Money won't be easy to come by in the next 12 months. Tech projects underwent significant scrutiny during the last budget-analysis cycle, and short-term return on investment remains critical at many companies. Successful projects depend on workers understanding why they have an IT tool and being able to do their jobs better because of it, says Keith Morrow, VP of IS and CIO of convenience-store chain 7-Eleven Inc. "For us, it all boils down to, does it make our stores easier to run or does it add pain? That's the filter through which everything must pass."
Morrow has been known to fight against IT initiatives he doesn't think will provide adequate return on investment within a reasonable time frame, especially ones trying to patch-fix a broken process or get too far ahead of unproven technology. For instance, Morrow supports 7-Eleven's research and testing efforts in radio-frequency identification technology. But he's not ready to go beyond that. "I'm dead set against plunking down a significantly large investment on unproven and untested technology and perpetrating it on our stores," he says.
Morrow says 7-Eleven believes RFID--using tags that emit radio signals to track goods in the supply chain--will be an important technology, but as a retailer where inventory distribution to individual stores is generally completed on a single-item basis, costs associated with the technology are still too high for full-scale implementation. Instead, the retailer plans to continue budgeting for proof-of-concept initiatives around RFID, he says.
Overall, 7-Eleven's IT spending has remained fairly constant the past few years and will be flat again in 2004, Morrow says. The company has held the line by requiring managers to justify their projects and operations each year. "We build up the budget from a blank sheet of paper. Nothing in technology, in my view, should ever be static," he says.
Henkel Group, maker of Duck brand duct tape and other adhesives, has increased its IT budget slightly over the past few years, says VP of operations Gene Obrock. Henkel is trying to gain a competitive advantage by investing in technology rather than adding staff, which increases overhead expenses. "We'd rather invest in technology versus people," Obrock says.
