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VOLUME 5 ISSUE 1 2012

A bi-annual journal produced by Cognizant

Innovation Reimagined
The First Word
Externalizing the Sources of Innovation

RETHINK REINVENT REWIRE

Innovation Catalysts Life Sciences R&D IT Infrastructure


Why Theres Never Been Transforming Clinical Recalibrate Before
a Better and More Operations Revamping Your IT Systems
Important Time to
Innovate Remaking Retail Working Wirelessly
Myth-Busting: Business Unlocking the Business
Innovation Best Process Transformation for Value of Mobility
Practices Retailings New Reality
Fact-Based Insights
Ideating, Innovating to Drive
Application Maximizing the Returns
Fundamental Change
Development of Big Data
Business Model Rx Where Lean Principles Meet
A Vision for U.S. Agile and Global Software
Healthcares Radical Development
Makeover

The Last Word


Innovation: Not a Choice, But a Series of Choices
Cognizanti is a bi-annual journal published by Cognizant. Our mission is to
provide unique insights, emerging strategies and proven best practices that
globally-minded companies can use in their quest for business and IT
performance excellence.

All articles published in Cognizanti represent the ideas and perspectives of the
individual Cognizant associates and contributors who have documented
expertise in business-technology strategy and implementation. The content of
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contributors and not necessarily those of Cognizant. They are put forward to
illuminate new ways of conceptualizing and delivering global services for
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professional advice and should not be relied upon as such.

For more insights, and to continue the conversation online, please visit our
e-community at http://cognizanti.cognizant.com.

Copyright 2012, Cognizant Technology Solutions


No part of this publication may be used or reproduced in any manner
whatsoever without written permission of Cognizant.
VOLUME 5 ISSUE 1 2012

A bi-annual journal produced by Cognizant

The Cognizanti Team

Publisher: Malcolm Frank, Executive Vice President, Strategy & Marketing

Editor-in-Chief: Alan Alper, Senior Editorial Director

Thought Leadership Program Manager April Vadnais, Senior Manager, Corporate Marketing

Art Director: James J. Lee, Corporate Brand Director

Design/Print Production: Jason Feuilly, Associate Director, Corporate Brand/Design

Diana Fitter, Freelance Designer

Copy Editor: Mary Brandel, Freelance Contributor

Columnist: Bruce J. Rogow, Independent Advisor

Illustrator: Steven DiNinno, Contributor

Digital Distribution: Nikhilesh Jasuja, Associate Director, Corporate Marketing

Editorial Advisory Board

Sukumar Rajagopal, Senior Vice President & CIO, Head of Innovation

Sanjiv Gossain, Senior Vice President, Head of UK & Ireland;


Global Head - Markets, Communications and Information Media &
Entertainment Industry

Kaushik Bhaumik, Senior Vice President & Global Head - Markets,


Technology Industry

Srivatsan Nagaraja, Senior Vice President, Head of Life Sciences,


North America

Mark Livingston, Senior Vice President, Cognizant Business Consulting

Ramkumar Ramamoorthy, Senior Vice President, Corporate Communications

Anand Chandramouli, Director, Cognizant Research Center

Copyright 2012, Cognizant Technology Solutions


Table of Contents

1 Editors Note
Innovation Reimagined

3 The First Word


Externalizing the Sources of Innovation

9 Innovation Catalysts
Why Theres Never Been a Better and More
Important Time to Innovate

17 Innovation Best Practices


Ideating, Innovating to Drive Fundamental Change

29 Business Model Rx
A Vision for U.S. Healthcares Radical Makeover

37 Life Sciences R&D


Transforming Clinical Operations

45 Remaking Retail
Myth-Busting: Business Process
Transformation for Retailings New Reality

53 Application Development
Where Lean Principles Meet Agile and
Global Software Development

61 IT Infrastructure
Recalibrate Before Revamping Your IT
Systems

69 Working Wirelessly
Unlocking the Business Value of Mobility

79 Fact-Based Insights
Maximizing the Returns from Big Data

87 The Last Word


Innovation: Not a Choice, But a Series of Choices
Editors Note

Innovation Reimagined
We know what you are thinking. What can Cognizant tell me about innovation that I havent already
heard, read or learned the hard way? A few things, we believe.

