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10/6/2014
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How IT Can Spur Digital Innovation

Digital initiatives are where the action is. These 3 companies show how IT can get involved before there's a breakdown or breach.

interface design and customer experience. La Quinta outsources the application development, but Shaiva's IT group brings the discipline and methodology to the effort. Developers did the coding in three-day sprint sessions, each with marketing pros in the room to answer questions.

At each of five key project stages, the stakeholders stop to have what Shaiva calls 30-minute "tollgate" meetings, in which the business unit and IT teams go over where they're at and where they're headed. Anyone can throw up a red light -- if costs are running higher than expected, for example, or if the technology isn't cutting it. Teams have up to 48 hours to fix what led to the red light. About 5% of projects get killed at one of these tollgates, which come at what Shaiva describes as the strategy, architecture, design, build, and pre-production stages. Most projects that get killed are stopped at the strategy stage, and on occasion at the architecture stage. "We don't want cowboy development," Shaiva says. "... It's our own flavor of Agile scrum."

For example, for a recent website redesign, La Qunta implemented two-week design and development sprints that included three days of joint design, configuration, and coding sessions, where marketing teams were in the room as part of the process. It used a similar Agile process for the design of Instant Hold.

The IT-marketing relationship is among the weakest at companies, our survey finds. Just 37% of IT pros say they're highly integrated with their marketing colleagues, a percentage that's lower than with all six other functions we asked about. The non-IT pros in our survey think even less of this relationship: Just 27% say IT and marketing are highly integrated at their companies. "Keeping each other in the loop isn't collaborating," warns Shaiva.

A CEO's view of digital innovation

Insurance Auto Auctions holds live auctions at over 165 sites across North America, but buyers come from 110 countries worldwide thanks to live-streaming via web and mobile apps that offer real-time bidding and translations into six languages. PC and tablet apps let buyers monitor and bid on as many as eight live auctions at the same time, while a smartphone app lets them bid on one at a time.

Even live auction attendees are glued to their devices, viewing some of the more than 15 million vehicle photos IAA posts a year. "They're at the physical auction raising their one hand, and in the other hand they have their mobile phone and they're bidding on vehicles in another auction somewhere else," says CEO John Kett. "That's honestly something we didn't think about. We thought of them almost as discrete, but really they're using them at the same time."

IAA is living one lesson of digital business: People don't want to unplug; they expect you to make their in-person experience even better via a mobile device. IAA is adapting techniques from B2C e-commerce, such as a new project to improve vehicle image quality and let buyers zoom in to look at a car's damage more closely.

When I spoke with Kett and IAA CTO John Krupnik, they didn't talk about "aligning" IT efforts with business priorities. With tech so central to operations, Kett described sitting down with Krupnik, and the company's operations, finance, and marketing leaders to map business priorities. "John's not alone," says Kett, about his CTO balancing priorities. "... We're very much tuned into what constraints or roadblocks [IT] might have, and we help him manage through that, because ultimately we own it."

Krupnik makes sure his technologists have just as tight a connection to business priorities and challenges.

IAA's key customers, besides car buyers, are insurance companies. When insurers take in totaled vehicles, they turn to IAA to get the title and sell them as quickly as possible. When a disaster such as a hurricane or flood hits somewhere in the US, there's a surge of totaled cars in that area that need processing, overwhelming local teams. So Krupnik will send his IT team out to the field to process cars, at a time when IAA's technology is under the most intense pressure to perform.

"Normally, they don't get to see their technology directly in the hands of that user," Krupnik says. "And the stories that they share, it's amazing. There's a level of personal satisfaction with that, too, where they can really connect the dots of how they started with that requirement." IAA has an innovation team, but it's not a part of the IT organization; there aren't even IT pros on it. Kett intentionally staffed that group with people from disciplines other than tech, and from other companies and industries, to get a fresh perspective on how IAA should be using emerging technology.

Our survey suggests that few companies look to IT as the main innovation engine. When we asked which of seven factors will increase IT's importance in innovation, more than 60% of non-IT and IT did cite two factors: relying more on data analytics for business decisions, and interacting more with customers through digital channels. However, just 8% of non-IT leaders say "more innovative ideas" is the No. 1 area of improvement they need from IT.

