Innovation Imperative: Why IT Needs to Act Now

The Innovation Imperative: Why IT Needs to Lead Now

September, 2012

“Innovation is creativity with a

job to do” – John Emmerling

2 Copyright © 2012 CA. All rights reserved.

You miss 100% of the shots you never take”

– Wayne Gretzkey

Some thoughts on innovation

“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. Adeife

The age of technology innovation

88% newcommercial

enterprise apps will move to

the cloud1

CLOUDCOMPUTING

30 billion pieces of

content shared on Facebook every month2

SOCIALNETWORK

2-7 Zetabytes90% unstructured3

BIG DATAANALYTICS

Mobile web bigger than

desktop internet by 20154

MOBILEDEVICE

15 billion networked

devices by 20155

INTERNET OF THINGS

1 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.

http://ijustdid.org/2011/11/facebook-sharing/

http://www.readwriteweb.com/enterprise/2011/11/infographic-data-deluge---8-ze.php




http://www.morganstanley.com/institutional/techresearch/pdfs/Theme_6_Data_Growth.pdf

http://mashable.com/2010/04/13/mobile-web-stats/

http://www.pcworld.com/businesscenter/article/229170/cisco_predicts_15_billion_network_devices_in_2015.html

http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=324003

4

Cloud Computing … IT no longer “the only game in town”

Copyright © 2012 CA. All rights reserved.

Business

Consumer

CLOUDCOMPUTING

5

Consumer Driven IT . . . a tipping point

Copyright © 2012 CA. All rights reserved.

Self-Service

Anywhere

24/7

IT ConsumerIT User

IT Users have matured to become IT CONSUMERS

FlexibilityScalability

Dependent

The Office

M-F, 9-5

Devices

WORK STYLE

LOCATION

WORK HOURS

NEEDS


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

The Innovation Imperative

IT must innovate to deliver new services to support initiatives that drive revenue

Mobility Social Big Data SaaSClient

Experience

While optimizing delivery of mainstream IT

RationalizationAgile Cloud

DeliveryStandardized Infrastructure

Automation Reengineering

Bring Your Own Device

…AND do it faster than your competitors!


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?


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”

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!

Insight from your peers

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.

Copyright © 2012 CA. All rights reserved.9


Research Results

1. Current state and best practices around innovation

2. Top triggers, obstacles and benefits

3. Investing in innovation

4. IT Report Card

State of innovation: 48% report that innovation is widely practiced, while 20% say it is minimal or nonexistent

None: Innovation is nice-to-have and largely unsupported

Minimal: Pockets of innovation, culture does not support or reward

Moderate: Pockets of innovation and supporting culture

Frequent: widely practiced and encouraged

Established and Formulized

4%

16%

32%

35%

13%

Current State of Innovation


48%

20%

1. Current state and

best practices

Q1: Which of the following best describes the current state of innovation in your organization? Base: Total 800

33% of organizations in the U.S. report that innovation is minimal or nonexistent

Innovative organizations emphasize planning and process even more than experimentation and hypothesizing

PERCENT PLACING SIGNIFICANT EMPHASIS ON EACH ACTIVITY

Innovation is Frequent/Established

Innovation is Minimal/Nonexistent

Meeting 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%


best practices

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 156

The U.S. more likely to report emphasis is minimal or nonexistent on exploring is the unknown (47%) and experimentation (43%)

12

For technology projects, “iteration” is much more prevalent than “disruption”

Technology disruption

Route to market/channel innovation

Business process innovation (e.g., supply chain)

Business model innovation (e.g., pricing models)

Design innovation

Service innovation

Technology iteration/evolution

30%

34%

35%

38%

40%

43%

46%

Percent indicating innovation projects fall under each category frequently



best practices

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)

74% of the most innovative orgs have formal processes to measure innovation

We have not completed any innovation projects

No processes in place

Informal ad-hoc measurement processes

Formal but manual measurement process

Formal technology-enabled measurement process

3%

16%

28%

35%

17%

1%

9%

16%

35%

39%

Innovation Freq Innovation Minimal



best practices

Q20: How does your organization measure its success with innovation projects? Base: Freq /Est 387, Minimal /None 156

