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The Innovation Imperative: Why IT Needs to Lead Now

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The Innovation Imperative is upon IT now. While some companies embrace and reward innovation in their organizations, others struggle to put the right processes and resources in place to make …

The Innovation Imperative is upon IT now. While some companies embrace and reward innovation in their organizations, others struggle to put the right processes and resources in place to make innovation a reality. With the onslaught of new technologies easily accessible by end users, IT needs to take the lead now to prove it is the innovation engine for the business. This presentation includes data from a CA Technologies sponsored IDG Research Services study of the state of innovation worldwide.
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  • 1. The Innovation Imperative:Why IT Needs to Lead NowSeptember, 2012
  • 2. Some thoughts on innovation “Innovation is creativity with a job to do” – John Emmerling You miss 100% of the shots you never take” – Wayne Gretzkey “There’s a way to do it better – find it” – Thomas Edison Never innovate to compete, innovate to change the rules of the game” – David O. Adeife2 Copyright © 2012 CA. All rights reserved.
  • 3. The age of technology innovation CLOUD SOCIAL BIG DATA MOBILE INTERNET OF COMPUTING NETWORK ANALYTICS DEVICE THINGS 88% new 30 billion 2-7 Zetabytes Mobile web 15 billion commercial pieces of 90% unstructured3 bigger than networked enterprise apps content shared desktop internet devices by 20155 will move to on Facebook by 20154 the cloud1 every month21 IDC, ‘IDC Predictions 2012: Competing for 2020,” IDC #231720, December 2011.2 Ijustdid.org, ‘30 Billion Pieces of Content Shared on Facebook Monthly,’ Jonha Ravesencio, November 30, 2011. Data sources cited: Google, BBC.3 CenturyLink projections cited in ReadWriteWeb article, “Infographic: Data Deluge -- 8 Zettabytes of Data by 2015,” November 17, 2011.4 Morgan Stanley data from ‘The Mobile Internet Report December 15, 2009. Cited in Mashable article, ‘New Study Shows the Mobile Web will Rule by 2015,’ April 13, 2010.5 PCWorld, ‘Cisco Predicts 15 Billion Networked Devices in 2015,’ citing data from Cisco Visual Networking Index Forecast. , June 1, 2011.
  • 4. Cloud Computing … IT no longer “the only game in town” Business CLOUD COMPUTING Consumer4 Copyright © 2012 CA. All rights reserved.
  • 5. Consumer Driven IT . . . a tipping point IT User IT ConsumerDependent WORK STYLE Self-ServiceThe Office LOCATION AnywhereM-F, 9-5 WORK HOURS 24/7 FlexibilityDevices NEEDS Scalability IT Users have matured to become IT CONSUMERS5 Copyright © 2012 CA. All rights reserved.
  • 6. The Innovation ImperativeIT must innovate to deliver new services to While optimizing delivery of support initiatives that drive revenue mainstream IT Client Agile Cloud Standardized Automation Bring Your Mobility Social Big Data SaaS Rationalization Experience Delivery Infrastructure Reengineering Own Device …AND do it faster than your competitors! The opportunity for IT is to become the catalyst and innovation driver who will define and execute their organization’s business-centric strategies to:  create innovation faster from scratch  unleash innovation by transforming existing resources  secure innovation across their entire environment 6 Copyright © 2012 CA. All rights reserved.
  • 7. Are you ready to respond to the Innovation Imperative?1. How well is your IT organization positioned to be able to respond to the Innovation Imperative?2. Do your business executives agree with your assessment, and how can you improve alignment?3. What barriers and obstacles are you facing?4. Have you identified the benefits for your innovation projects as well as the risks of not innovating?5. Are you investing for innovation while still supporting ongoing maintenance?7 Copyright © 2012 CA. All rights reserved.
  • 8. Insight from your peers CA Technologies recently sponsored an in-depth survey of 800 IT and business executives from large organizations in the U.S., Brazil, U.K., France, Germany, Australia, Japan and Singapore. The research explored key topics in innovation, and the evolving role of IT as a key driver of innovation for their organization The results may surprise you! In this survey we define innovation as a “practice, process or technology that is demonstrably new and different and has a measurable positive impact on an organization’s success”8 Copyright © 2012 CA. All rights reserved.
