This blog is for sourcing and procurement professionals to discuss and share perspectives, point of views, ideas and best practices around key sourcing and procurement topics.

« June 2009 | Main | October 2009 »

July 6, 2009

Cross-Functional decision making - A case of David Vs Goliath?

The unique bundling across technology and business processes (functional process definition as well as operations delivery) in Business Platforms entails cross functional decision making  between the CIO and the business owner ( typically COO’s or  functional owners such as CPO’s, HR directors, and Financial controllers).  There is also another cross-functional decision making between multiple business owners. For e.g, in the case of a Procure-to-Pay Platform, where procurement and AP owners have to align to take an integrated view; or end-to-end Hire-to-Retire, where individual HR function owners need to align. I will cover this in a separate blog entry, and will restrict this entry to discussing alignment between the CIO and business owner. 

In my interactions with customers, I have often encountered a dichotomy in alignment between CIO’s and business owners.  In most cases, while the business owners view this as a great model to help achieve their business objectives and want to take a technology agnostic view, CIO’s view this as a model that interferes with their organizational technology strategy and feel a loss of ownership and control.  This leads to organizations being unable to take a holistic business view, and lose out on a unique opportunity that could be a win-win for both the business owners as well as CIO’s.

If we analyze the business drivers involved, the current business environment and liquidity crunch is forcing companies to bring a razor sharp focus on operational costs with capital reduction high on the CFO’s agenda.  In such an environment, the traditional model of attempting in-house technology transformation (with IT outsourcing limited to execution of  strategy) and separately outsourcing business process operations leads to sub-optimal results and needs significant capex, which in most cases the CFO is unlikely to approve.  The Platform model calls for the CIO and business owner to align early in the strategy and decision cycle. CIO’s should view the platform provider as another weapon in their arsenal that they can leverage to deliver on the organization’s business objectives.  Wave 1 of this would clearly be targeting of this approach for non-core functions (such as Indirect procurement or tactical HR transactional processes), where internal investments would not be the best use of the resources available to CIO’s and it is less critical for CIO’s to own and control the technology and they can benefit from the technology expertise, global scale and cost benefits that a platform provider can provide as well as the accountability for business outcomes that can be enforced on the platform provider in this model.  This will also enable the CIO to use the available scarce capex on strategic initiatives that translate into revenue generating programs.  Technologies such as cloud computing, and collaboration enabling tools such as portals and business mashups provide CIO’s a unique opportunity to benefit from this model.
On the other hand, business owners can benefit from getting the CIO’s team involved in the decision making, to ensure that technology risks and organizational technology considerations such as data and information security, scalability are duly evaluated and an optimal decision made. 

All this calls for integrated governance being ensured, for business owners and CIO’s to be joint stake-holders in the platform decision and outcomes, and have scorecard metrics that enable this. If this happens, the CIO and business owner can tango together to deliver transformation to the CFO, and this will indeed be more than music to the CFO’s ears!

Subscribe to this blog's feed

+1 and Like

Follow us on

Infosys Edge on Twitter