Thursday, April 09, 2015

Counting on IT to Deliver Top Investment Returns

Jason Ringgenberg arrived at YRC Worldwide in April of 2014, after the company’s latest debt restructuring and union labor agreement. So, unlike his fellow executives who report directly to CFO Jamie Pierson, all he knows about the worst of the company’s financial woes is what he’s heard.

Ringgenberg is distinct from his counterparts in another way: he’s not a finance executive, but rather YRC’s chief information officer. He came on board at an opportune time for a CIO, in that the company was looking to technology to reap top returns on its discretionary investment dollars.

With YRC still sitting on a debt load of more than $1 billion and interest payments topping $100 million a year, it might seem that continuing to retire that debt would be of paramount importance. But small-dollar investments, especially technology-oriented ones, can generate a far better return.

For example, the company invested about $3.7 million in 2014 on dimensioners, which use laser technology to precisely measure freight in order to make sure YRC gets fully paid for its services. That investment will be fully recouped this year, company officials say, and will generate millions in incremental revenue each year going forward. If that $3.7 million had been used to reduce debt, the impact on annual interest expense would have been, figuratively, pennies.

Full story here....

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