  • 9. A few highlights 48% of your peers report that innovation is widely practiced at their organizations, while 20% indicate innovation is minimal or nonexistent Surprisingly, innovative organizations emphasize analysis, process and structure as much as experimentation and exploration Customers are often the driving force behind innovation and meeting their needs is a leading trigger for investment in innovation. There are major gaps in perception between IT and business executives on what IT’s role is in innovation and how prepared they are to drive innovation. Lack of budget and resources remain a key obstacle to innovation. While current investment in innovation is low, 69% expect spending on innovation to increase over the next year. Roughly 80% report their organizations have achieved or expect to achieve higher customer satisfaction and increased speed to market as a result of innovation. 99 Copyright © 2012 CA. All rights reserved.
  • 10. Research Results 1. Current state and best practices around innovation 2. Top triggers, obstacles and benefits 3. Investing in innovation 4. IT Report Card10 Copyright © 2012 CA. All rights reserved.
  • 11. State of innovation: 48% report that innovation is widely 1. Current state and bestpracticed, while 20% say it is minimal or nonexistent practices Current State of Innovation Established and Formulized 13% Frequent: widely practiced and encouraged 35% 48% Moderate: Pockets of innovation and supporting culture 32% Minimal: Pockets of innovation,culture does not support or reward 16% 20% None: Innovation is nice-to-have and largely unsupported 4% 33% of organizations in the U.S. report that innovation is minimal or nonexistent Q1: Which of the following best describes the current state of innovation in your organization? Base: Total 80011 Copyright © 2012 CA. All rights reserved.
  • 12. Innovative organizations emphasize planning and process 1. Current state and besteven more than experimentation and hypothesizing practices PERCENT PLACING SIGNIFICANT EMPHASIS ON EACH ACTIVITY Innovation is Frequent/ Innovation is Minimal/ Established NonexistentMeeting current customer needs 71% 48%Analyzing and planning 67% 37%Anticipating future customer needs 69% 36%Exploiting what you already know 62% 45%Stressing process and structure 56% 35%Allowing freedom and flexibility 54% 26%Hypothesizing and learning 52% 29%Rewarding experimentation 50% 24%Exploring the unknown 48% 29%Not straying too far from what you know well 33% 39% The U.S. more likely to report emphasis is minimal or nonexistent on exploring is the unknown (47%) and experimentation (43%) Q2: How would you rate the level of emphasis your company places on each of the following in its day-to-day activities? Base: Freq/Est 387. Minimal/None 15612
  • 13. For technology projects, “iteration” is much more 1. Current state and best prevalent than “disruption” practices Percent indicating innovation projects fall under each category frequently Technology iteration/evolution 46% Service innovation 43% Design innovation 40%Business model innovation (e.g., pricing models) 38%Business process innovation (e.g., supply chain) 35% Route to market/channel innovation 34% Technology disruption 30% Q3: Thinking of past, current or planned innovation projects within your organization, how frequently do these projects fall under each category? Base: WW 750 (Those who report at least minimal levels of innovation at their organizations) 13 Copyright © 2012 CA. All rights reserved.
  • 14. 74% of the most innovative orgs have formal 1. Current state and best processes to measure innovation practices Measuring Success with Innovation Projects Formal technology-enabled measurement 39% process 17% Formal but manual measurement process 35% 35% Informal ad-hoc measurement processes 16% 28% No processes in place 9% 16%We have not completed any innovation projects 1% 3% Innovation Freq Innovation Minimal 55% of organizations in the U.S. report no or only ad-hoc processes to measure innovation Q20: How does your organization measure its success with innovation projects? Base: Freq /Est 387, Minimal /None 156 14 Copyright © 2012 CA. All rights reserved.
  • 15. Research Results 1. Current state and best practices around innovation 2. Top triggers, obstacles and benefits 3. Investing in innovation 4. IT Report Card15 Copyright © 2012 CA. All rights reserved.
