CIO Corner: Are CEOs’ Technology Priorities Stifling Innovation?

Is a strategic disconnect between CIOs/CTOs – who seek investment that accounts for the impact of mobile, cloud and social – and CEOs – who remain focused on ERP and CRM systems – dampening innovation? 

Last year, when Gartner asked 220 CEOs for their IT-related priorities for 2012, it uncovered a wide and rather odd discrepancy. CEOs, it transpires, aren’t interested in new technologies.

While their CIO counterparts are champing at the bit to get social, mobile and cloud-based systems bedded into the enterprise, CEOs have their minds fixed completely elsewhere. Total CIO quotes Mark Raskino from Gartner saying:

Mobile, social, cloud, and the nexus [of the three] — CEOs in midsized to large global companies don’t understand those words.  They do not volunteer terms like ‘cloud’ or ‘social’, and they do not understand how such concepts transform the fortune of their company.”

It turns out that CEOs’ minds are fixed mainly on ERP and CRM – structured, monolithic systems that make the enterprise more efficient and keep all its activities and data regimentally ordered. 

It’s easy to see where the CEOs are coming from: ERP and CRM are huge strategic investments that cost a lot of time and money to implement, so they must be milked for every last drop of value. They’re also vital to the smooth running of the enterprise and to the efficiency of its processes.

But in focusing on these highly structured systems, are CEOs doing their companies a disservice?  Could they be stifling the organisation’s ability to innovate, to find creative new solutions to problems, to develop products and services that change the world?

ERP as the enemy of innovation
It’s a question raised recently by Dave Yarnold, CEO of ServiceMax, who wrote in the Forbes CIO Central blog that ERP systems like SAP are becoming the enemy of business innovation:

“I can’t even guess at the number of meetings I’ve had with senior company leaders over the years where creative new business ideas were shelved because ‘it didn’t fit into SAP’. Is it possible that this long-term adherence to the SAP way has in some way been at the root of the lack of creativity, competitiveness or the loss of manufacturing jobs we now bemoan?”

As CEO of a cloud-based software company, Yarnold has a vested interest in the answer (and as a vendor of content virtualization software, so do we), but the point is a good one.

Studies of innovation have often concluded that too much rigid organisational structure prevents new ideas from forming.  In his 2010 bestseller Where Good Ideas Come From: A Natural History of Innovation, Steven Johnson says that innovation flourishes in a ‘liquid network’:  a loosely-structured environment in which connections can be easily forged and ideas can be easily shared, communicated and accessibly stored.

For Johnson, liquid networks occupy “the fertile zone between too much order and too much anarchy”. He lists cities, the internet and the kind of open-plan offices favoured by digital startups as examples of environments that are fluid enough to allow casual cross-fertilisation of ideas, but not so chaotic that those ideas get lost.

Steering a course between order and anarchy
What do cities and office interiors have to do with CEOs and their technology choices?  ERP and CRM systems are examples of what Johnson calls ‘solid’ networks – rigid structures that don’t easily allow for casual information-sharing, informal collaboration or serendipitous discoveries of other people’s ideas. They may be useful, but they put the brakes on innovation.

On the other hand, the vogue for employees bringing their own smartphones and tablets to work – which we explored in our ‘consumerisation of IT’ blog post – may swing organisations too far the other way; into a world of chaos in which information is squirrelled away all over the place where no one can find or use it.

Johnson says:
“The quickest way to freeze a liquid network is to stuff people into private offices behind closed doors, which is one reason why so many Web-era companies have designed their work environnments around common spaces where casual mingling and interdepartmental chatter happens without any formal planning.”

ERP systems and employee smartphones are both analogous to those “private offices behind closed doors”. They’re environments where information is locked up – either in structured databases or on personal hard drives – and effectively unavailable to the wider organisation.

The smart CIO, if he or she wants to be a catalyst for innovation, must set that information free for the enterprise to use. In doing so they must steer a careful course between what the CEO wants (apparently more rigidity), and what employees want (apparently more chaos).

How they go about doing that is up to them, but we’d like to think that content virtualization has a big role to play. You can find out more about what we mean in our Content Virtualization ebook.

Tell us what you think
What’s your experience? Is your CEO enthusiastic about the potential of mobile, social and cloud technologies – or does he/she think you should be maximising your investment in ERP first?  We’d be very interested to hear your views, so please let us know in the comments.

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