Innovation’s new IT tools:Agile data and the cloud

An Economist Intelligence Unit e-book, sponsored by

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Introduction 3

Paving the way for IT innovation 5

A toolbox for bottom-up experimentation 6

Casting a wide net 7

Data and the cloud: the IT innovator’s enablers 8

Reaping benefits through the cloud 9

Enabling more agile use of data 11

Taking the innovation to market 12

Innovation through agility 13

Case studies: CIO-led innovation 17

Intel’s history of innovation 18

Exelon focuses its energy 19

Innovation’s new IT tools: Agile data and the cloud

Table of contents

Introduction

Innovation’s new IT tools: Agile data and the cloud

In the first e-book in this series, CIOs in the Lead, the Economist Intelligence Unit examined ways in which IT leaders can leverage the cloud and other technologies to bridge the gaps between the IT function and business units. This instalment analyses the variety of ways chief information officers (CIOs) and other technology executives are leading IT-based projects to help position their companies as industry leaders. Successful companies reinvent themselves time and again to parry threats to their core businesses, build new revenue streams and keep ahead of the competition. Companies use a range of tactics, including innovation, acquisition and market consolidation. In recent years, digital innovations have become more important for companies in almost every industry, while, in parallel, advances in technology such as cloud computing and advanced data-management tools have revolutionised how companies conduct IT-driven innovation. Consequently, IT leaders’ role is expanding dramatically. Their historic job of supporting the day-to-day needs of the corporation and its business units by cost-effectively delivering core digital infrastructure services has changed significantly: they now are tasked with driving innovation in digital products and services for both internal IT consumers and their businesses’ customers.

IT-led innovation poses a whole new set of technical challenges, including collecting and managing data from various and disparate sources. Now, however, the emergence of cloud-based, third-party software and services that cut costs and improve efficiency offer parallel opportunities that can ultimately have a transformative impact on a company’s process of innovation.

Organisationally, CIOs and other IT leaders are finding new ways to source ideas from their IT teams and from beyond company walls, as well as learning to manage the age-old innovation problem of integration v isolation while products are undergoing development. Most important, IT leaders are using their technical expertise to help their organisations understand how to use IT tools new and old to make the best use of data and the cloud to innovate more effectively.

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Introduction

Paving the way for IT innovation

Paving the way for IT innovation

A toolbox for bottom-up experimentation

Regardless of the specific model that organisations adopt to pursue innovation, they need to employ an approach that combines top-down executive mandates for creative thinking with bottom-up problem-solving initiatives—providing innovators with the support, tools, incentives and time to pursue creative projects. Inventive IT products are the goal of software maker Intuit, Inc’s, “innovation days”. Launched in 2012, these events give employees three days each quarter to explore new ideas and technologies. Intuit created Brainstorm, a web-based collaboration platform, to help employees develop pitches for different projects, set milestones and record data as they experiment. The platform was so successful that the company now sells it to external customers.

Intuit teams are also encouraged to conduct their own research as part of the innovation process, which may include creating mock e-mails to test consumer behaviour or interviewing people on the street about how they use a particular technology. Cheryl Ainoa, senior vice president of platform development at Intuit, and her team use the company’s Quickbase online database software to track the success of different innovation-day projects over time. Combined with their internal web-based platforms, “this is a lean experimentation approach that looks like a hackathon but doesn’t require you to pull an all-nighter”, Ms Ainoa says. The main lesson is that “you can get really good feedback and data very quickly”, she adds. “Innovation doesn’t have to mean months or years.”

[With internal web-based platforms], you can get really good feedback and data very quickly. Innovation doesn’t have to mean months or years.”

- Cheryl Ainoa, senior vice president of platform development, Intuit

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Innovation’s new IT tools: Agile data and the cloud

Casting a wide net

Adobe Systems Inc casts a wide net in its search for innovative new products and services. For example, Mark Randall, Adobe’s chief strategist and vice president of creativity, heads up the company’s Kickbox internal innovation programme. Launched in 2013, Kickbox enables Adobe to mitigate the risk of green-lighting creative new projects by giving prospective intrapreneurs a red box—literally—containing a candy bar, a Starbucks gift card and a debit MasterCard preloaded with $1,000. That money is just enough to help employees build a website that can beta test their idea, drive traffic to that site and begin collecting user data to test validity, Mr Randall says.

