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The Spirit of Innovation

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Investing in the right information technology

makes innovation a rewarding reality.
Spurred by IT, innovation keeps businesses on the leading edge and,
ideally, a few steps ahead of the competition. But achieving that goal
can be a complicated endeavor as CIOs are expected to innovate while
dealing with mandates to cut costs and focus on immediate returns.
To gauge perspectives regarding the importance of innovation in IT strategies, AT&T sponsored a survey by IDG Research Services. The independent research firm polled 100 IT and
business leaders about their thoughts on innovation and ITs role in stimulating creativity.
The results include the following key findings:

Factors
Necessary to
Stimulate
Innovation

Innovation is a priority, but respondents question how effective their companies

are at innovating.

Collaborative
Environment
84%

IT plays an important role in innovation.

Technology fosters innovation by improving productivity, promoting collaboration
and stimulating creativity.

Open
Communications
84%

Innovation Defined
In the survey, IT and business executives cite varying interpretations of innovation. However,
the common thread is that innovation is core to any good business strategy.

Employee
Education
70%

Over half of the respondents define innovation as creating new products and services,
with an almost equal number describing it as enhancing productivity. Other top definitions
include reducing cost (43 percent), driving revenue (40 percent) and market leadership (40 percent).
No matter how its defined, innovation occurs over a broad spectrum, says Thomas Koulopoulos, founder of the Delphi Group, a strategic thought leadership and advisory firm, and
executive director for the Center for Business Innovation at Babson College. He states that
there are radical innovations representing entirely new concepts that change business in a
monumental wayfor example, the invention of the telephone. And then there are incremental innovations that introduce new facets to existing concepts, like the migration from
dial-up Internet access to DSL.
In its simplest form, though, innovation is any change that adds value to the way we interact with the world around us, says Koulopoulos. He warns that companies mustnt innovate
simply for innovations sake. Innovation should always contribute to the businesseither in
bottom-line cost reductions or top-line revenue generation.
With that in mind, survey respondents agree that innovation is a critical component of good
business practice. In fact, 44 percent indicate that their organizations place a very high level
of importance on stimulating innovation and creativity.

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A Disconnect from Reality

Interestingly, the IDG Research statistics reveal a disconcerting twist in respondents
perspectives on innovation. Although it is considered a top priority, CIOs and IT leaders
assign surprisingly lower ratings when it comes to the effectiveness of their organizations
innovation efforts. A mere 14 percent of respondents say their organizations are very or
extremely effective in stimulating innovation and creativity. Most respondents cite decidedly average ratings, while 23 percent say they are not at all effective.

Technologies
that Improve
Productivity
Remote Access
66%

Koulopoulos calls this gap an innovation deficit, a common phenomenon in business. It reflects the unmet expectations and frustrations of companies believing they should be able
to innovate faster. He says that many companies are held back by so-called mundane issues
such as budget, time and politics. CIOs are often wrapped up in the day-to-day operations,

Wireless
Networking
61%

making it hard to focus on anything other than cost reductions, he says. But breaking free
from those burdens results in effective innovation.

Unified
Communications
45%

A company that does innovation well is one that is already beyond the inspirational level
and is well into the mechanics of innovation, Koulopoulos says. Here, there are typically
two dynamics at play: an ongoing mandate and commitment from top management and an
extreme form of collaboration at the lowest levels of the organization.

RFID
45%

Technology Turns the Tides of Innovation

In terms of narrowing that innovation deficit, a majority of the respondents reports that IT
plays a very important or critical role. In fact, 42 percent consider state-of-the-art technology necessary for stimulating innovation.
That puts CIOs at the helm of the innovation movement. CIOs have a far better understanding of business processes than anyone [in the organization] because every process
goes through ITfrom sales automation to Web portals, says Johna Till Johnson, president
and senior founding partner of Nemertes Research. And its their technology investments
that help bring a companys innovative spirit to life by delivering tangible and actionable
business benefits, such as improving productivity, promoting collaboration and stimulating
innovation.
When it comes to making the right investments in technology, Johnson points to the simple

Defining Innovation
Creating new
products and services

Enhanced productivity

Reducing cost

Driving revenue

40%

Market leadership

40%

Automating processes

Mitigating risk

Speed to market

22%

Profit growth

Other

15%

Dont know

43%

36%

25%

21%

2%
Source: IDG Research Services

52%

56%

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facts. Innovation is about growing the business and there are only so many ways to do
thatnew money, more money, save money and force money, she explains. So CIOs must
tie their innovation efforts to these four areas, mapping technology investments to the potential to grow the business. If you cant figure out how to do that, you probably dont need
to innovate, she adds.

Technologies
that Promote
Collaboration

Johnson also says that its important to link innovation investments to real business value
with built-in metrics that closely correlate to the companys strategic objectives. For example, CIOs can put wireless technology in the hands of the sales force to increase productivity
and boost sales numbers; or they can deploy RFID on the retail floor to improve customer
service and increase clerk effectiveness. Both of these investments deliver obvious value
with hard metrics to make a solid business case for innovation.

