Innovation & IT

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07-Aug-13 Submitted by: Ankit Gupta Roll No : 05-MBA-13

Innovation and Information Technology

Introduction:

Innovation: Innovation is the application of new solutions that meet new

requirements, inarticulate needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. The term innovation can be defined as something original and new that "breaks in to" the market or into society. One usually associates to new phenomena that are important in some way. A definition of the term, in line with these aspects, would be the following: "An innovation is something original, new, and important - in whatever field - that breaks in to (or obtains a foothold in) a market or society."

Information Technology: Information technology (IT) is the application

of computers and telecommunications equipment to store, retrieve, transmit and manipulate data,[1]often in the context of a business or other enterprise The term is commonly used as a synonym for computers and computer networks, but it also encompasses other information distribution technologies such as television and telephones. Several industries are associated with information technology, such as computer hardware, software, electronics, semiconductors, internet, telecom equipment, e-commerce and computer services.

Summary of Computer History

The first use of computer was recorded in 1613, referring to a person who carried out calculations or computations, and the word continued to be used in that sense until the middle of the 20th century. From the end of the 19 th century onwards though, the word began to take on its more familiar meaning, describing a machine that carries out computations. I n 1 9 3 6 K o n r a d Z u s e , a G e r m a n e n g i n e e r designed Z1 Computer it was first freely programmable computer. It was a binary electrically driven mechanical calculator with limited programmability, reading instructions from punched tape. It was completed in 1938and financed completely from private funds.

Major capabilities of Information Technology

Perform high-speed, high-volume, numerical computations. Provide fast, accurate, and inexpensive communication within and between organizations. Store huge amounts of information in an easy-to-access, yet small space. Allow quick and inexpensive access to vast amounts of information, worldwide. Enable communication and collaboration anywhere, any time. Increase the effectiveness and efficiency of people working in groups in one place or in several locations. Vividly present information that challenges the human mind. Facilitate work in hazardous environments. Automate both semiautomatic business processes and manually done tasks. Facilitate interpretation of vast amounts of data. Can be wireless, thus supporting unique applications anywhere. Accomplish all of the above much less expensively than when done manually.

Innovation in IT
In an era of constrained growth, chief information officers should be looking to take a central role in driving innovation and seizing technology-related growth opportunities. Whether or not they achieve this ambition will depend on the attitude and support of their CEOs. Most developed economies (including Australia's) appear to have entered an era of constrained growth. The resources sector aside, businesses can no longer rely on strong underlying economic growth to propel healthy annual increases in revenues and earnings. Those most likely to prosper in this environment are the companies able to create new business opportunities through disciplined innovation. Alert businesses will also be conscious of the threats posed by the innovation of others and will develop the capacity to respond quickly and effectively to such threats. The role of the IT function and the leadership provided by chief information officers will be a critical factor in the process. IT has played a powerful role in creating a competitive advantage over the past 5 decades. Today, digital developments have an unmatched potential to transform customer expectations, rewrite the rules for work practices and disrupt the status quo. We need only consider the impacts brought by digital cameras, voice over IP, social networking sites, blogs, search engines, wireless broadband and the iPhone to appreciate this. The role of IT will continue to become proportionally greater over time as we see the rate of digital innovation accelerating rather than slowing down. A recent paper by KPMG, Using IT to Drive Business Innovation, takes up this theme. It notes that, over the next five years alone, processing power, storage densities and network connections will continue to grow exponentially. Handset developments will change the way digital services are accessed and business will rely increasingly on processing and storage capacity rented over networks (i.e. 'cloud computing'). Entirely new frontiers will open up in the digital processing and management of audio, video, spatial and social information.

IT's role in innovation success

Opportunities to create new business value will come thick and fast. Organisations with the agility to put new information technologies to work will multiply their prospects of success. Poor IT innovators will struggle. This at least is the way many chief information officers (CIOs) view the future.

