Peter Drucker said companies need to “innovate or die”, high stakes indeed. To successfully meet the demands of an ever changing marketplace you need to continually respond and innovate to keep pace, but it is expensive and resource intensive. Increasingly that resource means IT.
Many of the organisations I speak with recognise the value of innovation, but struggle to make the business case for innovation work. The key challenges they share with me are reducing the protracted administrative burden of business cases and approvals and getting these projects satisfactorily prioritised and resourced.
How can they encourage and motivate their people to be enterprising unless they can better support new project starts?
This is the scenario; your decision processes based on your in-house IT model are lengthy and torturous, requiring capital expenditure, and careful evaluation. Then there is the constant cycle and bureaucracy associated with making business cases and getting them approved and prioritised, which can really slow down your speed of innovation.
I’m sure it’s a familiar situation within any business – you have strategic projects with approved business case and then you work with your IT department to prioritise, and then re-prioritise. The IT department have critical housekeeping projects that must get done or the lights will go out, metaphorically speaking. Unfortunately these are not the important things the business needs doing from a strategic perspective, but operationally they are urgent and have to be done.
The business just can’t seem to do it all; in fact you can hardly seem to do much of it at all. With the dynamic nature of your business and the constant changes in demands you have a constant and growing backlog of strategic IT projects to start.
But you can’t just leave these things and risk the downward spiral of declining market share, margins and productivity. How can you get the most important things done? There must be another way?
Break the cycle
Businesses have to make a strategic reappraisal on the way they view and deliver IT. Cloud based managed technology services could be the answer to making the business case for innovation work. Managed services offer far more than simply a cost cutting opportunity, but also reduce the cost and risk associated with IT based innovation and make the latest technology more accessible and minimise the delay in deploying it.
Here are my suggestions on how to break the cycle:
- Partner with a Managed Cloud Service Provider: Consolidate IT services and sourcing to a trusted partner or two. Work with these experts to align your business priorities to the required IT infrastructure.
- Streamline the business case and approval processes: Make them less onerous and provide support to people wanting to engage in a new project to help them get a business case in place and approved.
- Organise a forum for business and IT to review and priorities: Establish some joint planning forum between the business, its IT unit and the IT partners. Integrate the IT service partners into the cycle of planning and to support future strategy.
- Drive an innovation programme: This is a top down campaign to seek out and support ideas and support the people who bring these to the fore. Give them the support and confidence to take the risk and ensure they have the resources to make it happen.
How does this new business case work?
How does the business case, in relation to innovation, for using a managed technology services provider work?
Principally by eliminating some of the big costs associated with IT project starts and therefore minimising the organisational hurdles associated with new initiatives as they become less risky. Implementing an on-demand fully managed IT infrastructure addresses two of the biggest barriers to innovation, firstly it lowers the risk and secondly it speeds up the availability and flexibility of IT resources.
Here are some of the factors that contribute to this new dynamic:
- Cost reduction and financial predictability: Cloud adoption helps you to reduce costs on both the IT technology investments and the business operating costs. A large scale managed IT services provider typically command a better technology buying price than a traditional enterprise, and through the automation efficiencies and economies of scale in their operation they can deliver a far more cost effective service. The nature of commercial agreements creates a very predictable cost to forecast and allows for a far less capital cost expenditure pattern, which appeals to many CFOs.
- Scale and flexibility: Taking a cloud based managed service gives you access to additional IT resources provided on-demand. All businesses will have some level of flex or seasonality which can be catered for in a very cost effective manner. Think of new IT project starts as a variation on the seasonality dynamic and you can see why it makes sense.
- IT/Business agility: Building applications on a cloud platform minimises the delay in deploying new IT-based capabilities. Internally delivered IT resources can often take time to authorise or provision, delaying the availability of potentially profitable business capabilities.
- More intelligent IT spend: Managed cloud services provide a level of direct spend visibility against what a business needs and uses for its applications, rather than reflect the flat fee of an internally deployed datacentre infrastructure. This provides better insight on what each application costs to run, and helps budget decisions to be made about which applications are worth paying for.
- Availability and service levels: Cloud-based solutions can be offered with excellent availability and service levels. This is because they can be designed for high levels of resilience, business continuity or disaster recovery at a very low cost relative to a typical on premise approach.
Now that I have a new IT partner do I really need my own IT department?
Change the role of internal IT
The role of in-house IT is key within this strategic reappraisal of the way IT is viewed and delivered. The in-house IT unit has to change to meet the new dynamic, relieved of it’s former challenges of managing servers and rationing legacy and finite IT resources across too many projects and initiatives, and transformed into a more engaging role of services management, providing advice, guidance and acting as an IT services intermediary.
This places IT into a strategic role of business enabler, managing the alignment between the business and its IT needs, providing access to the required solutions via IT services partners. It’s purpose is in driving and supporting the evolution of your IT onto a scalable and flexible cloud platform, ensuring new services do not create security risks and that disparate platforms and services get integrated and that the infrastructure is continually evolving to meet the businesses needs.
Now, rather than being placed in a situation of having to react after the fact, they work with your business and your IT providers to plan your cloud services projects and adoption strategically, and to help build the role of IT into a department positioned to provide valuable advice, guidance and be the intermediary for cloud services selection and purchase.
Open up the opportunity to co-innovate
Working together with strategic IT technology service partners there is also the potential for co-innovation. These organisations can do a great deal besides creating your run rate enterprise IT infrastructure and services. Including them in early stage discussions on plans and strategy you can also benefit from their ability to provide valuable ideas and input, as well as providing access to the latest enterprise technologies,a whole spectrum of unique skills, knowledge, expertise and experience.
Improve the innovative climate in your business
IT departments and managers recognise that aligning IT with overall business strategy is the biggest challenge they need to deliver upon. However, for just about everybody working in IT today the pressure is on to deliver more with less.
So how can today’s IT professionals, required to play a bigger role in driving business process and enterprise differentiation, achieve this goal while figuring out how to streamline legacy operation activities. They are in a perpetual cycle of trying to improve a failing model of in-house IT, reducing cost and cracking the lets-get-lean IT whip.
Moving to a managed cloud service provider can be part of the answer; by introducing a new way of dealing with IT it can be a catalyst to an innovative future. By freeing up your operating cash, capital expenditure and your internal IT team to become more relevant to your business, you are better placed to support your business needs, and introduce the innovation required to be more competitive and profitable.
The technology choices you make at a strategic level have a fundamental impact on the innovative climate in your business. Make sure you gave all options due consideration and make the right choice for your business.