Technology

How Their Garden Grows

The corporate suggestion box isn't what it used to be, and for one company, that has proved to be a very good thing. Also: why finance wants IT sys...
CFO StaffNovember 15, 2004

Much of IT is designed to get data to employees, but very little attempts to do the reverse: get information from them, particularly of the fresh-thinking and problem-solving sort that can enhance revenue. True, an entire discipline known as knowledge management has explored techniques for tapping collective corporate brainpower, but for the most part, companies squander a good portion of the intellectual capital that resides within their walls.

Two years ago, Grace Performance Chemicals decided to do something about it. “We knew we had an effective process for developing new products,” says vice president of finance-operations Susan Farnsworth. “But we weren’t getting enough good ideas into the front end of the system.”

Grace turned to a small software company, Boston-based Imaginatik, which had developed an idea-management application it called Idea Central. Part database, part workflow system, the software is not, Imaginatik CEO Mark Turrell emphasizes, an electronic suggestion box. For one thing, a truly good idea often results from collaboration around several less-good ideas, while suggestion boxes have a take-it-or-leave-it quality that effectively thwarts a group contribution. Then there are what Turrell terms “people-sensitive” issues: do you make the suggestion process anonymous and risk not being able to tap additional insights from an employee? Do you identify which idea came from whom and risk revealing a senior person as clueless?

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Idea Central uses E-mail alerts to solicit ideas from a defined group of people; sometimes, as in a general call for cost-cutting ideas, that group may include every employee. In other cases, such as refining a given and possibly complex process, it may be more useful to invite only specialists to provide their two cents. The software acts as a repository for initial input and a forum for invitees to refine one another’s ideas, in the search for that elusive brainstorm that boosts the bottom line.

Grace dubbed its implementation of the software Idea Garden, and it has harvested quite a crop: everything from simple expense cuts (an employee’s observation that the company subscribed to too many magazines saved it $200,000) to what director of innovation Paul Westgate calls a “customers do the darndest things” campaign in which the sales force was asked to discuss customers’ novel uses of Grace products, helping the company spot new ways to market its goods.

Farnsworth says that new products generated in the Idea Garden have the potential to achieve sales of $6 million. Not bad for software that costs $65,000 to $100,000 for 1,000 users. “Employees get pumped up when they have a voice,” says Farnsworth. So too, apparently, do profits.

Make IT Connect

While CFOs continue to get more involved in IT management, they are also customers of the IT department, and like customers everywhere they have certain expectations and preferences.

When Forrester Research polled more than 200 finance executives about what they want their IT departments to do for them, the most common answer had nothing to do with Sarbanes-Oxley or compliance issues. Instead, three of the top four priorities were related to better integration and consolidation of existing systems. When the executives were asked to cite their biggest challenge with corporate IT, the most common answer was “different systems produce inconsistent results.”

It’s no surprise why: asked how many financial-management systems they have in use today, on average, respondents at large companies answered 15, midsize firms reported 13, and small companies said 6. But companies of all sizes have plans to stop the madness. Among large companies, nearly two-thirds reported that they have a program in place to consolidate financial-management systems, while half of midsize firms and nearly half of small companies do.

But at the same time, companies seem ready to spend more money on business-intelligence software — 43 percent plan to buy such software in the next 12 months to support finance activities — perhaps as a way to bridge those disparate underlying systems (see “Getting a Grip on Performance“).

Locking Horns

“Cops, Geeks, and Bean Counters” is not a new reality TV show but, according to The Conference Board, an apt description of the security problem currently faced by many major corporations. Having spoken to high-level security personnel at a number of global companies, The Conference Board, a membership organization of executives from nearly 2,000 companies, found that a culture clash among three distinct functions within corporations often inhibits the development of adequate security measures.

Responsibility is typically divided among physical security forces, staffers who address IT security, and risk-management employees, who focus on maximizing returns and minimizing losses. The three groups rarely communicate, report up through divergent departments within a company, and generally don’t consider their role in any way related to the roles of the other two. But Conference Board corporate-security specialist Tom Cavanagh argues that these cops, geeks, and bean counters do have something important in common: they are all charged with defending corporate assets, a mission that is hampered when they remain in their respective silos. To improve the situation, Cavanagh recommends frequent interaction to assess and agree upon priorities.

False Sense of Security?

The perceived threats may have changed but the overall attitude remains the same. A Harris Poll commissioned by SunGard Availability Services found, once again, that senior executives seem to be more confident about their companies’ ability to access critical business data during a disaster than in fact the companies may be.

