Today’s Wall Street Journal has an interesting article on how Sunoco’s CIO is trying to stretch his budget dollars.
I have cut and pasted some parts of the article here.
THE WALL STREET JOURNAL: How is the economy affecting the information-technology world?
MR. WHATNELL: It’s having a huge impact. Basically you’ve had to throw away any plan you’ve put together prior to the end of August and start over again. It’s caught a lot of people by surprise and now we have to quickly adjust our plans for next year [because much less money is available for new projects], not just for the state of the overall economy but for our individual companies’ outlook.
[The Journal Report: Technology] Julian Puckett
WSJ: How do you decide which projects make the cut when you’re tightening your budget?
MR. WHATNELL: They tend to be those things that save money rather than those that make money. It’s not that you don’t want to make money. It’s that cost-saving projects tend to be easier to measure and are more predictable because you are not dependent on the vagaries of how a customer is going to behave to a new product or how a distributor is going to react to a new channel. I think that is the reality of working [in] tough times.
WSJ: What is a project that you are cutting?
MR. WHATNELL: We have a standard refresh rate for equipment: every four years for desktops; every three years for laptops. We stopped doing that in May and we won’t resurrect that plan again probably until the spring of 2010.
[Refreshing computers] improved our reliability and our ability to have standardized rollouts. It was only when we were trying to tighten our belts earlier this year that we asked ourselves, “What would happen if we didn’t get new PCs for 15 months? And was anyone actually complaining that they couldn’t deliver a product, that they couldn’t get cash to a bank, that they couldn’t execute a trade because their computer was too old?” Of course not.
WSJ: How important is it to network with colleagues in the industry?
MR. WHATNELL: I think it is critical. It’s where a lot of ideas come from. It doesn’t even have to be your industry. You could hear someone from a health system talking about how they use mobile devices to enable doctors to access medical information and you think, “I could use that same approach to help engineers who are working on a refinery site.”
WSJ: Are you forthcoming when you talk to colleagues or are you worried about protecting competitive secrets?
MR. WHATNELL: I think there is a realization now that competitiveness does not derive from the raw technology. The competitive advantage doesn’t come from having the same set of Lego bricks that everyone else has access to. It comes from taking that set of Lego bricks and understanding how they can be put together to understand specific issues that your business is facing in your industry. And how you put them together will be very different from someone else in a different company, even though they are a competitor.
The source of competitive advantage is knowing how IT can help your business. You should to be able to ask any CIO: Are you able to describe in three minutes or less how your company makes money? To me that’s where it starts. And the answer isn’t “we’re in retail” or “we’re in the insurance business” or “we’re an oil company,” because everyone is in retail or the insurance business or is an oil company.
WSJ: What is your biggest challenge and how are you using technology to do something about it?
MR. WHATNELL: The biggest challenge for us is that we are a commodity business in a mature industry. So the challenge is how we can, over the next 15 months, focus on our core activities so that we can be the low-cost provider in our industry. At a time when people are looking to reduce and to cut, how can we create an environment where the business wants to listen to IT about what we can do to cut expenses, to reduce their cycle time and improve their agility. Rather than just have them say, “You have to cut as well.” We have an obligation to look at ourselves to find all the places where we can take cost out of the organization. The instinct in challenging times is to cut, cut, cut. But what is much more challenging is doing that and then leaving yourself in a position to talk to the business about how we can help.