Armed with unbiased data generated by the traffic to these beta sites, project leaders determine whether to continue to the next phase. “Sometimes it means shutting down a project”, says Mr Randall, who explains that if an idea does not pan out, he prefers that it not only fail fast but fail “gracefully”—in such a way that provides valuable lessons without running through a lot of money in the process. Adobe finds other ways to look outside for ideas as well. Once a year, Adobe CIO Gerri Martin Flickinger hosts employee events in which venture-capital-backed start-ups present their creative new approaches to technology. This exposes Adobe’s IT organisation in particular to innovative new ideas, while at the same time offering start-ups valuable feedback on those ideas from Adobe’s seasoned technology team.

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Innovation’s new IT tools: Agile data and the cloud

Paving the way for IT innovation

Adobe’s Kickbox programme: Fail fast, but gracefully, in such a way that provides valuable lessons without running through a lot of money in the process.

Data and the cloud: the IT innovator’s enablers

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Data and the cloud: the IT innovator’s enablers

Reaping benefits through the cloud

Corporate IT organisations become innovation leaders when they challenge their members to develop new, data-driven ways for technology to deliver value to the business as a whole. IT departments also support innovation through the services they provide to their business-side colleagues, such as enabling innovators and intrapreneurs elsewhere in the company to adopt strategies to collect and analyse data through web-based platforms. Easily available performance and feedback data help determine demand for these new products and services, the level of support (money and personnel) available within a company and how progress is to be monitored and reported as a project unfolds.

Prior to the widespread availability of the cloud, the cost of experimenting with ideas for new web-based products and services was prohibitive because intrapreneurs required dedicated IT resources within their company’s infrastructure. The cloud has solved that problem, Ms Ainoa says, because experimenters can spin up a project quickly and then take it down again without being stuck with long-term costs. This self-service model has proved successful for companies with the resources to support their own cloud infrastructure. Intel, for example, uses a private cloud arrangement to save the company about $7.5m annually while supporting an increase in use, Intel’s CIO Kimberly Stevenson reported in the company’s 2014–2015 IT Business Review. Aside from private cloud, other powerful options for cloud services include hiring a third-party provider or taking a hybrid approach that integrates both private and publicly available services. Hybrid cloud hosting can provide additional external capacity “to augment our own private cloud while enabling us to optimise our internal capacity”, according to Ms Stevenson. “Hybrid cloud hosting also increases flexibility, allowing us to dynamically adjust capacity when needed to support business initiatives efficiently.”

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$7.5m saving

17%increase

in use

In 2014, Intel’s private cloud arrangement resulted in:

Innovation’s new IT tools: Agile data and the cloud

For Intuit, the biggest drivers to move to the cloud are speed, resiliency and agility—all critical for successful innovation projects. The company also has a couple of key criteria to evaluate whether the innovation project is well-suited to the company’s needs, according to Ms Ainoa. Will it scale? Will it go global? As these criteria are tested, IT teams do not want to jeopardise their core functions. “We have a big business around helping small businesses and consumers file their taxes,” she says. “Our customers are counting on us to be there. We can’t have an outage. Anything that gets in the way of us providing our offering doesn’t work.” The pay-by-the-seat nature of the cloud also allows Intuit the flexibility to scale up or down as needed. Organisations do not need to estimate what they need upfront, in which case “what tends to happen is you round up and pay for more than what you need”, Ms Ainoa says. “In a [public or hybrid] cloud model, you can more tightly align your costs and deploy faster when experimenting.”

Speed, resilience and agility—all critical for successful innovation projects at Intuit.

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Innovation’s new IT tools: Agile data and the cloud

Data and the cloud: the IT innovator’s enablers

Enabling more agile use of data

Regardless of organisations’ specific approach to the cloud, it is becoming a mainstream approach to IT and data management. “From sensors on trains that are preventing accidents to smart homes that automatically adjust to your daily routine to devices that can predict and help prevent downtime of expensive industrial equipment, cloud is helping to redefine what’s possible,” Ed Anderson, research vice president at Gartner, states in a May 2014 study conducted by 451 Research on behalf of Verizon. IT organisations can no longer afford the inefficiency of managing data differently based on where they are stored. They need data management capabilities that seamlessly extend existing data-centre processes to access and use data stored in the cloud—an enterprise approach to hybrid cloud called “data fabric”. To succeed, IT organisations are implementing cloud-aware applications designed specifically to take advantage of a distributed IT infrastructure. Ideally, data-management structures and configurations are consistent regardless of the cloud services model or where the data reside—such consistency lends agility to data, enabling them to be easily managed no matter the type of cloud service or the underlying infrastructure.

