Sunday, October 17, 2004
CIOs spend a lot of time thinking about how to implement new applications. Maybe they should spend more time thinking about how to get rid of some of them.
Larry Dignan, writing for Baseline, talks about the trend for companies to save money and simplify IT operations by reducing the number of software applications.
Companies are increasingly getting the message.Dignan also points out the obstacles that CIOs face in eliminating, or consolidating, applications.
At 3M, Jerry Erickson, vice president for applications, says he expects his company's effort to clean house will reduce an incalculable number of applications in use "by a factor of 5.'' If successful, 3M's cost of sales will decline by 1 percent or more. That's $92.8 million out of the company's current $9.3 billion in cost of sales. Add it up, and 3M could potentially boost its net income of $2.40 billion by 3.9 percent.
- General Motors has cut its mission-critical applications—systems that would hinder GM if they went down—from 7,000 in 1996 to just over 3,000 today. The company doesn't break out direct savings from the consolidation, but it's no coincidence that GM's information-technology budget has been driven down, from $4 billion to $3 billion over the same period.
- Hewlett-Packard intends to slash its enterprise resource planning systems from 21 to four. HP reckons it can cut total applications from 3,500 to 1,500. The consolidation effort is part of a plan to save $1 billion a year in overall operating costs.
- Boeing went from 4,500 applications in 2000 to 3,500 today, and its official target is 500. Chief information officer Scott Griffin says fewer programs will raise productivity, helping the company launch new products and services faster.
Call it system elimination, consolidation, decommissioning, or retirement. Whatever the name, CIOs are finding that less can be better.