55% of organizations in the U.S. report no or only ad-hoc processes to measure innovation

Measuring Success with Innovation Projects


Research Results




4. IT Report Card

Customers are the #1 instigator, customer needs one of the top 2 triggers of innovation

Biggest Instigator of Innovation Major triggers of Innovation


Customers26%

Exec Mgmt25%

IT24%

LOB em-

ployees16%

Competitors10%

2. Triggers, obstacles

and benefits

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

U.S. more likely to report “mandate from the executive team” as trigger(31% versus 18% in total)

LOB employees and exec management are biggest roadblocks, major obstacles are budget and time



and benefits

Customers15%

Exec Mgmt26%

IT19%

LOB em-

ployees26%

Competitors14%

Biggest Roadblock to Innovation Obstacles to Innovation

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 800

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%)

Q21: Which of the following benefits has your organization achieved or is it expecting as a result of innovation? Base: WW 800

Benefits achieved and expected as a result of innovation

Decrease in capital investments

Competitive advantage

Higher employee satisfaction

Identified growth opportunities

Increase in revenue/market share

Increase in profit

Ability to enter new markets

Increased speed to market

Higher customer satisfaction

22%

28%

29%

29%

30%

31%

31%

32%

33%

45%

53%

50%

52%

53%

54%

51%

47%

53%

26%

14%

16%

14%

12%

11%

14%

16%

10%

5%

5%

5%

5%

4%

5%

5%

4%

Benefit Achieved Benefit Expected Benefit Not Achieved or Expected Don't know



and benefits

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 800

Potential outcomes resulting from a lack of investment in innovation


21%

22%

26%

29%

29%

31%

33%

37%

Damage to company/brand reputation

Increased need for capital investments

Loss of traditionally loyal customers

Profit loss

Loss or inability to attract skilled resources

Revenue loss

Increased competitive pressure

Inability to attract new customers /markets


and benefits


Research Results




4. IT Report Card

IT budget allocation will be shifting modestly towards delivering new business services

63%

37%

Maintaining current systems ("keeping the lights on")Delivering new business services

58%

42%

IT Spending Today IT Spending 3 years from now


3. Investing in

innovation

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 800

The U.S. is showing a greater shift, from 73/27 to 63/36 in three years but still lags

Low investment in innovation today, but likely to increase 10-30% in next year

Total United States EMEA APAC Latin America

20%14%

20% 21%

29%In-

crease

(NET)69%

De-crease (NET)13%

No change

13%

Don't know5%


3. Investing in

innovation

Average Percent of Current IT Spend Characterized as “Innovation” Spend

Expected Change in Innovation Spend Over next 12 Months

Q14: 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., the technology, people and processes that support it) fell under IT’s budget versus that of the business? Base: WW 800

Innovation spending is evenly divided between IT and Corp/LOB budgets

Mobile and Cloud will see the largest investments over next 12 months


Rich Media/Video Portfolio/Project management tools

“Internet of Things” Social media

Collaboration tools Automation

Virtualization Service management

Security management Business Intelligence/Analytics

Cloud computing Mobile technology

0% 5% 10% 15% 20% 25% 30% 35% 40%

12%

15%

16%

19%

22%

23%

25%

25%

26%

26%

35%

37%

3. Investing in

innovation

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


Research Results




4. IT Report Card

Q5: Which group or function is the single biggest instigator of innovation for your organization? Base: IT 399 Bus Execs 401

Who is the biggest instigator of innovation? 20 point gap

Competitors

LOB employees

Top management

Customers

IT

0% 10% 20% 30% 40%

10%

14%

20%

22%

34%

Competitors

IT

LOB employees

Customers

Top management

0% 10% 20% 30% 40%

9%

14%

17%

20%

30%


4. IT Report Card

IT Respondents Business Executive Respondents

What is the perception of the CIO/top IT Exec role with regard to innovation? 13 point gap

Barrier to innovation

IT does not play a major role

Enabler of innovation

Not an “expert” but a proactive champion

Authority or expert on innovation

6%

7%

30%

24%

Barrier to innovation

IT does not play a major role

Enabler of innovation

Not an “expert” but a proactive champion

Authority or expert on innovation

7%

10%

32%

29%

21%34%


4. IT Report Card

IT Respondents Business Executive Respondents

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 401

How important is it that your CIO or top IT Executive be a proactive champion of innovation?

