Paper forms maker slashes $15M from IT budget
As part of a corporatewide effort to revive itself financially, business forms vendor Moore Corp. yesterday announced that it will slash $15 million from its IT budget over the next 18 months.
The aim is to better track Moore's IT investment dollars. New company president and CEO Robert Burton, who took over in December, said in a statement that the IT cuts will be made in areas where "we have historically made investments without a clear understanding of how the technology was intended to support our core business."
The struggling Toronto-based company recently completed a review of its infrastructure across its seven divisions and will implement the IT cuts amid an overall $100 million corporate fat-trimming plan Burton presented last month.
As part of the new strategy, Robert Sell, a former vice president and CIO at Brunswick Corp. in Lake Forest, Ill., has been hired as Moore's new CIO. Sell replaces Robert Jones, who has left the company.
Moore spokesman Stephen Forbes today said the IT spending cutback is being made because the new management team found that the company's seven divisions had worked separately for years without any kind of overall IT plan.
"Instead of the seven divisions working as one, they worked independently," Forbes said. "They didn't work well together." That will be changing as part of an overall IT strategy being eyed by Burton and Sell, he said.
"We weren't getting the optimum use from our systems," Forbes said.
Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Daly City, Calif., said Moore's strategy to cut back on its IT spending and give itself time to see what it has to show for its investment so far is a good idea.
"I think that Moore may be a bellwether of sanity, in terms of IT," Greenbaum said. "I frankly give them a little credit for honesty."
Greenbaum said he doesn't think a $15 million cut will be debilitating, since it probably isn't a huge slice of the overall IT budget. The company didn't release the size of its total IT budget by press time.
Many companies make IT systems purchases that turn out not to improve their operations, and then push them aside later to make room for something else, Greenbaum said. "The shelfware problem is bigger than anyone likes to admit," he said.
Last week, Moore announced that it would cut 400 jobs in its North American forms and labels operations division, saving another $20 million. All of the changes, including Burton's appointment as CEO, follow a December agreement under which Moore received $70.5 million in debt financing from an investment firm that could eventually take a 19.7% stake in the company.
Burton is one of the investors in New York-based Chancery Lane/GSC Investors L.P., the firm that provided the funding to Moore. The company sought the new financing and the management help after reporting a net loss of $19.3 million on revenue of $1.68 billion during the first three quarters of last year.