One big glaring area where many are not keeping their eye on the ball, is committing resources towards ICT for business innovation. Despite extraordinary talent when it comes to innovation on the fly and the ubiquitous number eight wire approach to problem solving, most still do not dedicate the resources necessary to enable planned and structured innovation.
In a recent survey, IDC asked New Zealand CIOs "How much of your time, resources and budget is spent on innovation?"
The answer – 19 percent. Compounding this problem a meagre 17 per cent is spent on ICT governance with a majority of the resources still dedicated to operations and procurement. To put this into perspective, other Asia Pacific countries commit their resources to innovation and governance. In short, this approach is no longer sustainable, given the increasing global nature of competition.
How New Zealand CIOs allocate their time, resources and budget
Source: IDC AP C-Suite Barometer, 2015
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There is no simple answer to this challenge as it is often context and industry specific. But something does need to change within the CIO community that is not prioritising resources to innovation.
CIOs often ask IDC, "What is wrong with focusing on efficient operations and service delivery? That is what the business wants me to do."
In reality, there is nothing wrong with this approach, but it is not very innovative in of itself and therein lies the problem. CIOs have become very good at being plumbers; problems are usually structured; outcomes are easy to measure and nobody ever got fired for saving the company money and keeping systems humming along.
The problem is that for most CEOs, the operations box has already been ticked. IT has become so highly commoditised within the business that it is routine. Now CEOs, and increasingly boards, judge CIOs' level of success on their ability to deliver business innovation to increase revenue, profitability, and provide new products.
IDC research has indicated that within the next five years, less than one in 10 CIOs expect their role to continue with a plumbing, cost savings and risk management focus.
So what is holding New Zealand CIOs back in terms of dedicated budgets for innovation? The problem is three-fold:
Those in the organisation that are closest to the customers and the competitive combat zone are best positioned to identify market changes quickly and therefore experiment with quick and dirty innovations.
• New Zealand CEOs send conflicting messages. Despite all the attention to business innovation New Zealand CEOs are still tiptoeing around the innovation issue and focusing on the bottom line. Unsurprisingly this mandate is shaping the business, and so ICT priorities for New Zealand are often around operational efficiency and productivity gains, company-wide savings and improved management tools.
• Too many CIOs view innovation as something to be solved by technology partners. Almost two thirds of New Zealand CIOs reported to IDC that they leverage technology partners to source innovation and have relatively low rates of open innovation (solicited innovations from external parties such as customers) and innovation sourced from employees. There is a growing disquiet about the level of innovation being "outsourced" and how this is impacting on the viability of innovation, given the degrees of separation vendors and service providers have with the business' customers.
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• Using a top down innovation strategy instead of bottom up. Innovation direction from the top table is ill-advised as it is often shaped by an intolerance of failure and discouraging risk - some of the biggest stiflers of innovation. Innovation success often comes from the bottom up - those on the frontline who are uninsulated by layers of management and assumptions. As with the use of vendors for innovation, those in the organisation that are closest to the customers and the competitive combat zone are best positioned to identify market changes quickly and therefore experiment with quick and dirty innovations.
Given these challenges, what is a CIO to do to overcome these challenges (and many more not mentioned), to cultivate a dedicated cache of resources to dedicate to planned, rather than ad hoc innovation?
Challenge the status quo
As with any workout, the results will not happen quickly, but CIOs have demonstrated that they are good at the heavy lifting and out of the box solutions.
Therefore IDC recommends that CIOs consider building their innovation muscle by following these five steps:
1. Do something about creating a metric or metrics for innovation.
2. Start with engagement with the wider business.
3. Abstract an innovation team with the wider business with a set of resources dedicated to its potential.
4. Align innovation to business goals (the use of top down in the right way).
5. Join communities associated with innovation.
On a final note, CIOs should take a cue from Milo of Croton, a wrestling champion at the Ancient Olympic Games.
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To build your innovation muscle, get stronger. To get stronger, add weight (gradually).
Milo of Croton picked up a calf each day to carry on his shoulders. Each day for the next four years, he would do the same. As the calf grew, so did Milo's strength, until eventually he was lifting a four-year-old bull. Just make sure you don't try to pick up the innovation bull in the beginning!
Louise Francis (firstname.lastname@example.org) is IT spending research manager at IDC New Zealand.
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