I recently participated in a lively discussion about “Innovation vs. Operations: Can You Have It All?” on the SAP Internet Radio series Bizz Buzz with Game-Changers, a widely broadcast show hosted by Bonnie D. Graham.

/wp-content/uploads/2014/03/efficiency_420210.jpgI found that the conversation with Svend Wittern, Head of Operations for the SAP Business Suite, and Marc Cecere, VP, Principal Analyst at Forrester Research, shed a great deal of light onto one of the key challenges facing all of our clients today. They want it all – innovations and efficient operations. The question is, how to strike that balance?

The starting point: Collaboration

We all agreed that it starts with collaboration, specifically between the offices of the CIO and the CEO. Here’s why: if you’re embarking on a transformative project and your CEO expects a breakthrough innovation while your CIO is focused on operational efficiency, you’re inevitably going to end up with differing agendas in the C-suite. The CIO may be entirely on board with the importance of innovation, but unless the CEO’s office is ensuring sufficient time, budget, and bandwidth, and the CIO’s office has in place a process to encourage it, innovation is too often nothing more than an accidental by-product of other large projects.

What we should be aiming for are projects where improvements in operational effectiveness—like improving cycle times on order to cash (O2C) and reducing day sales outstanding (DSOs)—are a significant part of the agenda, because they can fund true innovative changes. For this to happen, there needs to be a consistent, clear viewpoint on what those improvements need to be and how they should be implemented. Put simply, the CIO and CEO need to have serious strategic conversations, not just discussions about operational issues.

These strategic discussions pose a great opportunity for the CIO. As Svend pointed out, CIOs generally agree with the goal of innovation, they just need help instilling the right processes to foster that innovation. By bringing their questions and concerns to the CEO, they will get the guidance they need and can help shape the innovation strategy more broadly.

Chief Integration Officer

In addition to guiding operational efficiency, Marc also noted that the CIO has to play the role of “Chief Integration Officer.”  IT is one of the few functions where all of the different business units and sectors converge, which means the CIO has the responsibility for balancing the demands of different parts of the company. This is an interesting, and advantageous, position for the CIO to be in and we’re seeing it unfold with the hiring of people from other business units into IT. So, as other units are becoming more tech-savvy, IT is becoming business-savvy and more valuable to the CEO.

And while there are a lot of opportunities for the CIO, there are also a few traps that they need to avoid. For example, Marc cautioned CIOs against making any single team solely responsible for innovation across the organization as this can drain motivation to innovate from other business units. I feel strongly that the CIO, who sits on the fine line between bleeding edge and leading edge, needs to promote advances in technology while not letting the company take on too much risk. Svend had a great follow-up to this, urging CIOs to regain the initiative over the technology agenda so that they can advise proactively, not just react to the latest advances like Augmented Reality or 3D Printing.

Looking into the future

Through their working knowledge of the various business units and their understanding of operational efficiency, the CIO is well positioned to help the CEO understand the limits of technology and make better-educated decisions. By working together on the innovation agenda, the CIO and CEO can find the balance between operational efficiency and innovation.  If I look into my crystal ball, I believe that in five years the CEO’s innovation agenda and strategy will be the guiding principle for organizations. As a result of the collaboration between the CEO and the CIO, most of these transformation initiatives will be self-funded, thanks to the operational improvements they offer.

I’d be interested to hear your thoughts on the topic. Do you believe that companies can find the right balance between innovations and efficient operations? Let us know here and on Twitter at @TCS_SAP.

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