Fifty senior executives at large companies, most of them CIOs, gave themselves an overall grade of B, up from a C last year, even though the percentage who said they were better prepared to access critical information in the event of a disaster declined from 67 percent last year to 57 percent this year. Just over half of the respondents said they had experienced some kind of disruption in the past year, with power outages the most common, followed by viruses/security breaches and hardware failures. Almost one-third of the respondents said the outages caused them to miss service-level agreement commitments, while 12 percent said their revenue streams were adversely affected and 6 percent said they had actually lost customers.

Despite that, senior-level focus on the issue seems to be waning. What’s not abating is fear of hackers, which has more than doubled.

Common Disasters
The most-feared threats to information access.
Telecommunications breakdown
44%
32%

Natural disaster such as flood or earthquake
15%
8%

Computer hackers
15%
36%

Power failures
10%
20%

Terrorist attack
20%
0%

Other
14%
4%

In Web We Trust

With Internet research firm eMarketer predicting a 27 percent rise in fourth-quarter online sales this year versus last, there’s little doubt that consumers will be spending a lot of time visiting a great many Websites. While the increased prevalence of high-speed connections now allows companies to offer much snazzier interfaces, researchers at MIT are developing ways for Websites to not just dazzle, but actually build a sense of trust between a company and its customers.

Collaboration between Intel Corp. and MIT’s Sloan Center for eBusiness focuses on how to take the Web experience beyond what Sloan professor of management Glen Urban calls the “must-haves” — namely privacy, security, and an error-free experience — and into the realm of the “trusted adviser.” The WebTrust project began with the addition of a logic wizard to help Intel site visitors find the downloadable software they are looking for, then added a “persona,” who guides users through their many options.

Interestingly, in this day of computer-animated everything, the persona is based on an actual Intel employee — a woman named Rosa — whose photograph and voice add a human touch. With Rosa helping, measures of the site’s effectiveness and users’ attitudes toward it and Intel rose substantially.

Urban says the results can be easily adapted by other site designers. “Websites are continually redesigned to add improvements,” he says, “but there is still a long way to go. It’s similar to the TQM movement: we thought we were good at product quality until the Japanese showed us how much better it could get.”

IP Ins and Outs

Companies have high hopes of licensing their intellectual property (IP) to others, but they often fail to see the potential in being licensees themselves. So argue McKinsey consultants Meagan Dietz and Jeff Elton, who found that while 43 percent of the companies they surveyed expect the licensing of their IP to increase (in dollar volume) by 50 percent or more in the next five years, only 11 percent expect to similarly increase the amount they spend to license the IP of other companies.

While it’s natural to want to sell your IP rather than buy others’, Dietz and Elton argue that when companies do invest in external IP and build it into their products, they can often turn around and license the results at a handsome profit. The not-invented-here syndrome is a hurdle that must be crossed, of course, but so-called in-licensors prove more adept at nearly all phases of IP management, despite the fact that in-licensing generally gets far less attention (and resources) than out-licensing.

So if your own company is short on good ideas (see “How Their Garden Grows”), consider licensing the ideas of others and refining them. It could pay off.

Automation Acclimation

The technological bedrock of most organizations will look substantially different in one to three years, according to a Summit Strategies survey of more than 300 IT managers involved in infrastructure decisions. The big change: a move toward automation and “virtualization,” the latter a hazily defined term that generally means moving away from dedicated machines for dedicated uses and toward a system in which fewer boxes can be made to satisfy more needs. It’s a close cousin to utility computing, another buzz phrase not short on definitions, but which Summit analyst Mary Johnston-Turner describes as “a transformation from silos of functionality to dynamic resources that can be shared based on business needs,” priced by actual usage.

Today, almost two-thirds of the respondents said, the resources that provide an IT infrastructure are generally dedicated to individual applications and the associated technology stacks that make them run. But only 18 percent of respondents believe that will be the case in one to three years. Instead, a host of new technologies — led by Web services but including storage and server virtualization as well as blade systems (modular servers that can be bumped up in power/capacity as needed) — will transform the data center.

Companies that have already started down this road, however, say that the management challenges are many and include improving configuration tracking, capacity planning, and workload-balancing capabilities; allocating the costs of IT resources in a more-equitable manner; retraining staff; and investing in more automation software to make all of this virtualized machinery as efficient and reliable as possible.