Johnston & Johnston

As of 2006, the reporting structure for Johnston and Johnston for the IT department was non-existent. The company ran orders through different departments who were pricing orders with discounts based on their own decisioning process. This was costing the company money. There was no streamline vendor sales process in place, so the company seemed to be losing money due to inconsistency in the sales process and how the sales reporting was being reported.

The CFO mentioned that the company had recently, 150 ERP systems. Maintaining an ERP system is expensive, so 150 ERP systems would be a cost that Johnston and Johnston could benefit from streamlining. In reviewing these ERP systems, Johnston and Johnston needs to consider a way to implement one ERP system that spans across the company.

By having a system that communicates to all segments of the business, an employee in one department could conceptually pull reporting for all segments of the business through a single request. Sales reporting could be centralized and sent through one system. Sales processes and pricing could be managed more efficiently. The reduction of ERP management would cut costs immediately, create a centralized reporting process which all employees could understand and utilize and this could unite the company into a uniform reporting structure.

Johnston and Johnston is a company that is international in 57 countries, 250 operating companies, 90,000 employees and $638 billion in annual sales. Managing anything would be a huge task. With any big company, there needs to be a process in place for decisions and approvals to be made. Considering Johnston and Johnston’s size, it is essential not to manage every project cost, but have cost level approvals in place that occurs as there are thousands of decisions a day being made about project costs so the opportunity for loses and budget surges is a huge risk to the companies bottom line. However, low cost approvals shouldn’t require too much decisioning as that will cause redundancy and slow the efficiency of the decision process.

Due to the size of Johnston and Johnston, there needs to be a reporting structure in place for different levels of project costs approvals. Strong local control is essential as mentioned in the case study by LaVerne, “strong local control is more agile and responsive, since we’re not making our subsidiaries check with a lot of people and jump through hoops before they make decisions and choose technology.” Strong local control also allows line managers and supervisors to eliminate the duplicity of decision making for higher management. Line managers and supervisors who are provided with control that is managed by a company governance policy can make decisions at their level which would eliminate upper management review an also provide quick processing for sales and management decisions.

Having a tier management decision process in place also improves the moral of the company and creates synergy. If managers are allowed to manage at their levels, make decisions, they are more likely to take on ownership and manage more effectively as they are connected to the decision process. Decisions can be made quickly for small approvals and larger approvals can be managed through a governance decision approval process that would implement specific price levels for approvals.

The IT segment of Johnston and Johnston needs to be organized better from the bottom to the top. As of 2006, there is not accountability to the CIO. With the absence of a strong CIO making decisions and reporting the management of the IT segment, the IT segment is without a voice and accountability at a high level. In order to manage the IT segment better, there needs to be a leader, someone who provides that segment with vision but also manages the