SAPPHIRE '09: Experts attempt to dispel stereotypes about the battles that rage over technology-purchasing decisions.
Posted May 20, 2009
ORLANDO, FLA. — A common fight occurring in many organizations today is between the chief financial officer (CFO) and chief information officer (CIO), each of whom wants the best for the organization -- but in very different ways. In an all-too-familiar scenario, the two often clash over technology investments. At this year's SAPPHIRE, SAP's annual user conference -- where the vendor repeatedly hammered home the theme of "clarity" -- a roundtable discussion for industry analysts and press attempted to deliver some of that clarity to the age-old conflict between CFO and CIO.
Panel members included:
- Erik Brynjolfsson, professor at the MIT Sloan School of Business;
- Abbe Mulders, CIO of Dow Corning; and
- Bill McDermott, president of Global Field Operations for SAP.
[Editors' Note: For more of Christopher Musico's coverage from SAPPHIRE '09, see his earlier destinationCRM.com news stories here, and here, and his blogposts here and here.]
To set up the discussion, Brynjolfsson explained the nature of his recent research, examining the correlation between investments in technology and productivity/performance. For too long, he said, the underlying assumption was that companies were more productive because they of the technology they decided to purchase. However, by utilizing data shared by SAP regarding investments in enterprise resource planning and CRM initiatives, Brynjolfsson was able to determine that the decision to purchase does not correlate with productivity.
The typical ERP deployment takes approximately two years to go live, he said. According to his data, improvements in production typically wouldn't begin until after those two years, and massive improvements might take an additional four to five years.
The moral of the story, he said, is that mere investment in technology isn't the key -- actually going through with implementiation is what will drive productivity. "That then starts the virtuous cycle," he said. "As companies recognize they are realizing an increase in performance, they will buy more modules. Performance then correlates with investments."
Echoing the findings with actual business experience, Mulders said that her company decided to implement a single global instance of SAP across its 70 sites in 35 countries. "Once you get through the two-year post-implementation, the productivity really takes shape," she said. "Then we were able to increase our investments."
McDermott explained that companies should utilize technology to help drive strategy, especially in a down economy. "If you can't answer what the value is to your investment, then it's not relevant," he said. To that end, McDermott identified four business areas executives care about most:
- cash and liquidity;
- retaining customers;
- keeping top employee talent; and
- supply chain optimization.
The question was then raised as to why -- given the plethora of published academic reports and customer success stories -- there are still arguments about not investing in technology. "I'm not surprised it's still debated," Brynjolfsson said. "Lots of applications still fail.… Many companies want to compress the implementation cycle in the short term, which will hurt in the long term and perpetuate a vicious cycle."
The flaws in the process can be tied back to the role of the CIO in the company, McDermott said. "How many boardrooms have the CIO at the table when talking strategy?" he asked. "The companies that get it have the CIO there."
The panel also discussed how CFOs are generally looking to green-light investments with an immediate return on investment, while chief executive officers (CEOs) want a clear enterprise that works in harmony. Regardless of the established chain of command -- whether the CIO reports to the CEO or CFO -- at the end of the day, Mulder said, it's "the inherent duty of the CIO to build the relevant relationships with all of the executives at the company."
McDermott agreed. "The CIO has to talk business language, compose ideas, and [display] acumen around business outcomes," he said.
News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.
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