Instead, the top three responses (covering more than three-fourths of survey respondents) on ways to improve IT are to work more closely with business units, deliver projects faster, and improve IT quality. Just 11% cite lowering IT costs.

Translation: Work with us to get stuff done, and we can figure out a way to pay for it. "If there's ROI, the money can be found," La Quinta CIO Shaiva says. "It's the ability to execute" a project in partnership with the business that matters.

Read the rest of the story in the new issue of
InformationWeek Tech Digest.
Chris Murphy is editor of InformationWeek and co-chair of the InformationWeek Conference. He has been covering technology leadership and CIO strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in ... View Full Bio

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BruceHarpham
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BruceHarpham,
User Rank: Apprentice
10/22/2014 | 2:39:25 PM
IT adds value with project management skills
@Chris Murphy,

 

I agree with your point that IT becomes more valuable (and fast) with vendor management and project management skills. Some in IT still have a "protect the manpower/resources" response to any request from the business. Glad to see that some IT departments are getting the message.

 

 
zerox203
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zerox203,
User Rank: Ninja
10/16/2014 | 5:22:32 AM
Re: How IT Can Spur Digital Innovation
It's weird, because these aren't necessarily the newest trends in the IT/Business relationship, or the newest idioms that IT pros are being told to follow.  The notion that IT ought to be integrated right into the business, and collaboration should just be how you do business (and not a special occasion), is not a new idea - but it's as true today as when it was. The difference is we've gone from 'you can't get by without computers' to 'you can't get by without the internet' to, now, 'you can't get by without mobile' or xyz other new trend.

That's how the rules have changed - the CIO is not just expected to be an evangelist of these technologies to the business, he's also expected to be incredibly agile and open to new ideas. It's his job to tell the business what it can't get by without next year - or, at the very least,  when the business side comes to him first, to know what they're talking about and have a plan in mind. SaneIT's point is very relevant - in order for that to take place, the IT pros have to know what goes on in day-to-day operations at your company. That can't be stressed enough.
SaneIT
IW Pick
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SaneIT,
User Rank: Ninja
10/8/2014 | 7:43:47 AM
Re: Spurring innovation
@ChrisMurphy,

Agile development is great but I see it executed on paper much more effectively than in real life.  When you are short staffed, which I see in many IT departments right now, you are going to be slower to take on new projects.  Then when you have a stack of prospective projects being pushed by the IT group versus one that comes to you from an exicited sales guy I think you can guess which ones get the first look.  So, how do IT folks spur digital innovation?  I think something we all need to do a little more and a little better is getting out there and seeing how everyone else functions.  Imagine the scenario where an IT manager rides around all day with a claims rep to watch how he works.  Then instead of making system X faster for your claims adjusters as a way to innovate you come back with ideas for new tools or processes that work in the real world.  I think many of us need to spend a little more time on the Information side to balance out the amount of time we spend working on the Technology side.

 
ChrisMurphy
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ChrisMurphy,
User Rank: Author
10/7/2014 | 9:33:52 PM
Re: Spurring innovation
It's an important point about capacity, SaneIT. One of the advantages i hear CIOs cite about agile development tactics is that they can re-route people as needed -- if you're working in short sprints, you have more frequent, logical stopping points where you can have people finish what they're doing and shift to another project as needed.
SaneIT
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SaneIT,
User Rank: Ninja
10/7/2014 | 8:48:43 AM
Spurring innovation
I don't know how much credit for the spurring I'd give the IT team in the Esurance example but the supportive nature is a breath of fresh air.  Too often on the IT side we get stuck in just keeping things running and don't have time to think of things that people might like to see or have access to.   The fact that the Esurance IT folks didn't just hang up the phone and laugh is a good sign for them but how many IT teams have the bandwidth to take on new projects like this quickly enough to get ahead of the market?  Innovation looks a lot like imitation when you're the second or third company to release a similar product.
Charlie Babcock
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Charlie Babcock,
User Rank: Author
10/6/2014 | 6:58:28 PM
IT organizations to like
Excellent discussion here on innovative IT organizations. I liked La Quinta Inns, but each had a distinct message.
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