  • 16. Customers are the #1 instigator, customer needs 2. Triggers, obstacles and one of the top 2 triggers of innovation benefits Biggest Instigator of Innovation Major triggers of Innovation Competitors 10% Customers LOB employees 26% 16% IT Exec Mgmt 24% 25%U.S. more likely to report “mandate from the executive team” as trigger(31% versus 18% in total) Q4: Regardless of whether innovation is supported or encouraged currently, what have been or would be the most likely triggers to spur innovation within your organization? (Please select up to three.) Base: WW 800 Q5: Which group or function is the single biggest instigator of innovation for your organization? Base: WW 800 16 Copyright © 2012 CA. All rights reserved.
  • 17. LOB employees and exec management are biggest 2. Triggers, obstacles androadblocks, major obstacles are budget and time benefits Biggest Roadblock to Innovation Obstacles to Innovation Competitors Customers 14% 15% LOBemployees Exec Mgmt 26% 26% IT 19% Many more in the U.S. (versus total) report issues with lack of budget (47% vs 29%) and no time to think (43% vs 27%) Q7: What are the major obstacles to innovation at your organization? (Please select up to three.) Base: WW 800 Q6: Which group or function is the single biggest roadblock to innovation for your organization? Base: WW 80017 Copyright © 2012 CA. All rights reserved.
  • 18. Benefits achieved and expected as a result 2. Triggers, obstacles and of innovation benefits Higher customer satisfaction 33% 53% 10% 4% Increased speed to market 32% 47% 16% 5% Ability to enter new markets 31% 51% 14% 5% Increase in profit 31% 54% 11% 4%Increase in revenue/market share 30% 53% 12% 5% Identified growth opportunities 29% 52% 14% 5% Higher employee satisfaction 29% 50% 16% 5% Competitive advantage 28% 53% 14% 5% Decrease in capital investments 22% 45% 26% Benefit Achieved Benefit Expected Benefit Not Achieved or Expected Dont know Q21: Which of the following benefits has your organization achieved or is it expecting as a result of innovation? Base: WW 800 18 Copyright © 2012 CA. All rights reserved.
  • 19. Potential outcomes resulting from a lack 2. Triggers, obstacles andof investment in innovation benefits Inability to attract new customers /markets 37% Increased competitive pressure 33% Revenue loss 31% Loss or inability to attract skilled resources 29% Profit loss 29% Loss of traditionally loyal customers 26% Increased need for capital investments 22% Damage to company/brand reputation 21% Q12: Which of the following potential outcomes are a likely result of a lack of investment in innovation? (Please select up to three.) Base: WW 80019 Copyright © 2012 CA. All rights reserved.
  • 20. Research Results 1. Current state and best practices around innovation 2. Top triggers, obstacles and benefits 3. Investing in innovation 4. IT Report Card20 Copyright © 2012 CA. All rights reserved.
  • 21. IT budget allocation will be shifting modestly towards 3. Investing indelivering new business services innovation IT Spending Today IT Spending 3 years from now 37% 42% 63% 58% Maintaining current systems ("keeping the lights on") Delivering new business services The U.S. is showing a greater shift, from 73/27 to 63/36 in three years but still lags Q13a: What percent of your IT spending today is allocated to the following? Base: WW 800 Q13b: Three years from now, what percent of your IT spending do you expect will be allocated to the following: Base: WW 80021 Copyright © 2012 CA. All rights reserved.
  • 22. Low investment in innovation today, but likely 3. Investing in to increase 10-30% in next year innovation Average Percent of Current IT Spend Expected Change in Innovation Characterized as “Innovation” Spend Spend Over next 12 Months Dont know No change 5% 29% 13% 20% 20% 21% Decrease Increase (NET) 14% 13% (NET) 69% Total United States EMEA APAC Latin America Innovation spending is evenly divided between IT and Corp/LOB budgetsQ14: What percentage of your organization’s current IT spend would you characterize as “innovation” spend? That is, spending on technology,services, equipment, and/or human resources that are intended to enable innovation within the organization. Base: WW 800Q15: Overall (including both IT and non-IT budgets), how do you expect the level of spending on innovation at your organization (e.g., the technology,people and processes that support it) to change over the next 12 months? Base: WW 800Q16: With the total equal to 100%, approximately what percent of spending on innovation at your organization over the past 12 months (e.g., thetechnology, people and processes that support it) fell under IT’s budget versus that of the business? Base: WW 800 22 Copyright © 2012 CA. All rights reserved.
