Guest Commentary: Does the Supply Chain Department Need the IT Department?

HighJump Software is just completing an internal implementation of a new ERP package that covers CRM, financials and customer service. The project touched nearly every business process in our organization, and was driven completely by business function owners and business subject matter experts. Involvement from the IT organization was limited to a few security reviews. I have been involved in several ERP implementations in my career and have never seen a software project so independent from the IT team. There are several factors that lead me to believe this is the way software implementations are being done in many organizations. This begs the question: Does the supply chain department really need the IT department?

A New Tech-Savvy Workforce
The marketing team leader on the implementation was the 22-year-old lead generation manager in my department. He has a good understanding of software, infrastructure and social media technology. I would expect this if he had studied computer science, but he was an English major. Today’s younger workforce has technology so ingrained in their lives that implementing tools to help them do their job better comes naturally. After all, these same individuals have been using technology to improve their personal lives for many years – whether for shopping, arranging social activities or finding dates. These individuals have a “do-it-yourself” attitude when it comes to using technology at work and find excitement in learning new technologies. Many find dependencies on the IT organization to be a hindrance and would prefer to have the accountability for the tools that help them do their job.

Impact of Cloud Apps on System Ownership
One of the factors that made our ERP implementation so IT-independent is that we implemented a cloud-based application. We probably could have run the project the exact same way with on-premise software and only asked the IT organization to provide the infrastructure required for the application to run in our data center. However, in my experience, that is not typically how it works. When an IT team knows they need to run the underlying infrastructure, they realize there will be an inherent expectation that the business will rely on them for broader application support (it must be human nature to do this). Using cloud applications forced us to think differently about who was truly accountable for the software and its implementation. We decided that “the business” owned the software and therefore the business process owners should be accountable. There was no IT organization to point the finger at if this didn’t work.

Ownership and Accountability to the Business Unit
A business school professor once told me something that I think about almost on a daily basis. He said, “Business is about managing for the best outcomes across constrained resources.” Every day managers must make decisions about where to focus their time, where to invest and which activities should be de-emphasized. In order to make sound business decisions about information technology investment, the business owner (not the IT department) must make the decision about investment and commitment to information technology. Sound business decisions about using technology cannot be made if the business owner perceives to be getting the system “for free” from IT. Similarly, a decision to invest in IT should not be limited by lack of internal IT resources or IT project prioritization. If a technology project stands on its own business merit, there should be a mechanism to execute on that project.

Applicability to the Supply Chain Group
This concept of IT-free applications accountability and ownership is particularly important for the supply chain organization. I frequently see companies adopting a shared service model for supply chain functions. When the supply chain organization becomes a service function, it increases the pressure to provide superior service at a lower internal cost. Better use of technology is the most logical place for the supply chain service organization to gain scale and bring more innovative business processes to their internal customers. In other words, today’s supply chain “service” is as much about technology as it is about supply chain operational expertise.

Additionally, there is increasing pressure to compare internal supply chain management with outsourced supply chain management from 4PLs or lead logistics providers. Most outsourced supply chain management solution providers are bringing technology and a deep understanding of technology to their clients. Internal supply chain professionals are being challenged to obtain a similar understanding and ownership over the technology to ensure their capability is relevant when compared to outsourced solutions. A supply chain organization that looks to the IT team for this expertise is not likely to be as effective as one with combined operational and technical expertise.

My Conclusion
I believe we have a confluence of factors that will dramatically change the IT organization and how “the business” manages technology going forward. A new generation of workers not only has the savvy to manage technology, but a desire to take ownership over the systems and processes impacting how they do their job. Technology advances in cloud applications, infrastructure-as-a-service and enterprise app stores are removing the complexity of operating the underlying IT “plumbing” (installs, server provisioning, network, and upgrades), which allow business users to manage the administration of the apps.

Finally, I think there is a realization that we are stuck in a paradox. Business innovation cannot occur without technology. However, most IT organizations are not structured or positioned to bring business innovation. This means that true business innovation will only come when business people can understand, own and leverage the technology.

Chad Collins is Vice President of Marketing and Strategy at HighJump Software. He joined the company in 2002 and has more than 12 years of experience using technology to deliver innovative supply chain solutions. Prior to HighJump Software, he was in the supply chain practice of Cap Gemini Ernst and Young Consulting, where he managed supply chain technology projects for the world’s leading manufacturers. Mr. Collins holds a Bachelor of Science degree in electrical and computer engineering from Marquette University and an MBA in supply chain management from the University of Minnesota’s Carlson School of Management.

Comments

  1. The outcome of IT projects is so much better if the user group takes responsibility for specifying what they want and implenting it. They have a fuller understanding of the system they use and take full ownership going forward.

    However, the average age in many industries, particulary transport, poses a problem with firstly having young tech savy people working for the company and secondly having older managers willing to delegate responsibility to them. It is amazing the questions our IT Department gets asked – basically if it has a wire connected to it or is a piece of software that runs on a computer, people think it is up to IT to know all about it and fix it.