Generally, IT teams refer to “data agility” as the speed and ease with which a user can extract value from large quantities of information found in multiple sources and storage solutions. Agility is particularly important in innovation because of the difficulty involved in predicting the exact amount and sources of resources needed for experimental work. Data are oftentimes collected through nontraditional and disparate sources, including the sensors, mobile devices and social media feeds that make up the Internet of Things (IoT).

IT organisations can now employ any number of technologies that do not require time-consuming redesigns to adapt to how different data are structured; these tools can even support entirely new ideas. For example, Apache Software Foundation’s Hadoop data storage and processing software framework is the industry’s go-to tool for enabling IT organisations to develop data access and analysis tools in a much shorter time than was possible with more traditional data warehouse architectures. Such agility helps business managers adjust and respond to changes in customer preferences, market conditions and other key metrics—as well as to support and enable innovative experiments.

IT organisations are implementing cloud-aware applications designed specifically to take advantage of a distributed IT infrastructure.

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Innovation’s new IT tools: Agile data and the cloud

Data and the cloud: the IT innovator’s enablers

Taking the innovation to market

In Transition

Data that are well-integrated and -managed in the cloud are easier to access and share across different lines of business. Such transparency is critical to getting the company support needed to follow through on a project. Even though IT-driven innovation these days may not require many resources, it still faces the perennial question: How is this new idea or project applicable to the business?

Once an innovation begins to develop, if it has been incubated away from the rest of the company, project leaders must walk a fine line between avoiding premature corporate input and isolating their work entirely from the core business. The former can invite too many cooks into the kitchen and derail an effort’s creativity, while the latter can block a project’s likelihood of becoming a viable new product or service. “Insulation becomes isolation when project leaders don’t have a good plan for transitioning a new product or service to the market or scaling it up to meet customers’ needs,” says Dr Robert Wolcott, co-founder and executive director of Northwestern University’s Kellogg Innovation Network (KIN) in Evanston, Illinois.

A quick review of a well-known cautionary tale—Xerox’s PARC—should help innovators facing this prospect. Xerox established PARC in June 1970 as a West Coast extension of its research and development laboratories. PARC researchers, working thousands of miles from corporate headquarters in Rochester, New York, pioneered many contemporary business technologies, including the PC, the graphical user interface and Ethernet local area computer networking (LAN). Management at Xerox did not commercialise PARC’s advances, however, as they had a different vision of the company’s future. This left the door open for Apple, IBM, Microsoft and others to capitalise on PARC’s innovations.

Insulation becomes isolation when project leaders don’t have a good plan for transitioning a new product or service to the market or scaling it up to meet customers’ needs.”

- Dr Robert Wolcott, co-founder and executive director of Kellogg Innovation Network, Northwestern University

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Innovation’s new IT tools: Agile data and the cloud

Taking the innovation to market

“The organisation essentially invented the entire personal computing revolution in the 1970s, yet profited from almost none of it due to the failure of Xerox’s leaders to recognise the value of its research investments,” Mr Wolcott says. Xerox insisted on seeing itself as a copier company, underestimating the value of its intrapreneurial activity. “PARC is simultaneously both the most and least successful approach to corporate entrepreneurship,” he adds. While cloud-based data solutions can certainly speed the innovation process, the problems faced by PARC were not technological—and today’s IT leaders can still take away several lessons. One way to avoid such isolation and miscommunication is to require innovators and intrapreneurial teams to get support and co-investment from the lines of business most likely to profit from their breakthroughs. “This helps resolve the transition and scaling challenge as well as the isolation issue because now I’m not allowed to be isolated,” Mr Wolcott says.

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Innovation’s new IT tools: Agile data and the cloud

In Transition

Your future

Your future

Keener competition and aggressive disruption by new players have made innovation a C-suite priority. The barrier to success is often not the lack of creative ideas, but rather the enterprise’s ability to execute and bring them to market. Innovation projects can be slow to germinate and incur high costs to execute. Thus the cost of failure is high, both to the companies and to the executives associated with a “failed” project—who are oftentimes blamed and have their careers stalled.