For example, the latest KPMG International survey of CIO attitudes and expectations (From Cost to Value: 2010 Global Survey on the CIO Agenda) reveals a distinct shift in CIO thinking. The CIOs surveyed expect a change in emphasis from cost efficiency and compliance to value creation and innovation. The days when IT was seen primarily as a means of improving efficiency seem behind us. IT is now set to contribute more directly to realising business strategy. To do this effectively, CIOs require a seat at the top table. But does yours deserve it? In analysing the survey responses, KPMG has come up with questions and views that should be considered. 1. Is your CIO focused on IT value? IT value now dominates the CIO agenda. To create sustainable value, organisations need to get a grip on the way information is produced, collected and used and they need to leverage off IT to respond to rapidly changing conditions. 2. Is your technology function structured to be strategic? The profile of the CIO determines the agenda of the future. Organisations should not expect IT value from CIOs unable to free themselves from a narrow operational focus. 3. What is driving IT value? People or technology? People drive IT value. CIOs recognise that value is not created simply by technology, but by people exploiting its full potential. Ninety percent of survey respondents say people are a major component of IT value. 4. Are you getting value for money on your technology spend? Cost optimisation remains important. According to 56 percent of the CIOs surveyed, cost optimisation should always be part of an organisation's strategy, because costs can be a major competitive weapon. The focus should be kept on improving business process efficiency. 5. Are technology risks adequately managed? Risk and compliance remain high on the CIO agenda in the finance sector. Compared with other sectors, banking and finance respondents regard risk and compliance as more important than IT value. This attitude doubtlessly reflects the high degree of regulation imposed on the finance sector and the continuing hangover from the global financial crisis. 6. Do you have the correct delivery model? The first major IT outsourcing wave has now ended. At the same time many CIOs are becoming more critical of their external IT providers. They are paying more attention to price/quality ratios and a large majority intend to increase the pressure on sourcing partners. 7. Are new structures adequately assessed? Collaboration tooling and cloud computing are the new kids on the block. Nearly three quarters of respondent CIOs think cloud computing is a good way to outsource IT functionality.

8. Is your CIO ready for the challenge? CIOs are generally optimistic about the future. They expect both their project success ratios and returns on investment to improve in coming years. Here is what respondents overall see as the critical elements of their future IT agendas:

using IT to enhance business value (80 percent) cost optimisation (62 percent) risk and compliance (56 percent) portfolio management (52 percent) sourcing (35 percent)

Obstacles to innovation
There are at least two big obstacles in the way of CIOs fulfilling their innovation ambitions. The first is that IT departments need time and resources to explore innovation opportunities and they do not always get them. In this context, there can be no question of neglecting IT departments' primary function of 'keeping the lights on' in their respective organisations. Installing financial systems, managing laptop fleets, enabling transactions and upgrading network security are the kind of non-negotiable responsibilities that leave IT people with little breathing space for creative exploratory projects. In turn, stretched IT resources often reflect the fact that the function is perceived as a cost rather than a value contributor. During the economic downturn, many IT budgets were pruned back heavily while some organisations have outsourced their IT functions almost to extinction. Organisations are discovering that IT outsourcing arrangements driven solely by cost considerations often lack the capacity to adapt to changed circumstances, or add new value to the business. Much of the intellectual capital and accumulated knowledge embodied in a wellestablished IT function can also be lost through clumsy headcount reductions and inappropriate outsourcing decisions. The second main obstacle is the matter of the CIO's status in the organisation. The latest survey shows that a CIO's agenda is strongly correlated with his or her position in the management hierarchy: a CIO reporting directly to the CEO typically views IT more as a critical business enabler with a high strategic value than does a CIO reporting elsewhere (e.g. to the CFO). Why are CIOs often onlookers rather than key participants in important business decisionmaking processes? For a start, some CEOs remain uncomfortable with IT and find it difficult to evaluate the advice they are getting from their CIOs. They know technology is important, but unlike most other areas of the business, they do not understand it. Their attitudes to IT have sometimes been shaped by painful memories of major technology projects that spiralled out of control as a consequence of poor project governance. (CEO discomfort with IT is partly a generational phenomenon; those

who have grown up as part of a younger, more techno savvy generation tend to approach their bits and bytes with greater confidence.) The other side of the coin is the inability of some CIOs to embrace the priorities of executive management and speak its language. At its most extreme, these individuals and their staffs can inhabit a parallel universe to the rest of the organisation with resultant poor communication, confused objectives and priorities, misaligned IT and business strategies and unsatisfactory technological and business outcomes. More often there is a milder cultural disconnect between IT and the rest of the business, which is inadvertently reinforced when IT is physically separated from the rest of the business, when IT staff are employed on different terms and conditions than everyone else, and when there is little or no movement of people between IT and other areas of the business.