InformationWeek
Defining The Business Value Of Technology
September 14, 1998
Defining IT Innovation
continued...page 5 of 5
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Speed Doesn't Always Pay
While many IT managers look to business partners for more ideas, one in five sees the greatest
challenge to future innovation coming from the lack of IT knowledge among senior managers and
business leaders. Some 16% say budget limitations are the biggest challenge, and 14% remain
concerned that senior management views IT as a cost center.
IT leaders among the InformationWeek 500 don't necessarily equate innovation with early adoption. Asked to rate the importance of early adoption in determining the ultimate level of financial payoff for a typical enterprise application, only 18% said "very important," while more than two in three said "somewhat important."
"Early adoption is not always a good idea," says Hilton's Durocher. "The ideal place to be is right behind the first adopters. On occasion, you want to be the first to do something because there are specific tangible [marketing] reasons for it. But in general, we think it's wise to stay just behind."
Innovation, of course, comes with substantial risk. Nearly nine in 10 top IT executives at
InformationWeek 500 companies equate innovation with risk-taking. Asked what level of
risks their organizations accept when it comes to innovation, three of four say "moderate risk,"
while 12% say "high risk." More than two-thirds of IT executives say their organizations are
more likely to take risks with new technology investments than in the past. And of the IT chiefs
at companies more likely to take risks, three of four say it's to increase competitiveness.
For those less willing to take risks, the most common reason cited is the failure of past IT projects. Other reasons include funding constraints, the tendency of senior management to avoid IT risk, the company's broad strategic direction, and personnel resources constraints. One in five IT executives blames the year 2000 problem for making risk taking less likely.
For many top IT executives within InformationWeek 500 companies, risk and uncertainty are givens when it comes to innovation. "Any time you're on the cutting edge, there's risk," says Citicorp's Taylor. "In many respects, you enter gently and look at beta-testing opportunities to see if you've hit the mark from a customer perspective. That's really what should be driving many IT projects. To minimize risk, we look for strongly accepted software or hardware with capabilities that have multiple uses."
Adds Bechtel's Leingang, "You have to take some risks to set yourself apart in the marketplace."
Leaders such as Leingang and Taylor might argue that you can't innovate without risk and you
can't successfully take risks without a culture of innovation.
Standing apart and ahead in the marketplace is a major goal of all companies in the InformationWeek 500. Each uses IT aggressively and effectively in order to innovate. Advanced technology and forward-thinking business processes give enterprises the edge they need to improve performance and quality for customers, suppliers, and employees.
Innovation is a necessary component of success. The average one-year revenue gain among the InformationWeek 500 in the most recent fiscal year was 16.5%, nearly double the average 8.7% rise for the Fortune 500.
Many of the business leaders at the InformationWeek 500 companies will say that IT
innovation has a lot to do with that growth.
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