Innovation, Organisations and IT – New Views

Most organisations are continuously challenged, seeking to stay ahead through innovation. In his new book, the “The future of management”, Gary Hamel says that 20th century management thinking and practices are no longer appropriate for modern day challenges. He declares that the problem of management in the 19th and 20th centuries, efficiency, has been resolved for the most part. Efficiency is based on conformity and compliance with standards, guidelines and protocols, and as such may not generate innovation. Hamel holds that wealth is being created through innovation. Innovation requires “diversity in thought and action” rather than executing processes in a uniform fashion over and over again. In this sense, Hamel defines the task of management as amplifying individual capabilities, and aggregating them for accomplishing complex undertakings. Thus, managers are called to foster adaptability—build systems that change by themselves; innovation—bring forth the resourcefulness of people; and engagement—sustain conditions under which people can bring their capabilities to bear. Hamel thinks that information technologies, especially the communicative and collaborative applications labeled as web 2.0 will be instrumental and crucial in this context. Nonetheless, he blames the IT functions in enterprises to be obstacles to utilising technology for innovation; many IT managers are unwilling to change priorities and respond due to work overload, and changes are always put under the rigid and mandated requirements of security and controls.

Carried by similar considerations, but aiming at adaptability or agility in government, are the arguments put forward by the Victorian State Services authority in cooperation with a UK think tank. Here, the authors have become critical with the efficiency drive of the recent government reform wave of the New Public Management. They propose, similar to Hamel, to reshape organisations by “reducing hierarchy, increasing autonomy and encouraging diversity” for establishing the conditions for agility. Agility for government is made up of an outward-oriented culture, alignment of systems and policy, an adaptable workforce, timely and effective decision-making, and productive information use. The proponents of agile government are however critical regarding the function of ICT. They acknowledge the peril of information overload on the one hand, while decisions will often have to be based on incomplete information, on the other. The authors emphasise that government is inherently different from private business. Hence, agility needs to be seen within the constraints of their political-administrative environment. Governments are accountable, need to consider results across agencies and beyond, retain stability during change, and have to determine when to act and how.

Against these broad deliberations, advice given to IT managers by a company called Intelligent Business Research Services (IBRS), pales through its rather conservative view of affairs. Though the report cautions against the assumption that IT administrative systems will not bring strategic advantage, it does not seem to encourage variety and novelty. The ten exemplary features of CIOs highlighted in the report are: “focusing on core business and IT issues, having strong execution skills, attaining business intimacy, taking a long-term view, being cautiously experimental, discouraging unnecessary technology diversity, being product and service-oriented, building strong teams, using strategic vendors and scoring vendors’ performance”.

Is Gary Hamel right in his verdict of the IT organisation, or is it futile to expect visionaries and engineers to find common ground?

Gartner Symposium ITxpo – November 2007

Gartner Symposium ITxpo (Sydney 20-23 November 2007), held annually is touted as “the single most trusted source of knowledge and advice in the technology world”. Press coverage posted diverse views. We summarise some key points here.

Disruptive discontinuities and altered identities
According to Gartner, dramatic shifts will occur in the near future (up to 2011) which have been termed “Disruptive Discontinuities”, driving new ways for acquiring and overseeing information technology. They are likely to question the business models of suppliers, as well as the ways in which technology is used by their clients. In particular:

  • Software as a service (SaaS) allows business units to detach themselves from the central IT department
  • Web 2.0 proposes new ways of communication and collaboration, and may change ways of doing business
  • “Global-class systems”, i.e., massive platforms that deploy applications well beyond the enterprise
  • Consumerisation means that experiences from the private and leisure use of information technology are being transferred into the enterprise, along with corresponding demands and expectations on IT departments.
  • Open source software underpins each of the other four discontinuities.

