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10/3/2012
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Why Business Doesn't Look To IT For Innovation

Most employees outside of IT don’t call their IT teams very innovative, yet most believe technology is growing in importance, our research shows. Can IT still be the hero?

'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.

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."

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marc112
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marc112,
User Rank: Apprentice
8/1/2014 | 1:33:41 PM
Considering how much these days businesses rely on internet
Considering  how much these days businesses rely on internet to conduct their activity, IT will play a major role inside any company years from now too. The IT department is the one to smooth things over for the others to do their job without encountering any unpleasant events. They are the ones to know which tools on http://www.trendmicro.com/us/home/products/software/password-manager/index.html to making things easier for everyone.
IT Reformer
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IT Reformer,
User Rank: Apprentice
10/29/2012 | 5:21:52 PM
re: Why Business Doesn't Look To IT For Innovation
This is a very insightful article on the perennial challenges the IT Ecosystem faces with many CIO's chasing "shiny objects" and IT mission owners often feeling dis-serviced by the traditional marketing approaches aimed at CIOs.

Four years ago, a dozen standards bodies, think tanks and universities forged a public/private partnership at the urging of Congress and the White House called the IT Acquisition Advisory Council (IT-AAC). This was driven by recognition the statistics showing 75% failure rates of all major federal IT programs. IT-AAC establishes a true IT honest broker that service the needs of the IT consumer, providing a shared cost knowledge exchange that is fills a huge void in the $3.8Trillion dollar IT market. Though the Federal IT market is often years behind the commercial IT market, this initiative could help them leap frog commercial IT in an effort to avert Sequestration's impact.
mchesmore503
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mchesmore503,
User Rank: Apprentice
10/17/2012 | 6:33:12 PM
re: Why Business Doesn't Look To IT For Innovation
Several points are dead on here. How do you not treat IT as a service organization or support function when SLA stands for Service Level Agreement. In many peopleG«÷s view IT is a service/support function and thatG«÷s where it ends, they are not a partner, the business pays them for a service. Wright or wrong that is the truth in many organizations. Should that change? Maybe.
An area that needs to be addressed, although I do not frequently see it even mentioned in conversations such as this one, is security. Full disclosure, this is my field and discipline by choice. I fully understand that we (security folks) are a major impediment in letting a company operate at the bleeding edge. Believe me; we hear your frustration with us. The problem I see with this article and frankly this way of thinking is that it only takes into account the part of the picture that supports the authorG«÷s point of view. There is no mention of risk management nor the threat to an organization by not performing solid due diligence. What about the risk to the organization as a whole by just running forward with an idea that seems to improve productivity? If you try and inject any measure of risk management or threat assessment/awareness you are branded as a G«£drag on innovationG«• or G«£that bunch that always says noG«•. Fifteen years ago we lived and worked in a different world. Cyber threat was a bunch of kids looking to use your hacked server to share MP3G«÷s. Today the landscape is so dramatically different that you cannot even compare the two. TodayG«÷s cyber threat is well organized, well-funded, with an excellent strategic plan and 1000 times the resources you have to defend against them. The threat today is only interested in separating your organization from every penny they have. Threats have no rules, laws, morals, ethics nor feelings to answer to. They are an extreme model of being focused solely on results. The result comes unfortunately at our organizations cost. Cost not only in real dollars but in losses to productivity and innovation precisely because we have to take such extreme precautions to not become a victim. Of course the business unit sees any type of risk management as an obstacle; we are designed to be just such a thing. Keep in mind that a speed bump slows traffic in both directions equally well. Surely many readers will throw up their hands at this statement and think to themselves, same old security crap, but unfortunately this is the world we live in. Ignoring something does not make it go away. We would all prefer that there were no bad people in the world and that the only risk associated with innovation was a failed attempt at doing something different but that is simply not the case.
While I too am saddened that IT has fallen from our once really fun role as innovators and champions of the latest greatest new IT gadget or thing, after almost 20 years in multiple IT disciplines I have hopefully grown mature enough to look at the whole picture and not just the immediate gratification.

