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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.

An Esurance customer who gets in a fender bender can fire up a smartphone app, let the call center rep see the damage through real-time video using the phone's camera, and use the same app to talk with the rep and file a claim. Esurance's goal is to process claims faster and make it easier on the customer.

As I talk with Esurance software development VP Phil Rodoni about how the company came up with the idea for this video app, he glosses right over one of the most important steps. Rodoni explains that Joe Laurentino, VP of material damage, uses Apple's FaceTime with his family and wondered if real-time video could help Esurance speed up claims processing. So Laurentino called Rodoni's development team, which led to a bunch of developers having lunch and sketching out which features people might want and the technology that would make it possible.

Right there, that's it. Do you even see that moment, Phil? A person working in claims had a bright idea about using tech, and Step 1 was to call the IT team and ask: "Whaddya think?" That's not how it works at all companies, Phil. In our recent IT Perception Survey, 72% of the 238 IT pros who responded said they "completely agree" that IT should work closely with business unit execs to develop innovative apps. But just 54% of the 92 non-IT pros who responded said they feel that strongly, with the rest mostly in the "somewhat agree" or neutral category. That's 18 points of separation on how IT fits into the innovation picture.

Customer-facing mobile apps. New products embedded with technology. Analytics-driven marketing programs. Fast-moving, customer-facing digital initiatives like those and Esurance's video appraisal are where the action and prestige are for technologists. Yet IT too often gets the call only when something breaks or is breached.

I asked Rodoni about that call from Laurentino, and he says that's just how things work at Esurance. IT people are embedded in business units, including the claims group. But as a company built from scratch as an online insurance company (now owned by Allstate), it's also just part of the culture that IT is integral to most every project. "If someone has an idea technology-wise, I can't think of a case where they didn't pick up the phone," Rodoni says. "That's not to say we do all things in house, but they usually ask us, 'Hey, can we do this?' and they think of us as the general contractor in terms of how we can go get this thing built."

[Can IT teams deliver the innovation companies need? Read IT Has A Reputation Problem.]

As we talked about the video appraisal project, I heard a couple of other factors that must contribute to Esurance's IT folks getting called in early to digital business projects.

One is the need for speed. In six weeks, IT had a prototype in colleagues' hands. The app was in front of customers in about four months, Rodoni says. Often the reason business units veer around the IT organization is the fear that in-house IT can't deliver fast enough.

The other is hands-on teamwork. Esurance developers went from the San Francisco IT office to the Dallas office, where customer-support agents work, to see how the app would fit into their colleagues' workday. Little things matter, like testing headsets until they found the one that works best. IT shipped devices loaded with the app to field appraisers nationwide so they could test the app in the parking lots and back roads that customers would call from. Field testing taught some vital lessons, such as how much bandwidth customers would need -- how many bars on their smartphones -- to even start a video session.

Sure, it's easy for a born-on-the-web company to live and breathe such digital innovation, right? But what about La Quinta Inns & Suites, a 46-year-old hotel chain that outsources all of its app development? Or Insurance Auto Auctions, which does the gritty work of auctioning off totaled cars for insurance companies? InformationWeek recognized all three companies as innovators on this year's InformationWeek Elite 100 ranking. Here's how La Quinta and IAA are also driving digital innovation, and the role that IT plays in that journey.

"In the loop" isn't collaboration

Although La Quinta outsources all of its app dev, its IT team still partnered with the marketing team on a mobile initiative that made it easier for customers to book hotel reservations.

La Quinta CIO Vivek Shaiva describes how the company's marketing and IT pros listened in together on customer focus groups. They took that feedback, started brainstorming innovative new ideas, and "somewhere in that process, we came up with this idea of Instant Hold," Shaiva says.

Instant Hold is La Quinta's answer to how annoying it is to type in a 16-digit credit card number plus expiration date onto a little smartphone screen in order to make a reservation. Started last year, Instant Hold lets customers hold a room for four hours using their mobile phone number, until they can arrive in person, call, or get to a PC to book with a credit card number. (La Quinta has applied for a patent on the function.)

Did marketing really need IT's involvement? Or could it have cooked up that idea by itself, and then hired an outside mobile development team to code it? Yes, in theory, it could have. But Instant Hold creates a ripple effect. Local hotel managers must know if a room is being held, so that they don't give it away, and that means the new interface had to be integrated with the company's property management system for its 848 hotels. La Quinta also must watch for abuse, like someone holding 20 rooms with one number. And so on. "Multiply anything by 800 hotels, and it's not an easy job to deploy these technologies," Shaiva says.

IT must be known as the indispensable partner for scale, integration, security, and performance of any digital initiative. Ideally, IT must build a reputation for great vendor and project management, and for user

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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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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.
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.
ChrisMurphy
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ChrisMurphy,
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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
10/8/2014 | 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.

 
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.
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.

 

 
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