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January 13, 2011

CIOs will only get to innovate if they force the pace

A new survey from SAP suggests that IT budgets should be focused on innovation - but, as Gary Flood asks, is that enough?

By Cbr Rolling Blog

Innovation. It’s both a very trendy but also much abused term at the moment in IT. And maybe we’d have a better idea of what it actually means – and what it could contribute? – if we were given a chance to do some of it.

That at least is the tenor of an interesting cross-Europe poll conducted by our friends at SAP into the topic. (Actually, talking of much abused terms, for once that usually meaningless IBM-created term ‘EMEA’ may have some point, as the study really was of that total geography for once; 487 interviews were conducted with senior IT decision-makers including CIOs, IT budget decision-makers, and IT budget holders, across eight countries, the UK, Russia, Germany, UAE, France, Saudi, Italy and Qatar.)

Headline finding; they all agree on the need to refocus IT budgets toward IT innovation in order to improve business performance, productivity and profitability but a blockage exists down to, we’re told, the division of IT spend among three areas: operations, maintenance and innovation.

As a result, say a third of the sample, current IT strategy is too focused on day-to-day running of existing IT systems – and 60% think that’s held them back from investing in innovation. Over half believe that they would get greater business value if more was spent on IT innovation, while less than a majority, 44%, said that this lack of spend on IT innovation is having a negative business impact, e.g. lack of productivity.

Drilling down a bit further, it seems this population of IT leaders feel they are battling a wide range of issues that tend to prevent investment in IT innovation. Which are: uncertainty about the economy, (48%), operations taking the lion’s share (39%) and about the same proportion (38%) feeling their organisation’s current spending mix isn’t helping overall competitiveness.

So – if you don’t get such funding, what will happen? In response to this question, a third of respondents claimed that this would result in lower revenue growth than their business needed – with 38% saying it would result in a failure to meet regulation and compliance demands.

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Commenting on the research, Chris McClain, senior vice president of EMEA and India, SAP Premier Customer Network, said, "Our research has confirmed that companies continue to spend more of their IT budgets on operations than on IT innovation."

SAP used the opportunity of the research to highlight what it says some its customers are doing in contrast. Its examples include Procter & Gamble which it says is reducing TCO and managing innovation via "clarity with global processes," and a US outfit called Charmer Sunbelt, a distributor of fine wines, spirits, beer and other beverages, that is apparently using SAP software to optimise its structure and operations while driving costs down.

For our part: we’ve heard the keeping the lights on argument in many variations for years. This doesn’t add to that sum of knowledge that much. But it does yet again remind us, surely, that if IT doesn’t push its agenda forward its default position is as organisational Bulb Monitor… and in 2011, that shouldn’t be enough for a growing boy.

Time, in other words, to make innovation happen by starting to just do it- Showing always being preferable to Telling. Innovative enough for you?


Cyclist image courtesy of TimothyJ, Flickr, CC licence.

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