In rough times, properly used information provides direction

DATA SYSTEMS

April 01, 1991|By Michael Dresser

For Chris Everett, the 6 1/2 years he spent as a Navy pilot were a lot of fun -- when the skies were clear.

"It got real dicey when the weather went bad," he recalls, "because you had to rely on your instruments."

It's much the same in business, says Mr. Everett, partner in charge of consulting services in Price Waterhouse's Baltimore regional office. When tough times set in, businesses become especially dependent on the corporate version of a jet's radar and altimeter -- its information systems.

That's because information has become a weapon of choice in the marketplace. Advanced data processing systems let businesses stay in closer touch with their customers and serve them better.

"When times get tough and competition gets a little fierce for the scarce customer, you need more than just your gut reaction," he says.

Better data processing also can be an important tool in controlling expenditures, Mr. Everett says, but he stresses that cost-cutting alone should not govern the process of upgrading an information system. When done right, he says, the process is driven by the company's strategic goals.

"Don't just automate the way you do things today," he says -- you might wind up making inefficiency faster.

Upgrading information systems can be a daunting challenge for any manager these days. Just when it's most important for a business to slash costs, an increasingly expensive function becomes crucial to the company's survival.

But slashing spending for information systems might be more dangerous.

"You can't cut back on your level of technology," says Alan Hevner, chairman of the information systems faculty at the University of Maryland's business school. "That's almost impossible in this day and age."

Any company planning to upgrade its information technology system should make a formal review process before acting. But don't count on traditional cost/ benefit analysis, Dr. Hevner warns, because "some of the benefits are so intangible."

Mr. Everett recommends that the strategic evaluation process be carried out in three parts:

* Assess the current situation. The CEO needs to examine how data processing is helping the company achieve its goals. Among the questions to ask: Is information technology being used to attract and serve customers, or is it just an accounting tool? What is the cost of the current way of doing business? Does the company have sufficient computer talent in-house or will it need to go outside?

* Create a vision. The CEO needs to set broad goals for the company and specific goals for how data processing should be used to achieve those goals.

These need not spring full-grown from the head of the boss. The most effective planning strategies are based on an internal review aided by an outside "facilitator," Mr. Everett says.

The CEO and other employees know the business best, but sometimes they are too close to the status quo to be entirely objective. Meanwhile, a qualified outsider can help push people to be honest with themselves.

Above all, Mr. Everett counsels, don't just react to emergencies you find early in the process unless they present an immediate threat to the company's survival. Money spent before clear goals are set will probably be wasted.

* Decide how to implement strategy. After goals have been set, the company needs to evaluate how to accomplish them in the most cost-effective way.

At this point, it is important to stay focused on the goals you have identified and not be seduced by gadgetry, Dr. Hevner warns. In many cases, Mr. Everett says, an already-existing, inexpensive packaged software program can do everything the company needs done. If a company is so unusual it does not fit any of the patterns of existing software, writing a new program may be necessary. But unless there's a competitive advantage in developing your own, go with the package, he says.

One important thing to look for in a new information system, he says, is its ability to incorporate your existing software. You don't want to rebuild your data base from scratch, he points out, nor do you want to force your employees to learn entirely new procedures. You can find proprietary programs that can meld old software systems with new ones, he says.

Although software can be expensive, Mr. Everett says, the implementation process is often three to four times as costly. Here again, he suggests that the best approach is to put the process in the hands of a team of outside consultants, in-house information technology experts and employees who will use the software.

While the costs involved in upgrading a computer system are especially daunting in tough times, Dr. Hevner says, a recession also means opportunities. Your suppliers' business probably is slow too, he notes, and "they're going to cut you a pretty good deal right now."

Companies that do not have the money now to make a major investment in information technology have several other options, Mr. Everett points out.

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