INFORMATION TECHNOLOGY
By: Madeline Bayliss
Technology keeps surprising us. Remember the cartoon family, the Jetsons? We used to think a lot of that world was going to be in our future. Except that part about cooking a complete meal in two seconds. Now, decades later, that’s the one thing we got!
Steve Sashihara is constantly making sense of projections. As CEO of Princeton Consultants, an information technology and management consulting firm based in the town of the same name, he has often seen information technology become something different than what the innovations first suggested.
"After years of bringing great technology to companies, we had to ask why that great technology didn’t determine if a project were successful," he recollected. "What we found is that success was random. There was another variable that had to be present."
Four variables, in fact, were found to be critical to success: strategy, process, organization and technology. Furthermore, the ability to deliver results rapidly was directly related to the impact, cost effectiveness and quality of the project.
So how are companies using technology today? The economic condition is the key driver, according to Mr. Sashihara.
"There are two different modes for company strategies: growth and pain," he explained. "In today’s pain they are looking for immediate medicine to reduce costs and increase productivity. They have done the obvious with big cuts now they have to consider the radical."
Headlines bear out his observations. No less than 31 large U.S. companies announced job cutbacks in January, the largest being Kmart’s 37,000 cuts. There was actually a gain in overall jobs in the economy in the same month, but the individual company announcements and impact on specific communities seemed to overshadow the bottom line number.
Business Week reported in its Feb. 10 issue that most of the business community was cutting costs to improve profitability, including job eliminations, controlled capital spending and lean inventory management.
The radical next steps that Mr. Sashihara sees some companies taking go right to the core of their businesses.
"A lot of technology is so far removed from operations," he said, "that it takes a leap of faith whether it will have any impact. Companies need to ask what is the essence of what they do, then find ways technology can make that process smarter in order to differentiate from the competition.
"That will drive revenue, not just costs."
Mr. Sashihara believes this line of thinking brings companies to realize that optimizing fixed assets not rightsizing headcount is opportune for finding competitive advantages.
One example is a major newspaper experiencing declining advertising revenue in the face of increasingly complex demands. Colors, specific page placements, long-term advertising campaign commitments and page layouts all have a direct impact on the physical printing plant. Giving a client an answer to a requested media placement and knowing whether that is a profitable decision involves a complex analysis that requires time.
Time is not something clients want to give. Without prompt responses, publications are losing sales to other venues. With hasty responses, there is the risk of badly priced business or commitments that the physical plant might not accommodate.
Using optimizing simulation based on work by another Princeton-based expert, Professor Warren Powell of Princeton University, Mr. Sashihara’s firm developed a program to make these decisions real-time. "By being able to say yes to a client with fast and accurate answers when everyone is hungry for business, you change the business model in a profitable way," Mr. Sashihara said.
He also pointed out how the technology was applied at a strategic and tactical level.
"The company already had an operational system for page layouts, but they couldn’t answer the tactical question, ‘Do I want this job?’ In order to answer that question, they had to be able to consider how that commitment could affect the capital equipment needed for production in the near and long term, and what that cost might do to pricing."
Using a company’s primary assets most effectively, according to Mr. Sashihara, is "the heart of the lever to improve company profitability."
Sometimes that refers to the human assets as well. Cutting additional positions or looking for incremental productivity may not add a lot of dollars to the bottom line. Mr. Sashihara sees greater impact in taking processes that are core to the business and applying technology, both to the repetitive nature of those functions and to the decision-making.
"Technology can make better decisions than people with basic rules," he said.
Mr. Sashihara sees larger companies not only as the ones who can afford these more sophisticated technologies, but also as the ones that need them the most.
"Big guys leave a lot on the table, creating opportunity for smaller firms to fight back. But if successful, the small companies become big and face the same issues," he said.
He sees consolidation as inevitable as companies succeed and grow, but notes that often that results in failures at the customer level. "There’s often less and worse service. We end up with fewer choices and often more bland ones" as companies tap the economy of scale.
Smart technology is being deployed now to counter this trend and enable companies to leverage their assets for micro markets. Mr. Sashihara commented that the Japanese economy is pointed in this direction as it emerges from severe economic conditions. He cited Honda’s initiative to allow for personalized specification of car features, a reverse of the trend to standardize and limit car models for more efficient production.
What is the next view of the future for Mr. Sashihara?
"The future that lives up to the picture we have today is a world that continues to be transformed by the intervention of the Internet. The World Wide Web may be the change of the century. Going forward, I think of the advice I would give to my high school son on where to target a career. In the movie, The Graduate, the answer was ‘plastics.’ Now I would tell him the place to go is ‘human health’ and the potential for customized medicines for each person."