Article

CIO innovation moves beyond hot technology

Shamus McGillicuddy
Many IT leaders identify their organizations as focusing on either innovation or controlling costs. But for Mike Carper, the division between the two isn't always so black and white.

"To me, [innovation] means finding new and creative ways to generate business value or becoming more efficient as a technology service provider," said Carper, divisional vice president of technology operations at $1 billion clothing company Coldwater Creek Inc. in Sandpoint, Idaho.

Innovation isn't just about creating business value by spending money on the hottest technology. It's also about finding ways to do things better.

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"I don't find cost control and investing in new technologies mutually exclusive," Carper said. "By finding new technologies to make operations run more efficiently, the company can focus more days of the year on innovation as it applies to business outcome."

Ambitious CIOs have heard the innovation message from analysts and vendors for a few years now: CIOs should be thinking outside the box about how IT can transform their companies and create business value.

Pete Bigley, vice president of IT innovation services at Pleasanton, Calif.-based grocery chain Safeway Inc., described at the recent AMR Research Executive Leadership Conference how his role was created in order to boost his IT organization's ability to deliver value to the business.

"Eighteen months ago I was the head enterprise architect [at Safeway]," Bigley told attendees at the conference, held in Boston. "But IT was falling behind. The two roles of IT were seen as delivering services and delivering what is asked of you. We weren't seen as being a partner."

Bigley said his company saw the value in establishing a small team to think solely about innovation in IT. He now heads a group of two or three people who do deep research on emerging technology so the IT organization is ready to strike when these technologies are mature enough to contribute to the business.

The price of innovation

But for midsized companies that have fewer IT resources, the cash to pay for a dedicated innovation team isn't always available to CIOs. For instance, in its report on Critical Budget and Staffing Trends for 2007-2008, Info-Tech Research Group Inc. discovered that companies that focus on IT innovation tend to spend a lot more on IT than other companies.

The London, Ontario-based research firm surveyed 1,712 IT decision makers. Those CIOs who focus heavily on IT innovation said their companies spend an average of $6,768 per employee on IT. Those who said they focus heavily on cost control said they spend an average of $3,504 per employee.

Also some IT leaders are in roles that focus solely on operations, where investing in new transformative technologies isn't always an option.

I don't find
cost control and investing
in new technologies mutually exclusive.

Mike Carper
divisional vice president of technology operationsColdwater Creek Inc.
"The people working for me are working on operational activities. They're not working on business-related initiatives," Carper said. "I'm looking for people who have the vision for how we want to become more efficient, how we want to automate things so that our internal customer doesn't have to wait so long for requests to be satisfied and for services to be restored. The goals and objectives are to consolidate, simplify and automate. This is really the driving factor for operations and how they should focus on innovation."

Carper said his operations team used to spend a great deal of time provisioning users for his company's various systems.

"We looked at new technologies that would allow us to provision accounts whenever a new person is hired. The technology we have in place now knows when a new employee is added," he said. "Based on what access those people need by roles, it creates their email accounts and their other system accounts. Before, [provisioning] was a bottomless pit of time. It required looking at a lot of different products and trying to be innovative with the ways we managed accounts and access.

"Let's say we have 16 other business platforms," Carper said. "They all have their own separate access requirements. We installed a technology that goes out and creates accounts in all those other systems and creates a single identity that can be tied back to them so they no longer have to remember multiple usernames and passwords. We no longer have to manage the creation of accounts not just in SAP but in other systems as well."

Carper's organization is experimenting with automated imaging and data backup for PCs, which will speed the process of deploying and replacing machines.

"I think we're much more respected than we used to be," Carper said of Coldwater Creek's innovations with account provisioning. "Previously when these kinds of accounts needed to be created in the old system, it was a convoluted process of sending email around, expecting people to come around and ask."

Defining innovation

John Sloan, senior research analyst at Info-Tech, said there are many definitions of IT innovation. In his survey on spending and staffing trends, innovation was defined as investment in unique products geared toward business enablement and business alignment.

"The idea being that innovation in a sense is about making investments that aid the business in either making money or streamlining operations," Sloan said. "I can have my own definition of innovation that might be a little different, trying to get people either thinking about developing new products or developing new ways of doing things to enhance the company's way of doing things and generate new revenue, as opposed to focusing on driving costs out of the system or looking at how operations can be done in a more cost-effective way."

However, just spending money on new technology doesn't guarantee success. Info-Tech's research showed that IT spending by companies with a heavy focus on innovation was 6.3% of total corporate revenue, while companies that focused on cost control revealed that their IT spending was 5.9% of revenue. There's not a lot of separation there for two radically different approaches to IT investment. However, Sloan saw some success in the numbers.

"When I look at the fact that innovators are increasing their spending more but holding the line on percentage of revenue, I see that as success. The company is growing revenue. That indicates that you are spending more and making more."

However, highly successful IT innovation should drive down IT spending as a percentage of revenue, Sloan said.

The key to that highly successful innovation might lay, in part, in the approach Carper has taken at Coldwater Creek. According to Info-Tech's research, the companies that tightly integrate their systems, as Carper did with his company's account provisioning systems, drive down their spending as a percentage of revenue lower than anyone -- just 4.8%.

"The tightly integrated shops are not necessarily the innovative shops, but they're in a better position to capitalize on innovation," Sloan said. "If you're focusing on applications that can aid business processes, and have a complex but tightly integrated infrastructure, you could provide a better foundation for that kind of innovation."

Let us know what you think about the story; email: Shamus McGillicuddy, News Writer


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