Monday, November 22, 2010

Stop Killing Innovation

I hear and read a lot about how IT is supposed to innovate to enable "the business." Anytime I see "IT" in one part of a sentence and "the business" in another, a little part of me dies. Somewhere there is a Nirvana where "thought leaders" understand that there is no business without IT, that IT is as part of the business as the sales person or factory worker or janitor, and that IT would be better off not constantly justifying its existence to "the business." But I digress.

I want to address the "innovation" issue in this post. CIO magazine recently published an interview with Vinnie Mirchandani titled Taking Business Risks With Your IT Budget. I liked what Mr Mirchandani had to say, although I'm going to omit his multiple references to "cloud." Instead, consider how he sees innovation in IT:

More [CIOs] want to be [innovators], but organizations don’t let them...

In the 1980s, we talked about IT as a competitive advantage... In the 1990s, we didn’t hear much of that at all, and IT started reporting to CFOs. In the early 2000s, the CFO made IT a compliance function for auditing and security.

We’ve beaten the innovation out of CIOs at many companies. We want them to be risk mitigators, not innovators. People are afraid to be associated with any failure. They buy IT from vendors that are safe choices. They know they’re overspending, yet they do it anyway...

Mr Mirchandani doesn't say this, but he could have also mentioned that many managers expect CIOs to be "productivity engines," meaning they inherently shrink their budget every year. This drives cost reduction as the primary goal for an IT shop -- not innovation. It's like expecting the business development team to concentrate on decreasing the amount of money spent per new customer acquired, while not caring so much on the quantity or quality of the new customers -- if any!

So what to do?

The best thing they could do is get out from under the CFO. Go to your CEO and say, “I want to report to you.” Make sure the CFO doesn’t stand in the way. Some CIOs will get fired for doing that. Others will get a chance...

Cost pressure isn't limited to those who only report to the CFO, but he doesn't address that issue.

The shocking thing about corporate IT is that without realizing it, 85 percent to 90 percent of the IT spend is with a vendor, including outsourcers and the staff you buy from them...

When you’re spending 90 percent of your money with a vendor, you have only a sliver left for [internal] talent — yet it’s with your own internal talent that you can innovate. There’s very little left for CIOs to innovate with.

The more progressive CIOs are saying they’ve overdone it with outsourcing and are starting to hire their own enterprise architects and business analysts and other strategic resources.

To me this is the crux of the issue. Businesses cannot outsource innovation. Businesses can crush innovation pretty easily though.

I found one comment he made about the cloud to be very interesting:

CIOs resist it. It’s not secure, they say. It’s not always available. CIOs say cloud vendors go down too often.

I know CIOs who haven’t run a full disaster-recovery drill for years and turn around and say that the cloud isn’t production-ready.

So, my message to readers is this: if cost-out, five nines uptime, outsourced workforces, and other failed strategies are your goal, forget innovation. If you want innovation to thrive, try considering the alternatives.


vinnie mirchandani said...

thanks for the mention.

Yes, the many references to cloud seemed odd. The reporter used some of the other innovation areas I described like sensory networks, predictive analytics etc in other articles she wrote.

gunnar said...

IT and "the business" should never have been separated, its an historical accident. There should be three departments: Product Development (design, R&D), Product Deployment (Go to Market), and Product Operations.

Each department comprised of "IT" and "business" people on the same incentive plans. You are either building a product or service, deploying it to a market or operating it. Computers and information are implicit at each step. The artificial separation of business and IT only fosters confusion and delay to quote Sir Topham Hatt, neither IT not business gains anything from the separation.

Anonymous said...

I think it's absolutely spot-on to say IT innovation is killed by the business culture/practice of beating IT down for any issues at all (or costs). This conditions IT to be risk averse. Many decisions are about CYA or being able to pass-the-buck on failures (even small ones).


Anonymous said...

What do you think about the recent comments by the individual who is in line to become the CIO at the VA.

He told congres that CIO's sould be appointed (by the administration)

That means changes every 2 - 3 years, or after every change in adminstration.