Pencil maker says software package verifies the value of IT investments
By Staff -- Manufacturing Business Technology, 1/1/2004 12:00:00 AM
Most companies believe information technology is a sound investment, but Dixon Ticonderoga—a manufacturer of pencils, pens, and art supplies based in Heathrow, Fla.—says it has a tool that can verify the business value of a company's IT spending.
Garrett Grainger, Dixon Ticonderoga's CIO, says this tool worked so well in helping his department plan the IT budget for a recently opened manufacturing plant that it will be used to help determine what mix of applications is needed to support a new enterprisewide supply chain management program. "We completed the installation of systems at the new plant on time, and we stayed under budget," Grainger adds.
The tool is called ValueIT, from a company called Alinean. "This is a suite of products that lets various stakeholders—business unit managers, CIOs, and CFOs—collaborate to determine the true value of IT," says Tom Pisello, Alinean's CEO.
Pisello says ValueIT lets a company assess the impact of information technology on the business from two different perspectives. First, a bottoms-up analysis looks at a specific business process—such as the order-to-cash cycle—and determines what forms of technology could be installed to make it more effective. Second, a top-down assessment shows how a company compares with its industry peers in terms of IT spending and financial performance.
"Looking at how your financial performance and IT spending compares with other companies in your industry lets you see whether you have a competitive advantage," Pisello says. He also argues that the comparison is valid because the industrywide data on financial performance comes from independent agencies such as Standard & Poor's, while the IT spending figures come from another organization that collects them specifically for Alinean.
Dixon Ticonderoga first used ValueIT for a comparative analysis. Grainger declined to say how his company compared with its peers, but he did offer that the "writing instrument industry, on the whole, is a pretty low-tech arena."
Pisello says ValueIT 3.0, released this past summer, contains templates that collect the proper data for bottoms-up analysis, as well as new tools to gauge whether a project is delivering the anticipated benefits after its implementation. "Most companies consider the expected ROI when they are buying technology," Pisello says, "but few verify that return later. Companies need to start looking for that type of accountability."
