Friday, October 28, 2011

How to Become a Chief Innovation Officer

I had a real treat this week: I was invited to give a presentation to 25 CIOs at Infor's European CIO Advisory Council meeting, in Maranello, Italy. If you are not familiar with Maranello, it's famous as the town of the headquarters of Ferrari, which is an Infor customer. More on Ferrari at the end of this post.

Infor's Integration Strategy

The event was kicked off by Infor's CEO, Charles Phillips, who came into the top job last December, from his previous position as Oracle's co-President. It was a good opportunity for me to see how Charles deals up close with Infor customers, some of whom were meeting him here for the first time. Charles demonstrated a detailed knowledge of Infor's product portfolio and an ability to outline complex product strategy in business terms.

To that point, Charles gave the best explanation I've heard to date on Infor's integration strategy. Infor's Intelligent and Open Network (ION) is a lightweight middleware product that provides integration between various Infor products, between those products and third-party applications, and between those products and customer/partner developed systems. It is "lightweight" in that it is not optimized for specific transactions or point-to-point integration. Rather each application publishes a complete XML document for each transaction (e.g. a sales order), to which other ION-aware applications can subscribe asynchronously. ION stores all XML documents in a business vault, for reporting purposes and, I assume, to satisfy any regulatory compliance needs for audit trails.

According to Charles, ION is not appropriate for every application (e.g. an equities trading platform requiring subsecond response time would not be a fit), but it meets the need in a simple way for enterprise business applications, such as ERP, CRM and supply chain management. Infor is now in the process of ION-enabling each of its products for approximately 93 business transactions.

The best part is that ION ships as just three CDs, which, according to Infor, can be installed in about 10 minutes.

Infor's Challenge

So are all Infor customers ready to move forward with ION? Not quite. From group discussions and hallway conversations, it is clear that Infor's challenge is to get customers to current releases of their Infor products, where they can take advantages of Infor's new capabilities.

To be fair, this problem is not unique to Infor but common to all enterprise software vendors with large and long-standing installed bases. Many customers purchased their ERP systems years ago, and for good and not-so-good reasons they may have made hundreds or thousands of code modifications. Although they may have seemed justified at the time, these modifications now make it nearly impossible for customers to upgrade. In successful case studies mentioned by Infor executives, the only thing that seems to work is to take a clean-sheet-of-paper approach: put the latest software version in front of users in a conference room pilot and ask, "What's missing?" If you start with the assumption that each previous modification is still needed, the whole project collapses under its own weight.

How to Become a Chief Innovation Officer

This background turned out to be a good set-up for my presentation. I shared that the job of the CIO is becoming more difficult. CIO budget increases in most companies are severely limited, while at the same time CIOs are being asked to do more: support business change (which is increasing) as well as new technology innovations, such as mobile applications, business intelligence, new customer-facing systems, and social business.

The risk for CIOs under these pressures is that they may become, essentially, irrelevant. According to our research at Computer Economics, 75% of CIO budgets go toward ongoing support, leaving only 25% for innovation. With limited time and money, the CIO is forced to defer many business requests for new initiatives, and when users can't get what they need from the CIO, they begin to develop their own systems and IT capabilities. Eventually, the business stops asking the CIO for new stuff, and the CIO slowly becomes just a "Chief Infrastructure Officer," maintaining existing systems.

In such an environment, how can the CIO grow into a "Chief Innovation Officer?" I outlined the key steps.
  1. Optimize the Infrastructure. The first step is to lower on-going support costs to free up money for innovation. Understand your current cost structure and where there are opportunities to upgrade and consolidate the infrastructure and applications portfolio. Adopt key IT management best practices for incident management, problem management, and change management, which further lower costs and improve service levels. Cloud computing can also play a role here as a way of quickly rolling out new systems that build upon the organization's core transactional processing systems.
  2. Become a Chief Integration Officer and Chief Intelligence Officer. Once the infrastructure has been optimized, the CIO now has the credibility and ability to expand his or her role to become a Chief Integration Officer (focused on end-to-end business processes and customer/supplier integration) as well as a Chief Intelligence Officer (focused on turning internal and external data into useful information and deploying it to the organization through a variety of channels).
  3. Become a Chief Innovation Officer. The CIO is now not only reacting to and supporting the business strategy but also leading the business into new IT-enabled products and services.
I finished with a warning. Becoming a Chief Innovation Officer is not a one-time promotion. Today's innovation becomes tomorrow's infrastructure. Just as personal computers and email were once seen as innovations in IT, today they are just part of the infrastructure. Any CIO today who is focused on PC maintenance or email administration risks becoming irrelevant. So also, tomorrow, mobile applications, tablet computing, and business intelligence will become commonplace as elements of tomorrow's infrastructure. The CIO's challenge is to continually learn and grow.

The Need for Speed

Our two days together were not all work and no play. As part of the event festivities, Infor arranged a tour of the Ferrari Museum and a Ferrari test drive around Maranello for all the attendees. I put together a little video of my Ferrari driving experience, which you can view below.

Disclosure: Infor paid for my participation in this event.

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