The CIO is Trapped Between the CEO Wanting Innovation and the CFO Needing Compliance

Andy Mulholland, CTO, Capgemini

I have covered a lot of ground in recent blogs around the topic of exactly what innovation means to the business in terms of 'innovating' its business model to service customers and markets in new ways. This links to new technologies being used for the new purposes with new deployment models and how in turn these differences are difficult to relate to existing IT demands, capabilities and responsibilities. All of which leads to the big questions of exactly who will — and how they will — manage this to ensure a successful enterprise able to leverage local, or decentralized, 'edge-based' market innovative activities with centralized, compliant enterprise operations using classic IT under the control of the CIO.

There are some wonderful, and frightening, business stories around describing so called 'agile' enterprises where 'agility' and 'innovation' are in their DNA, and some serious management views such as 'the rise of un-organizations' , but these must be the exceptions. Most organizations are looking at a very dangerous situation where even if they turn a blind eye to edge-based activities by business managers around opportunities that don't need to be integrated to, or delivered from, core enterprise IT there are still two obvious big issues that will inevitably end up damaging the enterprise.

The first is a loss of leverage from the overall strength of the enterprise in terms of experience and knowledge. A successful move in one area won't be recognized and rapidly implemented in other areas to multiply the benefits, or worse unsuccessful ideas will get repeated adding to the cost and time wasted. That's where the need to really address the combination of social networking, collaboration, knowledge management and business information is required, and yes, it is a radical task, and yes, currently it is a battle between centralized traditional management and new younger business managers, but it's key! Increasingly, this seems to be under the label of Social CRM, with the recognition that this is all about the radical impact of technology on the front office which was relatively not addressed by the enterprise IT era and its focus on back office centralization and automation.

After a tough economic period with revenue under threat, or even dropping, this now has the CEO's attention as the new way to address markets, introduce new revenue-generating services, and may even start whole new business units. Naturally, these initiatives enjoy the CEO's support and blessing, and if the IT department is holding them back, then use other means to make it happen.

Contrast this with the second issue that this introduces; the need for integration with, and visibility of, processes to understand exactly how the enterprise functions and delivers on its policies, which of course comes back to a very important part of a CFO's responsibilities. What we are in fact talking about should perhaps be termed the extension of the existing processes into the new front office activities, and even more importantly the contextual understanding of who owns and uses what data and information in what way given its possible acceptance into enterprise data ownership. Not a small point, and not unsurprisingly one that the audit partnerships are very interested in, and thus the CFO has to be interested in too. PricewaterhouseCoopers has a very interesting area on its web site devoted to this topic with some good material including a specific post on how the CIO must play a new and central role in all of this to ensure that there is clear ownership.

The problem is nobody offers a real solution as to how will the CIO know who is doing what where and for what result in order to be able to fulfil this new set of responsibilities. We have been thinking and working on this at Capgemini over the last six months to try to come up with a real way of addressing this very different world. We have called it 'Innovation by a managed set of services'. It has two key elements; first, enablement, but enabling and implementing in a cohesive manner to ensure core policies and integrations are maintained; second, centralized reporting on the distributed innovation activities, including planned benefit cases, progress and actual benefits achieved.

We offer a framework contract through which any business manager in the enterprise can get immediate support for their requirement, whatever the skills or size, in a responsible manner with lower procurement risks and costs than their individual contracting, plus a solution that will be safe. Unlike a business transformation with one big program, one set of clearly defined requirements, and appropriate project management, this approach is flexible and maximizes the use of Capgemini's wide ranging skills and experience to handle requirements that will be new to the enterprise's own team. And, of course, it offers the additional benefit of centralized reporting to the CIO in order to cover their responsibilities.

We think it's an important practical step in achieving both the CEO's and the CFO's ambitions and responsibilities, but feedback is always welcome!