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Innovation is dead; long live cost cutting!

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A stupid headline, if for no other reason than innovation also applies to cost cutting, but unfortunately it is the kind of statement that is around currently as we once again face a recession. I say again because the current conditions are remarkably similar to 1990, and the period up to 1996, when there was an equally severe recession. Okay the causes for the two recessions are different, and I, like everybody else, has little idea on what will happen, but the similarity lies in technology and innovation. So forgive me for a little history lesson before I draw the parallels. In 1990 there was no such thing as IT, nor the role of CIO; it was all about ‘computing’ and the ‘computing services manager’ ruled the operations for the enterprise. On the edge of the enterprise users were starting to make some real gains in the use of PCs, and string together networks in their departments. The computing professionals rejected this activity, and indeed in many enterprises tried to stop it. We know with the benefit of history what happened; the PC and Network proved its value not as a computer, but as a way to share and manipulate valuable information, leading to the adoption of term Information Technology. But it wasn’t only this; there was a complete rethink of business models and organisation too. Business Process Re-Engineering was the title given to the redesign of process as a flow across an enterprise rather than the previous divisive department based structures; Matrix Working replaced the strict hierarchal organisational structure; and finally the introduction of ERP started as the need for consolidation of data at an enterprise level was seen as the safe enabler of the flexibility that had been created. If you can remember this period then you can also remember just what a challenge, and cost, it was to get the mess of different PC standards and applications that had been adopted by different departments back into a single cohesive set of standards to gain the real advantages. As it was put to me back then, ‘if I had known where we would end up then I would have taken great care when we started’. Today it’s Web based activities, Social Computing, and Mobility that is in growing use around the edge of the Enterprise, driven once again by users, and all to often with at best lukewarm enthusiasm by the IT professionals. The users are finding new, innovative value, and at costs that can be covered more through their local operating budgets than having to make capital purchase requests. So just as before innovation isn’t dead in times of recession, in fact on past form it accelerates as pressure to find solutions to the circumstances mount, but the real point is that the place where the innovation is happening tends to shift. There are three distinctive ways that innovation can help the hard pressed business manager;

  1. To create, or access, a new market with a new offering, which not just getting products available on line, but also adding revenue creating smart services to existing physical products.
  2. To check the progress of rivals in existing markets, usually be providing better service, not necessarily online, as it could well be internal improvement in the quality of service through increasing speed and scope of the ability for collaboration.
  3. To cut the costs of operation, not just in the manner of cost cutting IT administration, but in location and operation of the business model with suppliers, go to market partners etc.
However let’s not forget the enterprise level with the CIO, and the CFO, in this as the lesson to remember from 1990-96 was the degree to which enterprises lost control of their information, and fought to re-establish it, at some considerable cost as the recession ended. This time it won’t be so easy as the laws on Compliance will require control to be maintained, the challenge therefore must be to ‘enable’ the innovation on the edge. Trying to stop it is not likely to work, nor would it be in the best interests of the enterprise at this difficult time. What is needed is a code of practice to ensure standards are consistent, risks are correctly identified, and managed, and most of all, what should be integrated to the enterprise is appropriately integrated. So you want my prediction for 2009? It will be the resurgence of SOA, used more as Services Oriented Business Architecture, does this surprise you? Well remember the history of Client Server in the 1990-96 period. Many who tried it for projects with a background of Mainframe and Mini Applications couldn’t see the value in splitting the client and server logic and abandoned it. It took a new generation of developers familiar with PCs and Networks designing a new generation of applications, like ERP, to show what its true value was. Seems awfully like what I hear today about trying and adopting SOA.

About the author

Andy Mulholland
Andy Mulholland
Capgemini Global Chief Technology Officer until his retirement in 2012, Andy was a member of the Capgemini Group management board and advised on all aspects of technology-driven market changes, together with being a member of the Policy Board for the British Computer Society. Andy is the author of many white papers, and the co-author three books that have charted the current changes in technology and its use by business starting in 2006 with ‘Mashup Corporations’ detailing how enterprises could make use of Web 2.0 to develop new go to market propositions. This was followed in May 2008 by Mesh Collaboration focussing on the impact of Web 2.0 on the enterprise front office and its working techniques, then in 2010 “Enterprise Cloud Computing: A Strategy Guide for Business and Technology leaders” co-authored with well-known academic Peter Fingar and one of the leading authorities on business process, John Pyke. The book describes the wider business implications of Cloud Computing with the promise of on-demand business innovation. It looks at how businesses trade differently on the web using mash-ups but also the challenges in managing more frequent change through social tools, and what happens when cloud comes into play in fully fledged operations. Andy was voted one of the top 25 most influential CTOs in the world in 2009 by InfoWorld and is grateful to readers of Computing Weekly who voted the Capgemini CTOblog the best Blog for Business Managers and CIOs each year for the last three years.

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