EBIT = Earnings Before IT

Thoroughly enjoyed the Christmas User Group and drinkies at one of our partners this week. They produce a fantastic process mapping and modelling suite that just goes from strength to strength - some very smart guys. This tool is becoming pivotal in how some of our clients approach their business improvement and I will elaborate a bit more another time.

One of the team was regaling us with stories from a previous job in the retail space - he had a client that referred to EBIT as Earnings before IT. Before IT they opened the shipping container, counted up what was in there, shipped to the stores, put a price tag on it and sold it - easy, cheap, very profitable.

Then they grew beyond the "mom and pop" size and started installing technology driven systems - and this is where they claimed their problems started. The system demanded that you receipted the container contents based on what was ordered and what was on the bill of lading. Unfortunately most of the suppliers were shipping from China where the main aim was to fill the container and get it off the dock rather than worry about little things like PO details.

In the old days, the retailer didn't really care what arrived as long as the container was full and on time (DFOT rather than DIFOT!), but "IT" didn't like this - if the order says "100 widgets" and the bill of lading says "100 widgets" then there better be "100 widgets" or we have an exception situation. Up went the costs, down went the profits - "bring back the Earnings Before IT".

We all shook our heads and had a good laugh - but it is a salient point to remember - don't try to lock down the business rules around what "should" be if the business doesn't really aspire to live to those rules in the first place.