Doublewood
jacoblamm
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jacoblamm,
User Rank: Apprentice
10/12/2012 | 12:33:03 PM
re: Why Business Doesn't Look To IT For Innovation
I suspect that part of the disconnect between IT perceiving itself as an innovator and the Business perceiving IT as an innovator has to do with IT classifying G«£inventionsG«• and G«£improvementsG«• as G«£innovationsG«•. Business has a higher bar G«Ű only those inventions and improvements that end up having a market disruptive effect truly qualify as G«£innovationsG«•.
Jacob Lamm
Mark Montgomery
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Mark Montgomery,
User Rank: Strategist
10/11/2012 | 8:22:57 PM
re: Why Business Doesn't Look To IT For Innovation
Nice work Eric

We've been working at the confluence of IT and organizational management for nearly 20 years now. It's really good to see the industry trade publications placing the topic appropriately at the top of the pile of priorities. Some of the related challenges have been cultural, some structural as in hardware and software architecture in neural networks, some educational and unfortunately some cross the line of unhealthy industry alliances that favor IT managers working for vendors despite being on the paycheck of employers. More than one leading consultant/analyst has stated the latter in public. High turnover rates haven't helped, nor has ignorance of IT on boards and the ad spend of incumbents and related influence- conferences, and everything else in the ecosystem -- paid bloggers, etc., certainly hasn't done anything for those of us working to overcome the problem.

The good news apart from higher visibility as shown in this story is that a combination of basic R&D in the public sector and applied R&D in labs like ours have finally come together with advances in underlying hardware, data standards, education/awareness, and frankly economic necessity to overcome the challenges of sameness in IT, commoditization in the enterprise-but ever rising costs, with an emerging new generation of technologies designed from inception for the network environment--not just for innovation, but also crises prevention, differentiation and continuous improvement. If all goes reasonably well it should not be too far in the future that we see wide adoption of intelligent neural networks that better align interests between individuals and their organizations, including IT teams.
Wisesooth
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Wisesooth,
User Rank: Apprentice
10/10/2012 | 5:09:00 PM
re: Why Business Doesn't Look To IT For Innovation
Customers of IT are results oriented and militantly cherish their freedom from IT restrictions. IT is more process oriented, project by project, to keep the company afloat, agile, reliable, and safe from cyber preditors. IT customers couldn't care less about IT effort; they are concerned about their own effort. They hate being called "users" and other "snarl words." IT customers can buy an app for their home device for a nominal amount. They do not understand or even want to know why IT costs so much and takes forever to deliver.

The only way I know that can heal this disconnect is to involve the user community in the process with hands-on participation. That approach promotes customer "buy in" along with an appreciation of the effort required to manage change, protect the company jewels, and provide the agility to compete successfully in the marketplace.

The IT group needs to work on its image ongoing, not milestone by milestone. IT needs to show people how their work affects the organization's capabilities. Above all else, IT should stop using acronyms and talk to non-IT people in their language. Don't say "gigabit"; say 1000-speed. Don't say the backbone of the network is "xGbps"; say the network hardware talks to the computers and each other at 10,000-speed. Get the general idea?
EricLundquist
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EricLundquist,
User Rank: Apprentice
10/10/2012 | 12:14:24 PM
re: Why Business Doesn't Look To IT For Innovation
Good point. Staffs that labor without notice are not good for the staff or the company. Trying to develop a reward system around projects is a good idea.
EricLundquist
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EricLundquist,
User Rank: Apprentice
10/10/2012 | 12:13:04 PM
re: Why Business Doesn't Look To IT For Innovation
Good note and good luck getting back into the workforce.
EricLundquist
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EricLundquist,
User Rank: Apprentice
10/10/2012 | 12:11:01 PM
re: Why Business Doesn't Look To IT For Innovation
Sounds like you have something to teach those in corporate IT and their managers.
EricLundquist
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EricLundquist,
User Rank: Apprentice
10/10/2012 | 12:10:04 PM
re: Why Business Doesn't Look To IT For Innovation
Interesting. Business becomes more and more tech driven while putting more and more distance between tech and business staffs.
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