CIOs grapple with instinct versus data-driven decisions

BOSTON – The challenge for chief information officers isn’t simply choosing and installing high-end analytical software but assessing whether their organization’s leaders will trust data versus their personal instincts, CIOs told a group of analysts at the annual SAP Influencer Summit on Tuesday.

The potential of analytics to improve corporate decision-making and organizational performance is a key theme at the software giant’s two-day conference, particularly given the sales push around its in-memory database, HANA. Sanjay Poonen, president, and corporate officer of SAP’s global solutions group, said the new year would see the launch of SAP’s Business Intelligence 4x, which would be optimized for HANA. Business Warehouse for HANA and support for Hadoop will also be offered in 2012, Poonen said.

In a panel discussion with some of its customers, however, some CIOs told the SAP Influencer Summit that even the best business intelligence systems can’t always override the straight-from-the-gut mentality in some organizations. In a family-owned business like Italian confectionary firm Ferrero, for example, BI won’t necessarily be what steers it forward.

“It’s gut, it’s people, but it’s data as well,” said Martin Flegenheimer, CIO Middle and Eastern Europe at Ferrero. In some cases, however, analytics can provide “a comfort zone to make decisions,” he said.

Brandon Arbiter, vice-president at New York City-based online grocer FreshDirect, countered that information derived from enterprise IT is king.

“Fact and data is going to win out over gut every time,” said Arbiter, who previously served as manager of FreshDirect’s BI operation. “We have data behind every order someone’s made and every Web page they’ve clicked on. That’s a treasure trove to drive decision-making.”

Even if some managers have a strong gut feeling, they can use the data available through analytics to validate it, Arbiter said. “It allows you to rewind and make educated decisions,” he said.

The problem with analytics is that it looks more like an exact science than it is, argued David McCue, CIO at IT services firm CSC. That’s why he prefers the idea of “thoughtful experience” as an appropriate middle ground between data and gut feelings.

“Facts and data are not the same thing,” he pointed out. “Unless you ask the question in the proper way, what you get is the answer to a question, but that doesn’t mean it’s the right one.”

Besides analytics and in-memory systems like HANA, SAP co-CEO Jim Hagermann Snabe identified its core application suite (such as its ERP system), cloud computing and mobility as its four areas where it is trying to innovate. CIOs were also split on these last two areas. Flegenheimer, for example, described Ferrero as “shy on cloud” so far.

“We may take the benefits during the next cycle of renewal of our IT infrastructure,” he said. “We have been starting with non-critical areas,” such as migrating some of its Web sites, for example.

Michael Skall, director Lufthansa Revenue Services, said decisions about the cloud have a lot to do with the maturity of the software involved. At his firm, it makes sense to move from running large software suites that require expensive consulting expertise to a cloud scenario where someone else manages it. “It means you can offer IT as more of a satellite,” he said.

McCue was much more bullish on the cloud, suggesting that organizations simply need to come to terms with the regulatory and compliance requirements before more data and compute infrastructure is moved over. Psychologically, however, cloud advancements in the consumer space are changing perceptions in the enterprise. “We have an entire generation coming into the workforce for whom this is the norm,” he said.

CSC also aims to offer flexibility on the mobile device front, according to McCue, using a secure container for specific areas of a given device and setting up rules that will wipe them clean of corporate data if the user fails to authenticate properly. “It’s made my job interesting and somewhat easier.”

Arbiter admits that FreshDirect is still somewhat chaotic on the bring-your-own device (BYOD) front. “It’s the squeaky wheel gets the grease mentality,” he said. While the company was busy creating an approach based on the BlackBerry, “We had people giving up their BlackBerries left and right. We had to do a rethink. Now all our executives have iPads, and employees have Androids and iPhones. We’re kind of letting the dust settle.”  

SAP’s Influencer Summit continues on Tuesday.

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