‘Innovation accelerators’ drive business transformation through technology

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21 March 2014 | 0

Organisations that are using technology to bring more intelligence and mobility to their operations and products are becoming “Innovation Accelerators”, according to new research from Red Hat. These organisations are driving transformation by pursuing IT-enabled business innovation as a core strategy throughout the organisation.

A survey of 420 business leaders globally, commissioned by Red Hat through Harvard Business Review Analytic Services, found that these Innovation Accelerators (32% of survey respondents) are anticipating significant change over the next three years, particularly in how they engage with and learn about customers, as well as in their business models, products and services, and end user processes.

According to the survey, the Innovation Accelerators are more than twice as likely to invest in the creation of new applications compared to peers in companies where innovation is not a priority (72% versus 34%). They are also more likely to focus on revenue generating opportunities with new customer experience strategies (71%), business model innovation (69%) and service innovation (68%). By contrast, companies for which innovation is not a priority will focus more internally on the automation of business processes (70%).

The way organisations engage with and understand their customers leads the list of areas that will be changed the most by IT-enabled innovation, reports the survey, with more than half (55%) of all respondents saying it will be changed significantly and a fifth (20%) saying it will be completely transformed. Respondents also believe IT-enabled innovation will change the way employees do their work, with almost half (48%) saying it will be significantly changed and 15% saying it will be completely transformed.

This is also carried through to the company’s products/services, where nearly half (46%) said there would be significant change, while 11% said it would be completely transformed. Business models too are expected to change, with 42% expecting significant change and 13% expecting complete transformation. For Innovation Accelerators, the numbers are significantly higher, according to the survey, with 70% saying their approach to customer engagement and insight will be significantly changed, while a third (33%) say it will be completely transformed.

“C-level leadership plays a significant role in driving technology-driven business innovation”

The survey report said that these changes translate to a number of specific projects that respondents expect to engage in over the next three years. Two thirds of survey respondents plan to automate business processes (67%), with the same proportion executing customer experience strategies. Almost two thirds (60%) will create new applications and more than half will innovate their services (57%) and business models (56%).

Other significant findings were that business intelligence/analytics and mobile technologies and apps lead the list of technologies that respondents expect to drive business innovation over the next three years, at 66% and 53%, respectively. These are followed by process automation (44%), collaboration tools (29%), cloud computing (28%) and social media (24%).

C-level leadership plays a significant role in driving technology-driven business innovation, the survey found. The results show that CIOs lead this type of innovation in 41% of organisations (25% alone and an additional 16% in tandem with another executive), CEOs lead technology-driven business innovation in 16% of organisations, and other C-level executives account for 16%. In approximately one-fifth of organisations (18%), a senior cross-functional committee or innovation board leads IT-driven business innovation.

Innovation Accelerator organisations value this cross-functional collaboration, with nearly half (48%) reporting that IT and the business typically engage together to identify innovation opportunities.

While CIOs have a mandate to help drive this innovation, daily responsibilities of running IT and limited resources may be hindering their ability to do this. According to the survey, while 57% believe the CIO should drive innovation and strategy, only 12% say their CIO actually does that. Survey results indicate that CIOs at Innovation Accelerator companies perform more strategic roles, developing and refining business strategy (26%), driving business innovation (30%), and identifying opportunities for competitive differentiation (26%).

“It is clear from survey results that every organisation should strive to become an Innovation Accelerator,” said Lee Congdon, CIO, Red Hat. “These companies have moved from a ‘keep the lights on’ strategy to one where they are driving strategic initiatives like customer experience and service innovation. It is clear to me that the role of the CIO is changing as a result too, now playing an essential role in IT-driven business innovation.”

Respondents were from North America (40%), Asia (24%), and Europe (23%), with 13% from the rest of the world. Almost half (45%) of respondents were from organisations of 10,000 or more employees. Respondents were from North America (40%), Asia (24%), and Europe (23%). Thirteen per cent were from the rest of the world.


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