What is the key lesson we should take away from this recession?
I have been through three downturns in addition to our current recession; the first at GE, then at AT&T and Coca-Cola. What I'm doing today as CIO at Whirlpool is exactly the same thing I did in those situations. That is, achieving sustainable cost reduction by focusing on fundamentals.
Companies that are struggling the most to recover lack a clearly defined strategy that included cost optimisation. Hence, when the need to reduce expenses hit, they were forced to reactively rip out costs. When I arrived in 2007, the fundamentals weren't in place to provide a solid foundation. Our spending was up to 20 per cent higher than needed, we had far too many suppliers and few of the projects we were working hard to implement were strategically aligned to business direction or delivering the highest RoI. We needed solid financial management and governance processes to improve. This downturn gave urgency to our goal of achieving sustainable cost takeout in IT, which helped to accelerate our overall strategy.
We've spent two years building the IT organisation's operational routines and capabilities such as portfolio, program and financial management and globally integrating the organisation. With portfolio management and governance, we whittled down hundreds of projects to 20 to 30 strategic programs aligned with the business. Through our strategic partnerships with IBM (IBM), AT&T and others, we increased our capacity and scalability. This has added up to more than 28 per cent in annual cost reductions.
We're still investing in the IT organisation. We are selectively hiring and have continued professional development, including performance management, career development and more new technology training than we have had in the past. When the economy improves, people will remember that we've invested in them during the down times.
We haven't stopped investing in innovation, either. Part of our strategy road map is to support the return of growth. We are implementing platforms that provide an integrated supply chain and that allow us to manage consumer needs through a comprehensive online strategy.
When the economy rebounds, the companies that will win are the ones that have a foundation that enables sustainable cost takeout, that continue to focus on customer loyalty and that have a road map that supports business value creation.
About the author:
Kevin Summers is corporate VP and global CIO at Whirlpool, and he is a member of the CIO Executive Council. E-mail mentor topics to [email protected]
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