Carpenter Technology, a $977 million maker of specialty alloys, has been on a cost-cutting binge. Information technology has not escaped the ax. As CIO since April 2002, Scott has reduced spending while hammering out a proposal for an enterprise resource planning system to replace a patchwork of applications.
Q. What metrics do you use to evaluate your results?
A. It’s been very simple this past year; I’ve used cost reduction. With the help of many others, I have reduced our costs around 30% from $22 million—that’s not total I.T. spending for the corporation, but that’s what I have. And it will come in somewhere under $15 million.
Q. What does that represent?
A. I’ve reduced labor 50% [to 60 employees from about 120]. The other big component was renegotiating maintenance contracts. We’ve also improved on our management of outside resources—our help desk and server management.
Q. How did you decide on those cuts?
A. First, we assessed the applications and infrastructure portfolios, and came up with a series of projects that we’re proposing to senior management. It’s essentially an overhaul of both of those areas. So we significantly tightened down on the amount we’re spending on the current portfolio in anticipation of reinvestment.
Q. What are your plans to overhaul systems?
A. We’re evaluating ERP [enterprise resource planning] solutions. Instead of having separate applications with separate databases, and in many cases separate infrastructures, we’d have a centralized database—one large integrated package that can handle most of our needs.
Q. Where do you begin?
A. We’re suggesting we start with financials, procurement and HR [human resources]. We’d then move to the front end, or the order entry. The third phase would be planning and scheduling. We’re proposing phases to mitigate the risk associated with a big-bang implementation. I want to have a manageable scope, attempt to pay as we go, capture the benefits after each phase as best as we can and minimize the impact of change on the organization.
Q. What benefits do you hope to realize?
A. For example, reducing the time to close the books every month. It will take less labor. Then the question is, do you redeploy people? In our case, we’ve had a fair number of labor reductions. We have a very thin staff. So our plan probably will be to redeploy people to higher value types of jobs such as financial analysis.
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