Are You Prepared for the 3rd Wave of Innovation?

Gartner says IT Leaders should be prepared if they want to drive growth. Read On...

IT leaders can stimulate economic growth by changing fundamental things they do in their business and their personal lives, according to Gartner, Inc. IT leaders must turn the fear of a recession into an opportunity to leverage what they have and to innovate in order to grow their business.

During the opening keynote today at Gartner Emerging Trends Symposium/ITxpo, being held here through April 10, Gartner analysts explained that in some ways it was the drive to innovate by financial institutions that led to the current economic conditions. When more lenders and investors wanted their share of the massive housing boom, these financial firms were innovating new mortgage related products to drive revenue growth.

“The worst consequences of this recession can be reversed, and the road to business growth can be rediscovered by countering innovation with innovation,” said Ken McGee, vice president and Gartner Fellow at Gartner. “If you wait for the official declaration that this recession has ended before you plan for growth, you will have lost months or even a year of opportunity to return to business growth. While some of your staff are cutting costs, simultaneously have others on your staff start preparing for the return to business growth, and do that now.”

Mr. McGee said companies need “IT innovation of the third kind.” The first kind of IT innovation occurs when IT practitioners improve technical solutions to meet IT needs that were identified and initiated by IT people. This can be done through infrastructure modernization with faster Internet speeds, cheaper storage, or improved flexibility through virtualization.

The second kind of IT innovation occurs when IT practitioners design innovative IT solutions to meet business needs that were identified and initiated by business people. This can achieved with more CRM channels, smarter business intelligence analytic tools, or better mobile devices.

“The third kind of IT innovation takes place when IT practitioners design innovative IT solutions to meet business needs that were identified and initiated by IT people,” Mr. McGee said. “While innovation itself is the first imperative, focusing the value of IT to your organization over the coming years will require attention to five more imperatives.”

The six imperatives for innovation of the third kind include: Innovate, Globalize, Connect, Socialize, Advance, and Industrialize.

“Emerging countries” such as China and India are having a dramatic impact on the economy. Vendors from the emerging countries are the ones many companies will look to for the next generation of innovation that will drive their enterprises forward.

“Your organizations must learn to trade and compete with these rapidly transforming, highly organized enterprises that can often leverage low-cost, highly skilled labor sources,” said Partha Iyengar, vice president and distinguished analyst at Gartner. “At the same time the fast growing middle classes and newly affluent working classes in these economies present great revenue growth opportunities.”

Gartner analysts provided some examples of the impact emerging countries will have on innovation. Some of these examples included: The U.S. graduates approximately 100,000 engineers each year, while China graduates more than half a million English-speaking engineers; 80 percent of the world’s workforce already is in emerging countries instead of developed countries.

“As the population over the emerging countries grows, it is changing the global supply landscape for the most important resource for the future: qualified people,” Mr. Iyengar said. “Historically ‘closed’ countries are now increasingly loosening their boarders and looking for a new breed of highly skilled immigrants that will bring in much needed expertise, and in many ways transform their societies.”

Businesses are not concerned about bandwidth, mobile, or other computing issues. “The value to the business comes in how that connectivity is exploited,” said Anthony Bradley, managing vice president at Gartner. “The telecom sector has a vested interest in pushing connectivity, but business is interested in employing that connectivity for real business gain.”

Many people are losing productivity in the hidden form of electronic pollution with non-stop automated interruptions. “The connectivity is not improving the capability and output of key staff members,” Mr. Bradley said. “The destiny of telecom providers must be to transcend connectivity and deliver ‘invisible mobility’ for real business value.”

The network is starting to become intelligent. Mobile devices know where people are, as well as when they have their next meeting, and how to read them. A CRM system and the Internet might shed some light as to a client’s satisfaction level.

“Data collection technologies and user generated content are leading to an explosion of contextual information,” Mr. Bradley said. “We must begin leveraging connectivity, leveraging this ‘invisible mobility’ to build new types of business systems around context driven architecture, situational awareness, and globally scaleable ‘sense and respond’ systems.”

“We have reached a point where technology is delivering power to the people, not just the enterprise,” Mr. Bradley said. “This revolution is the socialization of IT.”

Never before has IT enabled thousands, hundreds of thousands, even millions of people to create simultaneously and collaboratively. The creation of business content has undergone a significant evolution to arrive at socialization. Many companies are leveraging social networks in connecting employees globally to enhance internal collaboration.

“Mass collaboration requires a new mindset,” Mr. Bradley said. “It is your organization’s competency in tapping into the power of communities that will determine its future greatness.”

CRM is morphing into customer involvement mobilization with emerging social applications such as idea exchanges, prediction markets, crowd-sourcing models, community-driven self-service, and customer-driven product design.

During the industrial revolution the ability to deliver a wide range of goods and services at a reduced price made them available to everyone. “It was only a matter of time before shared IT services gained significant penetration to foster dramatic shifts in the IT industry,” said Daryl Plummer, managing vice president and Gartner Fellow. “Combine this with the impact of socialization and collaborative computing models and the door opens for clean-slate competitors to enter every market. The industrialization of IT is upon us.”

Because of industrialized IT, everything and anything will become a service. It is called cloud computing. Gartner defines cloud computing as a style of computing where massively scalable IT-enable capabilities are provided “as a service” to multiple customers using Internet technologies.

“Cloud” will be a grand buzzword unifier in IT for the next 12 months. Utility computing, grid computing, software as a service, and many other scalable remote computing models will get linked to cloud computing.

Mr. Plummer said cloud computing is actually the wrong buzz phrase. He said people should be talking about cloud business instead. “Technology vendors will deliver cloud infrastructure, but those details must be linked for us all, or ‘the cloud’ will just be nothing more than a buzz-word,” Mr. Plummer said. “We can’t spend all of our time arguing about how to implement the cloud and almost no time talking about whether our business can fit the cloud model.”

IT organizations will need to determine what their strategy about the cloud that will allow them to help their business innovate into new models of revenue-generation.

Advancing the capability of the IT department means taking some calculated risks. The business needs IT departments to advance two capabilities.

The first opportunity is in strategic information management. “Gartner’s annual business executive survey with Forbes magazine showed that chief executives’ biggest expectation of IT is not productivity. It’s developing the capability to use information as a competitive weapon,” said Mary Mesaglio, research director for Gartner Executive Programs. “It’s not enough to own the information. You need to use it to get competitive advantage.”

The second opportunity is what Gartner calls operational technology. Integrating IT’s administrative systems with the operational technology in their enterprise is a green field of opportunity for IT.

“The new truth is that you (IT leaders) have to innovate and decide how to bring IT to bear on big new business problems that need systematic solutions,” Ms. Mesaglio said. “Sure the major vendors will provide you with a toolset from piece parts using service-oriented architecture (SOA), business process management (BPM), and software as a service (SaaS), but you need to provide the solution. The clock is ticking for those who still believe excellence in technology management alone will work.”

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