The IT innovation challenge

To innovate effectively across organizational boundaries, companies need collaboration tools that manage processes and transactions, and that enable information to be shared among stakeholders. IT and communications technologies can give companies a platform for idea generation and collaboration, between both internal and external stakeholders, for the exchange of ideas and problem solving.

If encouraged to collaborate with other business units, corporate IT can be a powerful catalyst for innovation.

There are strong incentives for searching more widely for ideas and input. More than a decade ago, Procter & Gamble realized that, for each of its 7,500-strong R&D workforce, there were 200 other scientists or engineers elsewhere who were at least as good. This prompted the consumer products giant to develop an “open innovation” program, known as Connect & Develop, which is now a prominent case study of this type of innovation.*   Beyond collaboration, IT also supports innovation through data. Most corporate IT functions play an active role in the collection, analysis and presentation of client and market data – helping to identify more profitable market segments, improve inventory management and gain insight into future opportunities.

Take one large UK supermarket chain as an example. It has dramatically improved its competitiveness by creating new, more flexible processes that can be adjusted to take into account the information about consumer buying habits that it extracts from the huge volume of data that its stores generate each day. This change has resulted in substantial benefits for the retailer, namely fewer stock shortages and more successful cross-selling.

Companies can also sustain competitive advantage through process innovations that make it more agile, efficient and effective. Corporate IT has a major role to play here, from deploying business process management tools and mobile apps to business intelligence capabilities and strategic partnering.

So the case for IT’s involvement in corporate innovation is clear. But despite this, many CIOs are still not playing their part. In a major EY study in 2012, fewer than half the CIOs polled agreed that they make an important contribution to their company’s product innovation process.** A follow-on study in 2014 showed that, even within IT-intensive industries, where CIOs might be expected to have a clearer role on product innovation, only half (51%) are doing so.***

Why is this? Read the full article to find out more about the problems that IT faces and how CIOs can help bridge the expectation gap. Ultimately, the contribution of IT to innovation will be measured by its ability to achieve the company’s goals.

* “Connecting the entrepreneurial workforce,” New Scientist website, http://www.newscientist.com/cloudup/article/in419, accessed 5 December 2013.
** The DNA of the CIO: opening the door to the C-suite, EY, 2012.
*** Born to be digital: how leading CIOs are preparing for a digital transformation, EY, 2014.

The complete article was written by:

  • Dr. Marc Wennmann
    Executive Director EY, Germany
  • Kai Herings
    Manager EY, Germany

Read the full articlepdf433.04 kB

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