  • 23. Mobile and Cloud will see the largest investments 3. Investing in over next 12 months innovation Mobile technology 37% Cloud computing 35% Business Intelligence/Analytics 26% Security management 26% Service management 25% Virtualization 25% Automation 23% Collaboration tools 22% Social media 19% “Internet of Things” 16% Portfolio/Project management tools 15% Rich Media/Video 12% 0% 10% 20% 30% 40%Q11: In which of the following technologies will your organization invest or increase investment over the next 12 months? (Please check all that apply.)Base: WW 800 23 Copyright © 2012 CA. All rights reserved.
  • 24. Research Results 1. Current state and best practices around innovation 2. Top triggers, obstacles and benefits 3. Investing in innovation 4. IT Report Card24 Copyright © 2012 CA. All rights reserved.
  • 25. Who is the biggest instigator of innovation? 4. IT Report Card 20 point gap IT Respondents Business Executive Respondents IT 34% Top management 30% Customers 22% Customers 20%Top management 20% LOB employees 17% LOB employees 14% IT 14% Competitors 10% Competitors 9% 0% 10% 20% 30% 40% 0% 10% 20% 30% 40% Q5: Which group or function is the single biggest instigator of innovation for your organization? Base: IT 399 Bus Execs 401 25 Copyright © 2012 CA. All rights reserved.
  • 26. What is the perception of the CIO/top IT Exec 4. IT Report Cardrole with regard to innovation? 13 point gap IT Respondents Business Executive Respondents Authority or expert Authority or expert 34% 21% on innovation on innovation Not an “expert” but Not an “expert” but 24% 29% a proactive champion a proactive champion Enabler of Enabler of 30% 32% innovation innovation IT does not play a IT does not play a 7% 10% major role major role Barrier to 6% Barrier to 7% innovation innovation Q19a: What is the perception of the role of the CIO or top IT executive in your organization with regard to innovation? Base: IT 399 Bus Execs 40126 Copyright © 2012 CA. All rights reserved.
  • 27. How important is it that your CIO or top IT Executive 4. IT Report Cardbe a proactive champion of innovation? Business Executive Respondents Critical 20% 73% Very important 53% Somewhat important 19% Not very important 7% Not at all important 2% Q19b: Regardless of the current perception, how important is it that your organization’s CIO or top IT executive take on the role of a proactive champion of innovation? Base: Bus Execs 40127 Copyright © 2012 CA. All rights reserved.
  • 28. Current relationship between IT and the business is 4. IT Report Cardthe most positive in innovative organizations Collaborative 31% 18% 78% Innovative Orgs (58% Non-Innovative Orgs) Cooperative 47% 40%Neutral or Siloed 17% 32% Distrustful/Wary 4% 23% Innovative Orgs 8% (42% Non-Innovative Orgs) 2% Combative 2% Innovation Frequent/Est Innovation Minimal/None Q17: Which of the following best describes the current relationship between IT and the business with respect to innovation at your organization? Base: Freq/Est 387, Minimal/No: 15628 Copyright © 2012 CA. All rights reserved.
  • 29. How innovative projects are led: percent indicating 4. IT Report Card “frequently” for each scenario Business-Led: The business approaches IT first with 42%their technology requirements to support a new project 42%Collaborative Process: IT and the business engage in an 25% established process to identify new projects/opportunities for innovation 34% IT-Led: IT approaches the business with opportunities 19%to invest in new technology that will enable innovation 34% Perception gap Stealth IT: The business circumvents IT and purchases 19% technology on their own to support a new project 28% 12 % Bus Exec Respondents IT Respondents Q18: How frequently do the following scenarios occur within your organization with respect to innovative projects? Base: IT 399 Bus Execs 401 29 Copyright © 2012 CA. All rights reserved.
