Warren Buffet once said, “Price is what you pay. Value is what you get.” With a company that has over five hundred employees, four locations worldwide, and $50 million in annual sales, placing the value on the organization is simple; look at the bottom line and see the profit. This is the situation at Riordan Manufacturing where the price it paid to do business was less than what it made, defining a clear value in what Riordan provides. Riordan’s Sales and Marketing department has a clear value; $50 million is sales to show of it. But how do we show the value for other departments within the organization such as Information Systems (IS) and Information Technology (IT) solutions? While the IS and IT costs and what Riordan pays for it are clear from looking at the financials, the value is not. This brings us to the question of what value does Riordan Manufacturing get out of its IS services and IT department.
This question is the problem that Riordan Manufacturing has had for many years. Recently, Riordan executive management hired a new Chief Information Officer (CIO) to improve its infrastructure and to answer this question. While management wants to use more IS and IT solutions throughout the organization, it has had trouble finding the perfect fit in all aspects of its operations. Even though IS and IT costs have risen, the puzzle pieces still have not come together; the value and benefit has not been clear to the company. As we will see throughout this review, it is time to focus and find the value that technology and information brings to the organization. It is time to find the efficiencies and savings that the company needs to clearly see the value. With Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), or Supply Chain Management (SCM) systems, there has got to be value in the way they are used. There has also got to be value in using outside services such as Application Service Providers (ASPs) than can help realize and utilize the value of these systems. Finding the best way to utilize technology will allow Riordan to find the best value in the IS and IT departments.
Business systems analysis and recommendations
Riordan Manufacturing prides itself on its public reputation as the leading edge manufacturer of plastic injection moldings that is backed by a powerful and innovative research and development team. However, internally, the organization is suffering greatly from severely outdated, labor-intensive, pencil and paper processes in the sales and marketing departments. Additionally, the business processes that are automated are departmentalized suited for the use of a single job function or department. Existing automated processes belong to the finance and accounting department as well as the inventory office of the manufacturing department. There is no connectivity between systems, and worse, attempts to establish communications between similar systems across the organization’s national and multinational locations have been fruitless. It is impossible for organization decision-makers to have a clear idea of the interworking of the organization and its financial health.
Chief Operating Officer (COO), Hugh McCauley, has developed a comprehensive strategic direction for the organization decomposed into individual strategic initiatives and further broken down into various programs that are the responsibility of relevant departmental leaders to accomplish. Riordan’s COO has done an excellent job of initiating a strategic direction and smaller goals to ensure the organization maintains industry leader status, but the missing link that will truly drive each program’s success, is an information technology linkage. To remain ahead of competition and to transform into a more agile organization, it is recommended that Riordan’s management evaluate the benefits of enterprise-wide information systems.