In order to turn around the profits plummet of Frito-Lay, Inc and react rapidly to changing market conditions, Jordan reexamined and reaffirmed the business strategy with the implementation of the handheld computer (HHC) and information systems to support managerial decision-making and operations.
Jordan・s actions between 1987-1989
Jordan・s actions between 1987-1989 involved two interrelated efforts with the help of HHC and information systems: the integrating, streamlining, and time-synchronizing operating processes across functional areas, and the development of integrated infrastructure. The evaluation of these actions was based on seven criteria as following sections.
Were the actions clearly linked to business strategy?
According to the Categories of Strategic Relevance and Impact (Applegate et al, 1999), Frito-Lay was under Strategic category as information technology was essential for executing current strategies/operations, while information technology applications in development was crucial to meet its intense competitive environment.
Jordan had a vision of the strategic direction and recognized that a clear business strategy was important to identify information system requirements. He first reaffirmed the micro-marketing strategy and realigned this strategy as ．corporate-wide initiative・ through centralized control with the flexibility of decentralized structure. Jordan also recognized that information was critical to support its business structure and strategy. He then led the company to build the organizational and information infrastructure, which was acted as the integral part of business planning. This initial step was effective but would require considerable information technology planning and close organizational relationship within the company.
Were there any conflicting requirements?
Definitely, different managers had different perceptions of what a system was to be used for. However, Jordan was able to align the focus of different functional areas to a common goal and the managers were aware of the challenges of managing a business rather than a function. This reduced the possibly conflicting requirements among functions.
Was the project management effective?
To be effective, the information projects required input from a wide range of people across the organization. The field sales organization concentrated its efforts on redesigning its work processes and improving productivity, which were inextricably linked to the implementation of HHC. The LA region served as a prototype site and pilot-tested the use of the HHC, redesigned the sales process to achieve maximum productivity and effectiveness, and defined the information and reports that the sales force and its supervisors would need from the system. The contributions from all levels provided necessary information to the effectiveness of the project.
Were there well-defined roles for project partners?
Ill-defined roles for project partners might lead to gaps or duplication of effort, and eventually led to the failure of information system. Hence, the partnership of three constituencies was essential (Figure 2).
The general management ensured appropriate structures, systems, and management processes were in place to meet the overall needs of the organization. The HHC project was jointly managed by the management information systems (MIS) and the field sales organization. Their roles and expectations were clearly defined. The MIS provided a pool of technical skills that could be developed and deployed to solve complex problems facing the firm. For example, the new technologies and massive redesign of technology infrastructure was one big challenge for MIS. The field sales assumed responsibility for business activities that the systems supported because the HHC was designed to change the sales process.
Was there technical specification and were the developers experienced?
There was insufficient information in these two areas. However, the targeted productivity and quality initiatives had returned the company to its former profitability level after the implementation of the project, it seemed that the technical specification was effective with the supervision from the experienced developers.
Were the benefits clearly established?
Jordan recognized that benefits from information systems were very difficult to establish. According to Applegate et al (1999), ．IT can no longer be considered an expense; instead, we must think of IT as a string of value-creating investments that deliver value today and in the future・. Using the value-based approach, Frito-lay was able to achieve several benefits:
Category I: Platform improvement with the ability to share information, communicate, coordinate, and control activities inside the organization. By late 1988, savings from better control of stales alone were more than $40 million per year. The number of distribution centers was cut by 10%. The number of sales people was cut by 600, and even with a leaner sales force, revenues from domestic retail sales increased to $4.2 billion. The company estimated that the system saved 30,000 to 50,000 hours of paperwork per year.
Category III: Commerce with improvement in core operating activities inside the company such as the trimester planning process, CAPS, Breakfast Club, Promotion Direct Delivery (PDD) and Total Direct Delivery (TDD), etc.
Category IV: Content with improvement in decision-making and enhance organizational learning. For example, managers learnt to change their roles and were aware of the challenges of managing a business rather than a function. Internal and external information were available at any time for decision-making.
All the benefits were clearly established with the micro-marketing strategy. However, there was also cost from the project, of which information was the biggest liabilities in Frito-Lay due to information overloaded for proper decision-making.
Jordan adopted micro-marketing strategy and attempted to shift the company toward distribution structure to face the challenge in the information age. This required effective and efficient use of resources such as vertical and lateral information sharing for accurate and immediate decision-making. Employees were required to have high levels of commitment and motivation to become an active player in defining and managing information. While organization was structured as a matrix of autonomous, inter-functional teams; commitment, collaboration, and resulted both centralized and decentralized information technology resources and control.
According to Nolan・s Stages of Growth Model (Warwick IMS study notes, 2002), the ultimate advantage of such move towards mature stage was that information would be recognized as being capable of providing competitive advantage in its own right.
What would you have done differently?
The approach would be more or less similar to Jordan, except clearly defined the information use at different levels. For example, the senior management would need both internal and external source of information for strategic planning purpose, while the operational level would need real-time and accurate information for immediate use. This might reduce the problem of information overloaded.
Applegate, Lynda M; McFarlan, F Warren and McKenney, James L (1999), Corporate Information Systems Management, 5th Edition, Irwin McGraw-Hill, MA
Laudon, Kenneth C and Laudon, Jane P (1998), Management Information Systems: New Approaches to Organization & Technology, 5th edition, Prentice-Hall, New Jersey
Warwick IMS Study Notes (2002), University of Warwick.
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