InformationWeek
Defining The Business Value Of Technology
November 17, 1997
Big Steel, Even Bigger Deal
anaging complex systems and changes in technology is one of the primary concerns on IS managers' minds. That's why, in early March, a story about how Inland Steel built its new Order Fulfillment System resonated with so many readers. The $4.6 billion steelmaker was able to build the
system-which comprises 7 million lines of code-on time and within its $37 million budget. The OFS project is expected to bring Inland Steel $25 million in one-time savings, and $9 million in annual benefits.
Inland succeeded where competitors (and its own previous efforts) had failed because it ensured that the new system was aligned across several business processes, not just one; it gained the support of the company's top business executives; and it delivered its results in phases. "We wanted early deliverables so we could see the benefits without having to wait for a big bang," said Bill Howard, the company's VP of IT.
Throughout its three-year project, Inland Steel also used the services of management consultants to oversee organizational issues and to bring in software tools to manage the project. Eventually, the company was able to eliminate its functional islands of automation and bring its 18 business processes together. In the process, the company replaced 60% of its 30-year-old legacy code.
The results: Inland Steel's order-entry cycle time was reduced by 84%. In the first month, Inland Steel shipped one-third more steel than for the same period the year before, a gain Howard attributes to the OFS system.
And, one of the unintended benefits of the conversion: a change in thinking toward IT by the top brass. In the words of Robert Darnall, Inland's CEO, "I'm trying to raise my sensitivity about the power of the computer, how it can be used, and how the new technologies can change the business for the better."
Story's author: Bruce Caldwell
Read it on the Web at: techweb.cmp.com/iw /621/21iuste.htm
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