Unified
Communications
56%
Wireless
Networking
50%

Innovation that Delivers

In the survey, participants were asked to rate specific technologies as to their perceived
ability to deliver business benefits that foster innovation: improving productivity, promoting collaboration and stimulating creativity. Remote access, wireless networking and unified
communications are at the top of their lists, but certain trends were revealed with respect to
particular benefits.

Remote Access
45%

Improving Productivity: Productivity is top of mind for any business. Technology is unilaterally deployed to enable employees, customers and partners to get business done as quickly,
efficiently and accurately as possible. According to the survey, remote access rates highly
for improving productivity, followed by wireless networking. Unified communications, RFID
and utility computing are also cited, though less frequently, perhaps suggesting they are
newer technologies embraced more widely by larger enterprises.
To demonstrate technology innovations effect on productivity, Johnson offers an example
of wireless technology in the hospitality industry, where service levels tend to make or break
most restaurants. To this end, she says, one restaurant has implemented wireless networking to speed the ordering process. The servers use wireless devices to queue up orders and
reduce customer wait timeimproving overall customer service.

Technologies
that Stimulate
Innovation

Promoting Collaboration: Similar to the need for productivity, collaboration is crucial in

todays competitive business environments. With mobile employees, distributed offices and
the collaborative nature of customer interaction, technology must bridge the barriers of
time and distance. So its not surprising that the top technologies for promoting collaboration include unified communications, wireless networking and remote access.

Web 2.0
34%

Here, Johnson describes a healthcare provider that has successfully implemented unified
communications to foster collaboration and enhance communications. The technology
provides the ability to retain records of interactions for insurance purposes. This innovation
all but paid for the technology investment through resulting reductions in malpractice insurance premiums.

Wireless
Networking
32%
Business
Continuity
Planning
32%

Stimulating Innovation: One of the primary factors necessary for innovation is creativity. To
stay on top of their game, companies must always strive to be creative, staying steps ahead
of their competition. Many technologies assist in this, but the top contenders identified in
this survey are Web 2.0, wireless networking and business continuity planning.
Business continuity planning, Johnson says, is one innovation area that has gained momentum from recent disasters such as Hurricane Katrina. In its wake, companies have discovered
its possible to maintain business activityand creative juicesthrough the worst of times,

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Interacting for
Innovation

or at least to get back up and running quickly. So their expectations around downtime have
evolved.
This holds especially true, Johnson says, in the financial services segment where no down
time is acceptable. Advances in business continuity and disaster planning programs are
helping businesses to keep their services available.

If innovation is all
about delivering
value, CIOs must
make sure theyre in
tune with the needs
and wants of their
many constituents.
That requires a level
of interaction that

Where the Rubber Meets the Road

Given all this insight into perceived benefits, the areas where CIOs are actually investing
their IT dollars are quite interesting.
According to the survey, the top three technologies that companies are most likely to invest
in during the next 18 months include wireless networking, business continuity planning and
remote access. This correlates closely to their perceived benefits for productivity, collaboration and innovation. The next most likely investments include compliance, encryption and
Voice over Internet Protocol (VoIP).

fosters the free flow

of ideas.
That said, IDG
Research survey respondents decidedly
prefer face-to-face
interactions when
seeking input from
customers, suppliers
and partners on how
innovation helps the
business. Specifically,
the top responses include gathering input
through: collaborationface-to-face
interviews and meetings (37 percent),
surveys or polls
(27 percent), and
personal contact
(10 percent).

Surprisingly, the more hyped technologies show only average investment potential. Johnson suggests there could be many things at play here. For example, VoIP may have rated
low for future investments because companies have already deployed it. And the terms
Web 2.0 and unified communications are relatively new and could be too nebulous for
some respondents.
Survey respondents say that they are least likely to invest in RFID and utility computing in
the next 18 months. Johnson isnt surprised, saying that RFID is a vertical application, thus
not appropriate for all businesses. Also noteworthy is that respondents at large companies
are significantly more likely than those at smaller businesses to invest in unified communications, RFID and compliance technologies.

Conclusion
Overall, the survey results reflect an innovative spirit with a bias toward spending on triedand-true technologies and a more discerning eye toward entrepreneurial ones. The technologies that score the highest happen to have universal appeal and affect every business,
says Johnson.
Indeed, nearly half of the respondents say they are innovators or early adopters when it
comes to adopting information technology. And as CIOs continue to make smart investments in information technology, theyll reap the rewards, enabling their organizations to
remain competitive.

Innovation starts with

good ideas, whether
they come from oneon-one interviews or
from a focus group.
So CIOs must make
that sharing happen
through collaborative
technologies, guiding
innovation today and
into the future.

For More Information

Visit www.att.com/business for more game-changing technologies to drive
business innovation.