How a Latecomer Company Used IT to Redeploy Slack Resources

Latecomer companies are those that have been slow in adopting modern enterprise systems. A key feature of latecomer companies is that they have been automating operations and digitizing administrative processes but their efforts have generally been local and segmented, which limits information exchange and makes resource coordination across business units difficult. As a result, slack resources emerge—i.e., the resources available in a company exceed the demands. Some slack resources are digital, such as computing power and storage, while others are non-digital, such as financial capital, production facilities and material inventories. An important role of CIOs of in latecomer companies is to redeploy slack resources into productive use. Modern enterprise systems, such as ERP, play an important role in redeploying slack resources. A company with excess material inventories cannot do anything with the slack unless it is able to determine the exact demands for the materials and identify the slack components. Because the need for materials is affected by sales and production plans, slack discovery requires integration across sales, production and procurement. Modern enterprise systems are designed to provide exactly this type of cross-functional integration. The full article describes an in-depth case study of a latecomer—XCMG, the largest construction machinery manufacturer in China. XCMG has five major established subsidiaries: hoisting machinery, bulldozers, road machinery, excavators and concrete machinery. It also has newer subsidiaries specializing in products such as sanitary machinery and fire-fighting machinery. Based on the SAP ERP-based digital transformation completed by XCMG, we have derived a four-phase process model of IT-enabled slack redeployment.