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4/29/2005
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Grocery Chain Aligns I.T. With Key Objectives

Giant Eagle uses governance software to focus resources more efficiently

With 219 grocery stores, Giant Eagle Inc. has a large business to run. That makes it essential for the company's business-technology projects to be aligned with key corporate objectives. To gain better control over the costs, risks, and resources involved in its IT initiatives, the chain of stores in Maryland, Ohio, Pennsylvania, and West Virginia has created an IT governance office and deployed new software to prioritize and manage them.

Companies with good IT governance have profits that are more than 25% higher than those without, according to a report published last year by MIT Sloan School of Management's Center for Information Systems Research.

Like many companies, Giant Eagle didn't have real-time visibility into its IT efforts and, as a result, set priorities in an ad hoc fashion. The company might have 100 IT projects seeking funding but only have the money for half of them. The IT staff would try to prioritize the projects but wouldn't have a clear enough understanding of the business objectives to know which projects would benefit the company the most, says Keith Kaiser, director of technical services and corporate architect.


Mercury's software lets Giant Eagle get a better view of its business-tech priorities, Kaiser says.

Mercury's software lets Giant Eagle get a better view of its business-tech priorities, Kaiser says.
"In the past, there was some horse-trading involved in deciding the priorities of IT projects," he says. "Now there's a process, so you can think about IT governance as a way of improving your IT supply chain."

Giant Eagle, with more than $5 billion in sales last year, started by merging its IT project office and an enterprise-architecture initiative into an IT governance office a year and a half ago to centralize IT decision making and more actively involve business executives in setting priorities. To support that effort, the company last year began testing a software suite from Mercury Interactive Corp. that's being released this week.

Mercury's IT Governance Center 6.0 includes applications to monitor and manage a variety of IT factors, including demand, portfolios, programs, projects, resources, time, finances, and changes. It also forces a company to tie IT projects to business objectives. For example, a request for an IT system to speed the flow of products in Giant Eagle's warehouses would be aligned with the "reduce cost" objective in the Mercury software because the technology would help the grocer become more efficient and save money.

The software lets IT and business managers work together to make better decisions. 'We fully expect to see a decrease in the number of requests coming into IT," Kaiser says. "This is extremely important because they are all corporate activities, they are business-driven, and they should be prioritized by the business."

Kaiser says involving business managers in IT decisions is a change, but the payoff makes the effort worthwhile. "That's the ultimate benefit. We know we're aligned with where the business is going because the business can see what we're working on at all times."

Mercury has added a dozen new features to its IT Governance Center, including capabilities to help customers comply with regulations such as the Sarbanes-Oxley Act and support quality programs and process-control frameworks like Six Sigma. Mercury also offers its applications as a hosted service.

The category of tools for business-technology management and IT governance is relatively new. The founder of a Mercury competitor, Enamics Inc., says more companies need to define the expectations and goals for great IT management. "It's different in IT than in finance or marketing or supply chains or other areas," CEO Faisal Hoque says. "In those disciplines, there's a definite way of measuring if you're not doing a good job."

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