Why Business Doesn't Look To IT For Innovation
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'More With Less' Isn't Enough
There's little debate that IT is a critical function. About 60% of both IT and non-IT pros say their internal IT team will be more important to the company in the next two years, and nearly all the rest say it will remain just as important as it is today.
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So what's the source of this tension? Are IT organizations doomed to fall short of impossible expectations in this era of bring your own device, cloud computing, and software service vendors pitching business units with a fast install and end run around IT? Will IT's legitimate concerns about security, compliance, and integration make it the innovation villain, viewed as a drag on new corporate capabilities, rather than an innovation leader?
One argument is that IT has done too good a job in its cost-cutting role. A recent Gartner study showed that its record of doing more with less (a response found frequently in our study) makes IT a business segment leader in productivity. But while measuring IT largely on the "do more with less" criterion may warm the CFO's heart, it can run counter to the concept of implementing new technology to drive innovation.
"CIOs have made IT more efficient, with the result of devaluing IT as the returns on efficiency did not flow back to the source of those efficiencies in most organizations," says Gartner group VP Mark McDonald.
General Motors CIO Randy Mott put it this way, when addressing the InformationWeek 500 Conference last month in Dana Point, Calif.: "Businesses talk about their revenue and their costs, and they talk about their profits. IT is the area that has the most complexity, has the hardest work to do in a lot of cases, and all they get to talk about is costs. There's just something about that that just doesn't feel right."
It's why Mott requires a "revenue of IT" metric for every new IT project--business units, IT, and finance agree on that revenue-like value. At GM, Mott is trying to prove that the discipline companies demand for IT can co-exist with the need for rapid-fire innovation and new ideas. So some of GM's most innovative projects won't have a direct benefit but will proceed because business unit leaders say it's something the company or group needs. "The innovation is discretionary," Mott said. "That discretionary spend has to be evaluated like you look at other discretionary resources, like capital."
John Halamka, the CIO of Beth Israel Deaconess Medical Center, is taking a similarly disciplined approach to the problem of balancing innovation and tight budgets.
"Governance" was the emailed response from Halamka when I asked him the best way to make sure IT and business align for innovation. (Beth Israel Deaconess is the No. 1 company in the 2012 InformationWeek 500 ranking of business technology innovators.) The hospital group has committees in different areas that bring IT and business leaders together. "These committees are where I propose innovative tactics to accelerate business owner strategies," Halamka says.
I can hear the groans: Committees are the antithesis of innovation, no? However, innovation counts for little if it's not aligned with business objectives. The trick Halamka has mastered is creating a transparent committee where business priorities are developed and IT resources are matched to those goals. These leaders are working to formalize tech innovation as part of everyday business, because the reality is that business units aren't always going to ask for IT's help anymore.
End Run Around IT
The tension that comes through in our survey is about a lot more than budgets and governance. The less measureable but more emotional issue is IT losing its role as the source of the cool new technologies. "Sidestepping enterprise IT and using your own devices and applications is usually easier, more fun, and, let's face it, often cooler than using what the IT department doles out," Accenture writes in a recent study.
So even as technology innovation is seen as the driving force for companies (what is Google or Amazon or Facebook other than a technology engine underpinning a business strategy?), the people who should be empowered with the design, development, and care of that engine are seen--and often see themselves--as, well, slow and bureaucratic.
This split personality comes through in the survey. Only about a fourth of IT and non-IT pros say their organization is an innovation leader. When three-quarters of your employees consider your organization an also-ran in innovation, you have a problem.
Only 32% of the IT respondents think that IT plays an extremely important role in business innovation; only 25% of non-IT respondents think so.
One problem is that IT leaders, who should be trained, equipped, and ready to drive technology innovation, often aren't invited to the party. Allowing each company department to make its own tech decisions can quickly lead to a mishmash of social collaboration, CRM, analytics, and marketing tools and systems. GM's Mott acknowledges that rogue IT purchases and deployments are done to meet a pressing business need, but he also notes that not centralizing them squanders the chance to leverage the data or systems across the company. Other business units also don't have IT's experience vetting technology vendors and contracts.
"I see the decisions that people and companies make when they have no internal IT guidance, and it can be disastrous," says one respondent to our survey. "They fall prey to the latest fad or great salesman that comes along, and they end up with a mess and no one to help except the next salesman who comes along."
What would a more successful IT and business partnership look like? "Our IT team continues to be the filter and gatekeeper and rescuer regarding all things IT," says one of the more positive survey respondents. "We have several areas that work closely with us, and the amount of innovative and everyday work we can accomplish is tremendous."