Moving IT from a Cost Center to a Profit Center

  • by David Hannon, Contributing Editor
  • January 20, 2012
Management
When the global recession hit full speed in 2008, home construction was near an all-time low in the US. IT staffs at many companies in the hard-hit building materials industry were being slashed as IT projects were put on hold. Learn how one building supply company managed not only to keep its existing IT staff together, but actually to increase the IT organization’s value to the company’s bottom line without increasing its spend.

Pacific Coast Building Products, a manufacturer, distributer, and installer of commercial and residential building products, implemented an SAP system in 2000 in large part to connect its approximately 100 disparate businesses around the western US and Canada. CIO Mike O’Dell explains the SAP implementation came in on time and under budget thanks to a talented and hard-working IT organization. After the implementation, the company set up its SAP team to function as a shared services organization supporting the various businesses of Pacific Coast, implementing new SAP functionality, and supporting users as needed.

When the recession hit in 2008, however, it was fueled by a housing market crash that basically crippled the building supply industry. Pacific Coast was cutting back wherever it could, and, as CIO, O’Dell was getting a lot of pressure to start cutting IT staff, which he dreaded after spending so much time building such a talented team.

“The question became how we could afford to keep the talent we had in light of the dramatic decline in the building materials market,” O’Dell says.  

At the time, O’Dell was serving as chairman of the ASUG user group and was hearing many SAP users say they were struggling with the costs to implement or maintain their ERP systems in the down market. Their IT organizations were being slashed while their executive teams sought more ROI out of their IT investments, but outsourcing SAP services to consulting firms was too expensive in many cases. 


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