SCDigest Editorial Staff

One of the most important yet infrequently discussed topics related to supply chain technology is who should control the software and related technology decisions – the CIO and the IT organization, or the supply chain executive and the business users?

SCDigest Says:

In a highly competitive world, business users are in some cases simply becoming more vocal about acquiring the capabilities they believe are required to run the business.. What do you say? Send us your comments here

The standard answer from both sides is that “business needs should drive IT,” but the reality is a lot more complex. This is evident in many ways, from the vastly different list of technology priorities that can be found on almost every survey of IT and business managers, to the great debates that still rage between going with the supply chain modules of the ERP provider (in general, favored by the IT team) and “best-of-breed” solutions (in general more often still favored today by supply chain and logistics users).

Many believe that in the end, the IT team still carries the most weight in the decision in many organizations. Case in point: a recent Warehouse Management System decision at a major food manufacturer. Though the operations team preferred one vendor for its functionality, the IT team wrote a memo detailing the huge costs that would be incurred because the preferred provider did not meet its technical architecture standards, and sent that memo to the CFO. The decision was ultimately made to go with another vendor that was a better IT fit but offered less functionality.

Is the Pendulum Swinging?

In November, CIO magazine reported on new research currently in progress at Forrester Research that says the decision dynamics may be changing.

According to the article, “The yet-to-be-published findings reveal that 25 percent of executives outside of IT are directly selecting vendor tools entirely on their own or more than IT executives. Also, 25 percent of executives are negotiating directly with vendors or managing relationships with those providers.”

What’s going on? Several dynamics:

• On-Demand software can make it easier for business users to access functionality with little IT help; SCDigest is aware of a couple of cases where the transportation group, even in large companies, has began using an on-demand Transportation Management System (TMS) in a “skunks works” type project, taking the costs as a monthly expense and operating in a mostly manual mode, with no back end integration.
• As Forrester’s Bobby Cameron notes, with slimmed down IT teams and tons of work to just keep the IT machinery running, IT is just not staffed in many cases to really engage on new software programs – so business managers work with vendors directly.
• In a highly competitive world, business users are in some cases simply becoming more vocal about acquiring the capabilities they believe are required to run the business.

The situation, however, is admittedly complex.  No one wants to go back to the days of applications chaos, with hundreds of different pieces of software to meet specialized needs, and overwhelming integration challenges.

GE used to and may still have a policy where certain applications (e.g., an order management system) was the “preferred choice” within the corporation. Individual business units could choose to move down a different path and select their own software tools, and if it worked out well everything was fine. But the price of implementation failure for those veering from the recommended solution was high.

As with many management strategies from GE, this one sounds like a good model as well.

Who really does control the software decision in most company – IT or the business? What should it be? How can we get a happy medium? Let us know your thoughts at the Feedback button below.