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9/15/2004
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Executive Forum: Times Are Better, Thanks To IT

Applying best practices speeds performance, reduces costs, and smooths the road ahead.

"It was the best of times, it was the worst of times." Charles Dickens' opening words in A Tale Of Two Cities encapsulate the last few years in a nutshell.

Most corporate executives, including those in IT, can easily relate to the second half of that phrase. The last few years have brought forth some of the most demanding economic conditions we've seen in years. Companies have had to make difficult decisions in terms of staffing and resource allocation. They've had to do more with less--fewer people, fewer resources, fewer projects. In most organizations, IT spending was impacted to a greater degree than other areas, correcting overspending from the dot-com bubble and preparations for Y2K. Complex market shifts also necessitated a different approach to business, one in which companies needed to realign their business to meet changing needs in different geographic areas.

In light of all this, you're probably wondering how I might think it was also the best of times for IT. Simply put, technology has come of age. Starting in the mid 1990s, IT spending could be directly linked to overall productivity in gross domestic product and its impact could actually be measured. Today, we're able to position technology as an effective tool for both productivity and growth. Clearly, this has been our experience at Dow as we continue to realize latent benefits associated with early investments, such as our global enterprise-resource-planning system. By using available tools and processes to help our company streamline operations and adapt to changing business conditions, we've come to the realization that if we reduce variability and standardize our systems and their use, we can leverage what's already in place.

An obvious tool to help reduce variability and improve performance is Six Sigma. Companies around the globe are using Six Sigma's rigorous, data-driven methodology to eliminate defects in their operations. At Dow, we're taking Six Sigma a step further to improve productivity by applying what we call our "3i" model. Based on business needs, Dow employees either implement documented best practices and systems, improve on those best practices, or innovate new ones. These best practices and systems become recognized internally as the most effective technology available to meet a specific need. And, because each of the "3i's" is enabled with the skills, tools, and rigor of Six Sigma, they provide the basis by which all businesses and functions can enhance their performance.

While the call to streamline operations at many companies brought with it difficult decisions in terms of staffing and resource allocation, it also provided opportunities for leaders to reflect on their companies' corporate structure. Is it built to leverage? Are processes repeatable? Can the structure expand and contract as needed? Is it organized in such a way as to deliver the best possible service and support to customers? Is it aligned in a way to bring the company through challenging times?

In looking at our organization, Dow identified an opportunity to realign and organize its functions to deliver more cost-effective and efficient work processes to its businesses, if and when they need it. The new structure is based on the premise that the businesses "pull" functional capabilities and use best practices to solve problems. This lets the businesses run a much leaner operation than in the past and makes functions accountable to manage centers of expertise that track and document best practices, along with the technology and work processes that support them.

In most cases, when a business has a specific need for improvement, there should already be a best practice for the work process or technology that has been documented by the expertise center. Documentation drives increased visibility across businesses, which can translate into further improvement or innovation where needed. By managing work in this way, we eliminate wasted time and energy from the individual businesses coming up with different solutions and drive further improvements of the most effective solution.

If we've learned anything from these last couple of years, it's that flexibility and agility are required to help us navigate the rocky terrain. And when we get right down to it, we have the knowledge, tools, and processes right at our fingertips to deliver measurable value. By standardizing and effectively applying best practices throughout our organizations, we're better positioned to speed performance, reduce costs, and smooth the course ahead, bringing us back to the best of times.

David Kepler is corporate VP of shared services and CIO at Dow Chemical Co., No. 19 on this year's InformationWeek 500 list.


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