Pat the CIO offers his pointed plan to achieve better ways of operating, calling it a comprehensive plan that needs support to succeed.
2. Your review noted our successes in 2008 with mobile apps, and a key driver behind that was our intent to use those applications and devices to help us integrate our supply-chain systems with our demand-chain systems. But once again, the company is running into a situation where the technology changes are outpacing the business-process changes.
Or, to put it more bluntly, we've changed the systems but we haven't yet changed human behavior: Carlton, the director of supply-chain operations, has dragged his feet for the past 9 months to resist this integration because if -- when -- we make that happen, he thinks he'll lose clout in the organization. I've met with his boss, I've met with him, I've met with his team, and we've shared future scenarios with all of them, and everyone's eager to jump ahead -- except Carlton. I have copies of all my e-mail correspondence with him, and project updates to support my position on this.
3. I'm as happy as anyone about the booming business we're doing overseas in India, Brazil, and China -- those new units have given us not just new customers to pursue but also product innovations, greater manufacturing capacity and expertise, and great new talent. But we're not fully leveraging all we could from those countries because they refuse to adopt some of the global apps we all agreed to standardize upon in 2008.
The CIOs for each of those units are on board but can't get the support from the country managers to schedule and complete the cutovers. I need your support on this, Jim, or maintenance costs will stay higher than they need to be because we're supporting a mish-mash of applications, each with its own maintenance costs.
4. Our outsourcing initiatives have bogged down because some board members are concerned about political fallout from some Congressional members in our home state. As I've noted to you in my monthly reports, this foot-dragging is costing us around $3 million per month, and it's further delaying our ability to implement new process improvements. And, it keeps more of my team stuck with doing internal grunt work instead of the customer-focused projects they were expecting -- and hoping -- to jump into 8 months ago.
There's $3 million a month in maintenance costs that we can convert to savings or innovation, but first you've got to get the board to stop blocking us from doing what needs to be done.
5. While on the subject of the board: more than a year ago, as a related piece of the data-center consolidation plan, I submitted to you a proposal to retire several large systems that we've been able to bypass through our virtualization efforts. While I can't precisely quantify the exact savings until we begin to do some of the work, my conservative estimate is that we can reduce expenses by about $800,000 a month.
But again, the board is standing in our way because the Audit Committee is concerned that some obscure requirements from Sarbanes-Oxley will be compromised if we get rid of these old financial systems. The truth is -- and we've documented this extensively -- our new architecture makes us significantly *more* compliant with SOX than we were under the old systems. So there's another $10 million that we're pouring, unnecessarily, into maintenance.