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CIOs Can Steer Enterprise Investment Strategy

By Ben Worthen

May 15, 2001 — CIO —

Guy Battista smiles when he hears those recorded announcements saying, "Your call may be monitored for quality assurance." He’s been there, done that. Last September, the First Data Corp. (FDC) CIO went, as they say, "double-jack" with an operator, listening in to calls at an Irish call center 5,000 miles from FDC’s Atlanta headquarters. That kind of attention to detail is a regular part of Battista’s evaluation process when FDC, a $5.5 billion financial services company whose subsidiaries include Western Union and TeleCheck, is thinking about investing in a company. n In this case, FDC was looking to invest in Fexco, a Killorglin, County Kerry-based customer service outsourcer.

(If you dial the toll-free number on the back of a can of Guinness, you’ll reach a Fexco call center.) FDC makes no secret of its desire to expand globally, and Fexco, which already works in Europe with Western Union, seemed like a logical way for the American company to plant its flag on the continent.

But before investing, Battista needed to make certain that Fexco was what FDC wanted. He wasn’t satisfied simply meeting the Fexco suits or bench testing their software; he wanted to watch the apps in action and see how the service representatives treated customers. He came away impressed. The software worked; the operators were polite and efficient. Battista and his team gave the deal the thumbs up. And in December 2000, FDC took a 25 percent equity stake in Fexco.

Battista, an 11-year veteran of FDC and CIO since 1997, didn’t set out in life to be an investment adviser or a venture capitalist, but his business and technical skills have played a crucial role in FDC’s enterprise investment strategy. "Today," says Battista, "I had three different conference calls on three different companies [targets for acquisition, targets for investment]. And tomorrow I’m meeting with our president to go over them."

THE CIO AS VENTURE CAPITALIST

This same scenario is playing out in boardrooms and corner offices all over the country as businesses turn to their CIOs, leveraging their technical skills and business knowledge, to help guide their investments in emerging technologies. Companies see investments as a way to gain a competitive, early-mover advantage. And given the rapid rate of technological innovation that advantage is more critical than ever before.

"What we’re talking about," says Nancy Koehn, a business historian at Harvard Business School, "is not just a chance to be on the new playing field, but a chance to help set the rules. We are talking about a chance to help set the standards. And that is extremely important." As a result, predicts Koehn, no company will prosper without looking outside its walls. Without, in other words, corporate venturing.

 

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