  • 30. IT’s ability to support innovation (% rating excellent/good) 4. IT Report Card Bus Execs more negative across all areas 75% Knowledge of the business 62% 72% Technical skills and expertise 62% 75% Receptiveness to new ideas 59% 16 point gap! 69% Business and communication skills 58% 70% Access to the right technology 57% 62% Overall speed and agility 51% 57%Staff level (amount of available staff) 47% 53% Available budget 46% IT Responents Bus Exec Respondents Q8: How would you rate IT’s ability to support and enable innovation within your organization in terms of the following? Base: IT 399 Bus Execs 401 30 Copyright © 2012 CA. All rights reserved.
  • 31. Advice from business executives on what IT can do 4. IT Report Card to better support innovation Increase speed/productivity 29% Increase business knowledge within IT 26% Be more proactive in identifying opportunities for innovation 26% Improve communication and alignment w/the business 25% Provide better access to data for decision-making 23% Be more proactive in identifying technology to fuel innovation 22% Invest in new talent/skills 22% Reprioritize IT spending towards innovation 21% Develop tools to streamline innovation processes 19% Help the business quantify/measure benefits 17% 0% 10% 20% 30% 40%Q9: In your opinion, how can IT better support innovation initiatives at your organization? (Please select up to three.) Base: WW 800 31 31 Copyright © 2012 CA. All rights reserved.
  • 32. IT is slightly more confident than Bus Executives that their 4. IT Reportorganizations will be successful implementing innovation projects Card 64% 56% 32% 28% 13% 8% Extremely/Very confident Somewhat confident Not very/not at all confident IT Respondents Bus Exec Respondents U.S. respondents are less optimistic – only 42% are extremely/very confident, and 21% are not very/not at all confident Q23: Overall, how confident are you that your organization will be successful in implementing the innovation projects it needs to be successful? Base: IT 399 Bus Execs 40132 Copyright © 2012 CA. All rights reserved.
  • 33. Action plan – steps to take next Share this research with your peers in the business – begin a dialogue on the role your IT organization can and should play in driving innovation Assess your current project priorities – is the balance in line? Are you doing enough to support innovation? What can you stop doing? Assess your organizations current skills and expertise – do you have what it will take to succeed in driving innovation versus keeping the lights on? Consider formalizing how innovation fits into your existing processes -- innovative companies emphasize planning, process and structure Look for ways to tap into your customers for suggestions on new services or ways you can improve your business Be sure to enroll your executive management – show them the bottom line benefits and potential to improve the organization’s market position through your proposed innovation projects33 Copyright © 2012 CA. All rights reserved.
  • 34. Research methodology This presentation contains the tabulated results from a custom global survey on the topic of innovation by CA Technologies, conducted by IDG in July 2012. This survey was administered online and programmed in English, German, French, Japanese, and Brazilian Portuguese. Invitations were sent to IDG Enterprise Research Panel members with the goal of collecting 800 total completes from among the larger pool. Results are based upon qualified responses among individuals who met the following criteria:  IT Executive (Director or above) or business executive (VP and above) title  Employed at an enterprise organization (revenues of $1 billion or more in the United States and $250 million or more outside the U.S.) A combined total of 800 surveys were completed online between June 28, 2012 and July 16, 2012 in the following regions: 150 in the United States, 300 in EMEA (100 each in the UK, Germany and France), 275 in APAC (100 each in Japan and Singapore, and 75 in Australia), 75 in Latin America (Brazil) The margin of error for a sample size of 800 is +/- 3.5 percentage points. Qualified respondents were required to answer all questions. Percentages on single select questions may not sum to 100% due to rounding.34 Copyright © 2012 CA. All rights reserved.
  • 35. Copyright © 2012 CA. All rights reserved. All trademarks, trade names, servicemarks and logos referenced herein belong to their respective companies. Thisdocument is for your informational purposes only. CA assumes noresponsibility for the accuracy or completeness of the information. To theextent permitted by applicable law, CA provides this document “as is” withoutwarranty of any kind, including, without limitation, any implied warranties ofmerchantability, fitness for a particular purpose, or non-infringement. In noevent will CA be liable for any loss or damage, direct or indirect, from the useof this document, including, without limitation, lost profits, businessinterruption, goodwill or lost data, even if CA is expressly advised in advanceof the possibility of such damages.35 Copyright © 2012 CA. All rights reserved.