RAISING THE STAKES IN IT INNOVATION

by Gabriele Piccoli, Senior Consultant, Cutter Consortium

We think that this is a great time to focus on IT innovation because, as George Westerman, a research scientist with Massachusetts Institute of Technology's Center for Information Systems Research (CISR) points out in the May 2006 issue of Cutter Benchmark Review (CBR), innovation is alive and well in IT shops around the world, after years of tightening budgets and requests for keeping the lights on utilizing fewer and fewer resources. In some respects, we never stopped innovating; after all, you have to be quite resourceful to figure out how to do more with less. But our survey results suggest that the nature of the innovations is moving beyond strict efficiency objectives. While budgets for the innovations our respondents described remain somewhat limited (with less than a quarter of the respondents describing initiatives with an above-average budget size), the focus of the innovation efforts is moving beyond the IT department (only a third of innovations described by our respondents were internal to the IT function).

As IT innovation is increasingly in direct contact with the business -- be it in an effort to improve business processes or to increase revenue generation -- we have an important opportunity to raise the stakes of IT innovation and demonstrate how IT innovation can have dramatic business impact. This is much easier said than done, I recognize. As George shows in his analysis (in CBR), the most visible and attention-gathering type of innovation -- revenue-enhancing initiatives -- are also the riskiest, with about a 30% success rate. Developing a deep understanding, a priori, of the business drivers and processes impacted by the initiative so as to be sure to marshal the appropriate resources and support, seems the only way to manage the risk associated with these initiatives.

With the opportunity to engage in innovation now available, Lee Devin, Professor of Theater Emeritus at Swarthmore College and author on the subject of innovation, spurs us (in the same issue of CBR) to raise the stakes. I would add a caveat at this point: there are a number of organizations for which IT serves mainly as a support function -- it is a necessary evil of sorts. These are not the types of organizations where raising the stakes makes sense. But for all others, IT innovation is instrumental to the creation and appropriation of economic value. Mind you, this does not mean that you have to develop or adopt cutting-edge technology for the sake of innovating -- in this case, you will be most likely dissipating value and losing credibility. I was pleased to see that many of our respondents focused on innovations that were not an IT product or software program. In 34% of the cases, IT enabled the innovation; and in 11% of the cases, IT was not even an integral part of the innovation, instead it was a critical tool to create/envision the innovation.

I agree with Lee -- it is time to raise the stakes. Doing so makes us all uncomfortable, I can attest to that myself as my bias is naturally toward analysis and effective utilization of client resources when I consult. (It's a different story when I have my academic hat on. Then I am much more comfortable pondering and playing with ideas even if they seem to lead nowhere anytime soon.) Yet as I read Lee's contribution, I thought of all the organizations, beyond Google, that justify allocating resources to take a "timeout" from day-to-day business operations to let the creative juices flow. Amazon.com is famous for it, as is Bill Gates with his yearly retreats.

Is IT innovation important for your organization? If so, the time has come to find a way to create enough slack resources in your IT shop to buy time and brain-cycles for your employees to have the best chance to succeed at it. And because so much of the impact of IT innovation is generated in partnership with the business, you will need to institutionalize a way for IT and business "actors" (to use Lee's theater metaphor) to interact and play off of each other. Finally, you will need to reconsider how you define, identify, and treat "failure." The time is now to raise the stakes of IT innovations. I don't think this proposition will be overly costly or risky. After all, that's what we, IT people, do: we create magic on a shoestring while cleverly managing risk.

-- Gabriele Piccoli, Senior Consultant, Cutter Consortium