Rollin Ford has one of the toughest CIO jobs on the planet. He leads a global IT team in one of the world’s largest companies by revenue and employees, a company that has earned a reputation for leadership in supply chain that has allowed it to dominate its markets. Yet Wal-Mart is constantly under pressure to maintain its leadership position. In the US, Target has become a fierce competitor, while in the UK, Tesco may have overtaken Wal-Mart in supply-chain leadership, with Tesco's move into the US watched closely by Wal-Mart.
Earlier this year, Ford sat on a CIO panel discussing IT’s role in innovation. His thoughts on innovation also touched on strategy and alignment. He suggested that innovation starts with the customer, then leads into a business strategy, and then it gets enabled by technology. However, he acknowledges, “there are very few secrets out there.” Ford suggests that the only competitive advantage over time is the speed at which your organization can implement and leverage innovative ideas: “Your organization has to embrace change and new technologies, and that becomes your model. It’s about getting from A to B and doing it quicker than everybody else.”
Many companies are at the height of the IT strategic-planning season. For some, this is an annual ritual tied to the budgeting process. For others, this is part of a long-range planning process, with an annual review to check on progress. Still other CIOs are approaching the development of an IT strategy as an integral part of an ever-evolving business strategy, with regular adjustments as the business units flex and respond to market changes. Whatever your perspective, it’s apparent that in the past executives outside of IT have given scant attention to the machinations of the IT strategy — but this is surely changing.
The operational performance of any business unit is now so heavily dependent upon the effective and efficient deployment of appropriate technology that planning a business strategy without also planning technology strategy is like planning to win Formula One without any telemetry. You can’t even get to the starting grid.
Even though there's plenty of evidence showing the positive impact many companies are getting from leveraging a social media strategy, there are still companies rigidly refusing to develop a social media strategy. This reminds me of the early days of the Internet: there were those companies looking to embrace the Internet and develop a new kind of "e-business," and the rest, steadfastly refusing to believe the Internet would transform their business. Even as Amazon defined a new online shopping channel in retail it was amazing to see how many large retailers were slow to establish an online presence.
Back in 2000 I wrote a report urging online retailers to embrace “community” as one of three core elements of their customer strategy. Companies such as REI, which already had an online community in 2000, have learned from their experience and are surging ahead into new social media.
SAP changes its board structure to focus again on product and technology
2009 was a tough year for the whole IT industry but SAP’s performance (-8% in total revenue and -28% in software revenue) was somewhat below the results of many other leading IT companies. The product launch of Business ByDesign is years delayed and clients are still unhappy about the way the new Enterprise Support was introduced. No question, SAP is currently in a difficult situation. At this point SAP announced yesterday that CEO Léo Apotheker’s contract will not be renewed and his resignation is effective immediately. In his place, the company appointed the two board members Jim Hagemann Snabe, responsible for product development and Bill McDermott, in charge of field operations, as co-CEOs.
After 20 years of service with SAP it would not be fair to blame Apotheker, who was certainly instrumental for SAP’s tremendous growth in the past, for the challenges SAP is currently facing. Over several years the company shifted from its traditional strengths, such as products, technology, quality and reliability to a strongly sales driven entity. In fact the whole board of SAP was slowly replaced by a team of pure sales professionals. Product innovation and quality, or customer satisfaction was no longer in the center of corporate strategy, but replaced by sales performance and quotas. In a press and analyst call today Hasso Plattner, Co-Founder of SAP and Chairman of the Supervisory Board, acknowledged that mistakes e.g. with Enterprise Support, were made, but the whole SAP board was involved and it was not Apotheker’s fault.
A brief reflection from the SAP Influencer Summit on SAP’s On-Demand strategy
At the SAP Influencer Summit in Boston Dec 8/9, SAP put a lot of emphasis on its new roadmap into cloud computing and how serious the company is taking the topic for its future success. Well, to be true SAP actually avoided the term ‘cloud’ almost entirely and talked about ‘on-demand’ solutions instead. Maybe the company stayed away from the term ‘cloud’ because there is still a lot of confusion in the market (or inside SAP?) what cloud computing actually is, or to simply differentiate from the masses that currently go ‘crazy in the cloud’. Anyways, to offer pay-by-use software applications via self-service over the web indeed is pure cloud computing and SAP has declared it to be a future focus area for the company when Jim Snabe said “… significant [SAP] investment into on-demand will disrupt the market and SAP will regain leadership in this space”.