Top business executives today view information technology (IT) as a strategic weapon to create value, as opposed to just considering it a tactical tool to cut costs. A recent survey of almost 300 chief financial officers (CFOs) by CFO Research Services found that six out of 10 CFOs view IT as "absolutely crucial" or "very important" to revenue and profit growth at their companies.

Indeed, 49% of the CFOs said IT is vital to business growth, while 46% said IT enables business process improvement. Only 5% said IT is purely a tactical tool.

This view of IT as a strategic value generator represents a major shift in attitude over the past five years, as business executives' perception of IT systems transformed from a cost center to a value center. Executives who participated in the survey cited improving customer service and operating processes as important revenue producers that also outranked traditional uses of technology that reduced costs.

"We view technology as an enabler of a lot of revenue enhancement properties," said Kent Potter, senior vice president and CFO for Chevron Phillips Chemical Co. LP, a $7.5 billion Houston chemical producer. Chevron Phillips looks to its SAP enterprise resource planning (ERP) system and a customer relationship management (CRM) system as the keys to unlock value for shareholders as well as provide additional services for customers.

For metals distributor Earle M. Jorgensen Co., the emphasis is on investing in technology that improves the customer experience. "We have invested a lot of money to improve order taking, handling and tracking. We have a delivery guarantee to our customers and having flawless IT systems is necessary to achieving that," says Bill Johnson, vice president and CFO for Earle M. Jorgensen, in Brea, Calif. Johnson adds that few of his competitors can offer the same service levels—a clear advantage from having robust IT systems.

Manufacturing executives are even more likely than their colleagues in other industries to view IT as a tool to create value, according to Kevin Prouty, research director for AMR Research Inc., a Boston market research group. "Manufacturers are still concerned with costs but they are prioritizing their projects based on value," says Prouty. Many companies have migrated from a strategy of long-term implementations with delayed payback to shorter projects with proven creation of value. "Most manufacturers—even the largest auto makers—are breaking their projects into a series of three- to six-month implementations," he says.

Manufacturers are using ERP, CRM, supply chain execution (SCE) systems, real-time analytics and enterprise portals to generate revenue and value, says Prouty. ERP systems do not generate much value by themselves, he notes, but they are an essential foundation for the revenue-generation opportunities garnered by the other technologies. "CRM and SCE are only as good as the data underneath them," says Prouty.

Supply chain systems in particular can help generate value for manufacturers, because of their ability to reduce inventory and order-to-cash cycle times. Manufacturers are letting their suppliers see into their production and planning systems to optimize their delivery of components and parts.

CRM systems are invaluable to the revenue-enhancement goals of large and smaller companies alike, due to their ability to unite disparate customer data. Says Prouty, "CRM really generates value by being able to pull together one picture of the customer."

Companies of all sizes are waking up to the fact that IT is a powerful tool for competitive advantage. More than half the respondents in the CFO survey said they were increasing IT spending, while only 40% said their industry was likewise increasing spending.

Identifying the features and functions that can help manufacturers generate additional value via IT remains a challenge. However, online product directories have evolved dramatically. CFOs and IT managers can use the http://www.enterprisesoftwareHQ.com web site, for example, to identify specific revenue-enhancing features and functions of ERP, CRM, SCE and other manufacturing packages.

Sources: CFO Mind Shift: Technology Creates Value
CFO Research Services, January 2002.
http://cfoenterprises.com/materials/whitepaper_CFOmindshift.pdf

What CFOs Really Think about Technology
CFO.com, January 29, 2002
http://www.cfo.com/article/1,5309,6617|||3,00.html

You Have The CFO's Ear
Information Week, Jan. 30, 2002
http://www.informationweek.com/story/IWK20020130S0009