Enron Corporation: Lessons in the Strategic Business use of IT.
Even great ideas have limits. Following the debut of Enron Corporation’s web based power and gas trading platform, revenue at the Houston-based energy company jumped from $40.1 billion in 1999 to $100.8 billion the following year. But after striking gold by combining its energy industry experience with a world class trading system. Enron (www.enron.com ) kept digging into new markets, convinced that its IT Infrastructure had the Midas touch. In 2000, Enron suffered a $60milliom loss in its broadband business. It struggled in more dozen unfamiliar industries and crushed within a year.
Questionable partnerships, overaggressive investments, and shady accounting practices top a long list of factors in Enron’s downfall. But as they look for lessons from history’s biggest bankruptcy, executives in all industries are questioning whether they, like Enron, spend so much time turning IT into a profit center that they lost sight of their organization’s core missions.
Is it time to go back to the days when IT supported the business rather than become the business? “ I think Enron’s bankruptcy is going to have a very sobering effect on boardrooms across the country,” said Dick Hudson, former CIO of Houston-based oil drilling company Global Marine Inc. and now president of Hudson and Associates, an executive IT consulting firm in Texas. “You can almost see a banker mentally taking hold in the senior suites.”Hudson said he has heard from CEO’s who have been reviewing their risky IT ventures, such as application service provider spin-offs or extraneous e-commerce services , to make sure they don’t have any investments that blow up in their faces. If they find any such ventures, he added, “they will probably retrench. It’s a bottomless pit.”
Charlie Lacefield, who retired from his position as CIO at Midland, Michigan-based Dow Corning Corporation three years ago, warned that although IT innovation is critical for... [continues]
Even great ideas have limits. Following the debut of Enron Corporation’s web based power and gas trading platform, revenue at the Houston-based energy company jumped from $40.1 billion in 1999 to $100.8 billion the following year. But after striking gold by combining its energy industry experience with a world class trading system. Enron (www.enron.com ) kept digging into new markets, convinced that its IT Infrastructure had the Midas touch. In 2000, Enron suffered a $60milliom loss in its broadband business. It struggled in more dozen unfamiliar industries and crushed within a year.
Questionable partnerships, overaggressive investments, and shady accounting practices top a long list of factors in Enron’s downfall. But as they look for lessons from history’s biggest bankruptcy, executives in all industries are questioning whether they, like Enron, spend so much time turning IT into a profit center that they lost sight of their organization’s core missions.
Is it time to go back to the days when IT supported the business rather than become the business? “ I think Enron’s bankruptcy is going to have a very sobering effect on boardrooms across the country,” said Dick Hudson, former CIO of Houston-based oil drilling company Global Marine Inc. and now president of Hudson and Associates, an executive IT consulting firm in Texas. “You can almost see a banker mentally taking hold in the senior suites.”Hudson said he has heard from CEO’s who have been reviewing their risky IT ventures, such as application service provider spin-offs or extraneous e-commerce services , to make sure they don’t have any investments that blow up in their faces. If they find any such ventures, he added, “they will probably retrench. It’s a bottomless pit.”
Charlie Lacefield, who retired from his position as CIO at Midland, Michigan-based Dow Corning Corporation three years ago, warned that although IT innovation is critical for... [continues]
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