Steel Processor Keeps IT In PerspectiveSteel Processor Keeps IT In Perspective

Ask Worthington Industries Inc. CIO Jonathan Dove about his IT organization, and he'll explain that the company doesn't have one. Instead, he insists the steel-processing company has something different: an information-management organization. OK. But in an industry facing genuine crisis, with prices plummeting and some of its largest players in bankruptcy, can corporate lexicon really be that important?

The problems of the steel industry are precisely why Dove makes the distinction. His group is zeroed in on providing Worthington executives with the data they need--whether it's through a data-warehouse system being developed to deliver better forecasts or a program-management office that prioritizes IT endeavors. "How do we take information and get it to people in a timely fashion for them to make decisions? That's our focus," Dove says. The goal is to keep the technology part of their jobs in perspective. "We look at what information needs to be managed, who it needs to get to, and how frequently it needs to be done," he says. "Technology is the last thing we look at."

The crisis in the steel industry is forcing many companies to change their thinking about IT. Steel prices have been in a free fall; hot-rolled sheet, steel's bellwether commodity product, dropped to a dismal $210 a ton in the fourth quarter of last year, compared with $310 a ton that was typical in the 1990s. Bethlehem Steel Corp., which recently filed for bankruptcy, has rolled its IT department into the business-services division; the company isn't replacing its senior VP and chief of procurement and IT, Thomas Conarty, who retired at the end of last month. Instead, Larry Clees, director of IT who reported to Conarty, now heads IT.

Worthington, in Columbus, Ohio, hasn't emerged unscathed. The company said late last month that it plans to close several plants, but it still managed to increase net income for the second quarter, ending Nov. 30, by 65% over the year-ago quarter, to $11.3 million. A key concern for steel companies is understanding what steel inventory is available and predicting what customers will want so companies don't have excess capacity. With that in mind, Worthington is in the midst of a data-warehousing project for its steel and cylinders businesses that will pull information from multiple systems and put it into an executive decision-making tool, which the company is creating itself. Worthington already has a small data warehouse that collects forecasting, inventory, and sales information. The goal is to add information from financial and capacity-planning systems, improving the company's ability to anticipate customer demand. Having the information in a single location will help executives spot and report trends.

Worthington is also implementing a Web architecture it developed last year with the help of IBM. The architecture has enhanced the company's E-business capability by providing reusable project modules that save time and money when extending its online system from one product line to another. Worthington will also likely slow down technology-intensive projects such as software upgrades in favor of ones that directly serve the customer; for example, if a customer wants to use a certain type of EDI to do business with Worthington, that would take priority.

The pressure to limit spending is greater today, but it's not new to Dove, who joined Worthington three years ago as CIO. CEO John McConnell set out two simple edicts from day one: Launch only those projects that add value to the business, and keep all projects on budget and on schedule. To do that, Worthington relies on a program-management office that Dove created.

Each project gets its own charter that lays out several key steps: defining business benefits, identifying start and end times, and establishing project phases and their estimated cost for the next 18 months. A charter needs approval from a business-unit sponsor and Dove before it's included in the road map, a chart of all the IT projects planned for each business unit. The process has worked well enough in IT that it's being used to coordinate projects in other business groups, such as purchasing.

To keep technology focused on the most pressing business needs, Dove meets weekly with the information director of each business unit. He also meets each month with the chief operating officer to discuss the status of projects. "We run a very tight ship," Dove says. In an industry that's taking on water fast, that's how Worthington plans to stay afloat.