor.
Transportation has also sucked up a lot of cash this past year, and there is often a lot of room for improvement that can be addressed with a modular rollout of a transportation management module. Within a short time, an IT investment can yield substantial reductions in reduced fleet operating costs, major improvements in delivery speed, and more coordination between the DCs and the stores.
Another great quick-value project for retailers is rolling out a financial management module to help them protect the business, starting at the point of sale (POS). Now, more than ever, it is critical for retailers to quickly identify cash shrinkage and areas of risk so immediate action can help minimize theft and fraud.
Rolling out a financial management module on a regional level can be done in a few weeks. Compare that with a total ERP system that can take years to work out the kinks and provide an ROI. That’s why a modular-based approach to technology upgrades can help put a company in position for continued success.
Of course, the most important thing in any modular rollout is to design specific goals that you can meet—goals which will provide a great time-to-value in the CFO’s eyes.
If that happens with financial management (or yard management, automated demand-sensing replenishment or any other value pack modules), companies can replicate that success across their other divisions in a distributed enterprise.