These discontinuities should be integrated into the enterprise by:

  • The central IT function not be catering for the organisation entirely; due to the availability of services over the internet, policies and governance principles should be reassessed.
  • Senior IT staff should forget about their affiliation with technology and identify themselves with their vertical industry.
  • Adopting web 2.0 technologies into the organisation for experimenting with new forms of communication and value creation.
  • Empowering users to explore web-based applications for potential innovation
    Differentiating users according to their responsibilities and requirements to amplify their individual effectiveness.
  • The IT unit to focus on its core capabilities, while users assume responsibility for applications accessed over the web. IT managers should follow this direction, or face obliteration.

Economy and government
Gartner analysts branched into economics and policy advice, firstly with the view that APAC (Asia-Pacific), is supposed to sustain its momentum of economic growth, unaffected by developments to the contrary in the United States and Europe. IT budgets in Asia are to increase during the next three years at a rate of nine per cent per annum. On the other hand, Australia’s prospects for growth are forecast to deteriorate, since it is based on the resources boom and not on productivity and innovation.Secondly, Gartner recommended that whole-of-government CIOs in Australia have the same status as in the United States. This would make government CIOs affiliated with the government in office, comparable to secretaries, and in case of a change of government would have to move on. Gartner proposes that government CIOs should become CIO 2.0. This encompasses diverse roles, such as “venture capitalist, economist and political visionary”. Instead of being a manager of supporting infrastructure, the CIO would mediate the department’s requirements with external suppliers, while projects would not be owned by the IT function, but by the business units within a department. The CIO 2.0 might also have been devised as a remedy for procurement challenges. In the past governments have been regarded as homogenous, while they actually are an assemblage of vertical industries leading to departments adopting applications that did not fit them. This has lead to Gartner predicting that “70 percent of whole-of-government integrations will fail by 2010”.
Web 2.0 and Security 3.0
Analysts warned IT managers not to prevent users from accessing web 2.0 applications. Applying zero tolerance on security, meant foregoing opportunities to new ways of operating and resulting in high costs protecting against threats that are not of material consequence. Nowadays, security should be understood by business units rather than IT, and viewed as a managed risk. The alternative approach is now labelled as Security 3.0. Security delivered against any potential threat is difficult and costly yet this is typical. Security 3.0 entails determining acceptable risks and looking beyond the current state by anticipating future threats. It is suggested that this would allow security professionals to stay further ahead in the security “arms race”, where each time a defence has been implemented this is soon being cancelled out by a new means of attack.
TaaS and software prices
Companies’ budgets are said to be under attack by software providers with shrewd licensing and discounting tactics. Veiled behind the offer of a considerable discount on the initial purchase price, usage rights are vague, which may affect licensing costs adversely for the client. Then, companies may be locked into paying ongoing maintenance and support fees, as well as mandatory upgrade cycles with additional charges. However, conditions are supposedly to change for the better within the next ten years. Stronger bargaining positions for the purchaser emerge from business process outsourcing, software-as-a-service, open source software, and the supply of maintenance by third parties, plus competition by new companies from India, China and Brazil. By 2011, a significant portion of IT products is predicted to be sold as a service. This mode of delivery, re-badged by Gartner as technology as a service (TaaS), will upset present market conditions.
Take away
Other themes touched on were Green IT, the emergence and impact of the virtual generation, or Generation V, in particular communication and consumption patterns, as well as the agendas of CIOs for the next three years. This included joining the Business Intelligence bandwagon, which recently attracted attention through acquisition by major developers. So, in summary, what did attendees receive? Firstly, new or altered “terms”, such as ‘TaaS’ instead of SaaS, and the category of ‘global class systems’! Secondly, there was some ‘vendor’ bashing. Thirdly, a name for self promotion, the ‘Government CIO 2.0’, which has been borrowed from a briefing by Deloitte. ‘Security 3.0’ appears to be a daring proposition, and it remains to be seen whether it will gain acceptance. Still, with all this versioning going on—Web 2.0, CIO 2.0, Security 3.0—presenters failed to mention the big one: Bubble 2.0.