Critical

Very important

Somewhat important

Not very important

Not at all important

20%

53%

19%

7%

2%

73%


4. IT Report Card

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 401

Business Executive Respondents

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: 156

Current relationship between IT and the business is the most positive in innovative organizations

Combative

Distrustful/Wary

Neutral or Siloed

Cooperative

Collaborative

2%

8%

32%

40%

18%

2%

4%

17%

47%

31%

Innovation Frequent/Est Innovation Minimal/None

4. IT Report Card

23% Innovative Orgs (42% Non-Innovative Orgs)

78% Innovative Orgs (58% Non-Innovative Orgs)


Q18: How frequently do the following scenarios occur within your organization with respect to innovative projects? Base: IT 399 Bus Execs 401

Stealth IT: The business circumvents IT and purchases technology on their own to support a new project

IT-Led: IT approaches the business with opportunities to invest in new technology that will enable innovation

Collaborative Process: IT and the business engage in an established process to identify new projects/opportunities for innovation

Business-Led: The business approaches IT first with their technology requirements to support a new project

28%

34%

34%

42%

19%

19%

25%

42%

Bus Exec Respondents IT Respondents

12%

How innovative projects are led: percent indicating “frequently” for each scenario

Perception gap


4. IT Report Card

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

IT’s ability to support innovation (% rating excellent/good) Bus Execs more negative across all areas

Available budget

Staff level (amount of available staff)

Overall speed and agility

Access to the right technology

Business and communication skills

Receptiveness to new ideas

Technical skills and expertise

Knowledge of the business

46%

47%

51%

57%

58%

59%

62%

62%

53%

57%

62%

70%

69%

75%

72%

75%

IT Responents Bus Exec Respondents

16 point gap!


4. IT Report Card

31

Q9: In your opinion, how can IT better support innovation initiatives at your organization? (Please select up to three.) Base: WW 800

Help the business quantify/measure benefits

Develop tools to streamline innovation processes

Reprioritize IT spending towards innovation

Invest in new talent/skills

Be more proactive in identifying technology to fuel innovation

Provide better access to data for decision-making

Improve communication and alignment w/the business

Be more proactive in identifying opportunities for innovation

Increase business knowledge within IT

Increase speed/productivity

0% 5% 10% 15% 20% 25% 30% 35%

17%

19%

21%

22%

22%

23%

25%

26%

26%

29%

Advice from business executives on what IT can do to better support innovation


4. IT Report Card

IT is slightly more confident than Bus Executives that their organizations will be successful implementing innovation projects

Extremely/Very confident Somewhat confident Not very/not at all confident

64%

28%

8%

56%

32%

13%

IT Respondents Bus Exec Respondents


4. IT Report Card

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 401

U.S. respondents are less optimistic – only 42% are extremely/very confident, and 21% are not very/not at all confident


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 organization's 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 projects

Action plan – steps to take next

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.

Research methodology


Copyright © 2012 CA. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. This document is for your informational purposes only. CA assumes no responsibility for the accuracy or completeness of the information. To the extent permitted by applicable law, CA provides this document “as is” without warranty of any kind, including, without limitation, any implied warranties of merchantability, fitness for a particular purpose, or non-infringement. In no event will CA be liable for any loss or damage, direct or indirect, from the use of this document, including, without limitation, lost profits, business interruption, goodwill or lost data, even if CA is expressly advised in advance of the possibility of such damages.