Emerging solutions to some of these problems can be found in the IT department—new enterprise technologies and services, especially with computing power and digital storage now being delivered online, lower costs, reduce time-to-market and decrease the overall risk of new ventures. Cloud computing mitigates risks by facilitating the collection and processing of key data while greatly reducing the costs of developing and testing creative new ideas. Organisations that are adept at data management, meanwhile, are better positioned than competitors to understand whether and where to make new investments and whether those investments are being made in projects that have potential.

Cloud computing and more agile data management give companies greater room to fail gracefully and to push forward innovation initiatives quickly in a well-informed way. Combined with leadership and organisational support, they can help IT teams foster creativity, agility and innovation.

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Innovation’s new IT tools: Agile data and the cloud

Innovation through agility

Case studies

CIO-led innovation

Intel’s history of innovation

Chipmaker Intel’s corporate IT organisation offers a high-profile example of overachievement in a number of areas. A few years ago, CIO Kim Stevenson and her team supplied tools to help accelerate the development and market entry of Intel’s system-on-chip (SoC) technology. This includes, “advanced analytics that helped Intel’s sales teams strategically focus on which resellers to engage and when and with what products”, Ms Stevenson wrote in her 2013 Intel IT mid-year performance report.

Used in mobile phones and tablets, SoC technology integrates the processor, memory controller, graphics and sound on a single chip. Previously, each of the components had its own development schedule, followed by periods of integration and testing. Ms Stevenson’s team partnered with Intel’s Silicon Design Engineering team to identify bottlenecks across the product life cycle, characterise workloads (measuring how a chip performs a certain task through simulations), optimise test and validation cycles and move significant amounts of information seamlessly across projects, teams and geographies to accelerate key phases of the chip-design process. Ms Stevenson’s team helped cut the time to market for several of Intel’s silicon products by 12 weeks. Given Intel IT’s billion-dollar budget, Ms Stevenson’s mandate is more than simply to keep the lights on. In 2013, she estimated that her team’s efforts would provide the company with up to $20m in potential new revenue and incremental sales opportunities.

Case studies

CIO-led innovation

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Innovation’s new IT tools: Agile data and the cloud

Exelon focuses its energy

Exelon formed its Emerging Technologies team in 2013 after the company’s merger with Constellation Energy. Sonny Garg, newly installed Exelon chief information and innovation officer (CIIO)—with help from Robert Wolcott, co-founder and executive director of Northwestern University’s Kellogg Innovation Network (KIN) in Evanston, Illinois, and his firm Clareo Partners—established the intrapreneurial unit to investigate and implement emerging technologies, to seek out and build relationships with innovation teams across the company (fostering bottom-up ideas) and to keep an eye out for new growth opportunities. The development of ideas into workable solutions for the company involves a series of processes and an innovation framework that Brian Hoff, director of IT emerging technology at Exelon, says is based on “the four pillars of inspiration, ideation, investigation and implementation”. The Emerging Technologies team was funded with $5m in its first year, with the stipulation that their work would deliver twice that value in savings to the business during the second year. Mr Hoff, who reports to Mr Garg, characterises the first year as “chaos”, as the team searched far and wide for ways to add value to the company while creating new processes and establishing tools. By year two, after meeting with various internal stakeholders and external experts, Mr Hoff and his colleagues had narrowed their focus to a handful of specific categories, including advanced analytics, drones and robotics and the “digital worker”. This allowed the team to exceed the benefit mandated and resulted in new challenge goals. Mr Hoff says that he and his team have learned valuable lessons since Exelon launched Emerging Technologies and began to focus on innovation and to adjust the corporate culture to encourage and promote employee ideas. Challenges include getting successful solutions sponsored, owned and scaled across the company. “If I completely fund an initiative out of my team’s budget, there is no skin in the game from the other parties,” he says. “As soon as I make the business units contribute their own money, this helps ensure that I’m not spinning my wheels.” People value their own time and commitment. These are very simple lessons that apply over and over in business, he adds.

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Innovation’s new IT tools: Agile data and the cloud

Case studies

CIO-led innovation