Merriam Webster defines innovation as the introduction of something new a new idea, method
or device, as in a consumer novelty (remember the hula hoop?), business phenomenon (Casual
Fridays) or technological breakthrough (can you spell Internet!). No epiphanies, so far.

From our point of view, particularly in todays unforgiving global economy, innovation is as much about
rediscovery and reinvention as it is about discovery and invention inside the organization's four walls
and with customers and partners. In fact, what is considered novel is often a brilliant twist on the
tried, true and continuously improved.

Rediscovery is something that Apples Steve Jobs clearly mastered. Somewhat smart handheld
devices debuted in the early 1990s. And, under John Sculley, Apple could have owned the
market from the get-go had it been able to develop handwriting recognition software
for its Newton personal digital assistant that faithfully translated poor penmanship
into understandable machine language. Instead, the Newton was dead on arrival.

Upon his return, Jobs defied Apples death spiral in the PC business by throwing out
the Newtons stylus and thinking boldly about the inevitable melding of computing,
communications and entertainment. (Note: Apples apps concept, development
ecosystem and distribution platform are a disruption discussion for another day.)

Those organizations willing to experiment with new ideas, methods or devices and
generate new forms of value, be they truly novel or reinvented, can often thrive in any era.
Now, you could argue that companies like Xerox or Kodak were consistently on the vanguard of
innovation but were unable to sustain their edge and profit from their breakthroughs. For example,
Kodak is widely credited with inventing digital photography in 1975. But it was others who created the
market and benefited from it.

This issue of Cognizanti journal is predicated on making sure your company doesnt get memorialized
in a Kodak Moment. We examine innovation across todays top business imperatives: rethinking
business models, reinventing the organization via process change and virtual work activities; and
rewiring operations around an emerging master IT architecture that we have dubbed the SMAC stack,
which consists of social, mobile, analytics and cloud computing.

The issue opens by explaining why there is no time better than today to innovate and how your
organization can apply best practices in ideation and experimentation. We then examine business
model innovation and process changes across key industries and activities, such as business
application development. We conclude with a look at how the SMAC stack is unlocking business
value and enabling rediscovery.

Our takeaway? Rediscovery is in many ways synonymous with innovation: Experiment with customers
and partners to create continuous IT and business process breakthroughs. Scale is vital, particularly
in these resource-constrained times.

As always, feel free to contact us at cognizanti@cognizant.com to stay on innovations forefront.


Participate in the ongoing conversation at cognizanti.cognizant.com to share your views on
innovations imperatives.

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The First Word

Externalizing the
Sources of Innovation
With todays business pressures to find new opportunities quickly and
affordably, open innovation is the wave of the future. Organizations that
expand their innovation processes outside their proverbial four walls not only
find better ideas, but they are also more satisfied with the results.

Organizations today are under pressure to complete an innovation triple-play: develop innovative products
and services; create more effective and efficient operational processes; and find more profitable and
productive ways of creating new market opportunities.

This innovation challenge is beginning to be met by businesses that use collaboration tools and
techniques to expand the search for actionable ideas outside the organizations four walls. Through these
open innovation techniques, these organizations are keeping costs down while also pursuing growth
through product and service innovations that are more likely to hit market sweet spots. Creating
innovation processes that extend to customers, partners, competitors and other external entities is a
necessary component for fundamentally remaking static, siloed industrial business models into more
flexible and agile digitally powered structures.

According to a study that Cognizant Business Consulting recently conducted with Forbes Insights,
organizations strongly believe in open environments for innovation, in which they collaborate with
customers, partners and others to generate and implement new ideas. In fact, the majority of the 311
respondents (see methodology) define themselves as externalist (11%) or hybrid (45%) innovators,
the latter of which signals companies whose innovation is 40% to 60% externally sourced.

Of all the external sources, customers are the most popular innovation partners, with 60% of respondents
saying they encourage customer input (see Figure 1).

Customers Are Top Choice for Innovation Partnering


Does your company use any of the following tactics to gather information and ideas for innovation?
80
70
60
50
40
30
20
10
0
Internal Encourage Social media Exchange ideas with Crowdsourcing
collaboration system customer input other companies

FIGURE 1

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Innovation with Customers Leads to Higher Satisfaction
How satisfied are you with your companys performance in the following innovation areas?

Developing a pipeline of
innovation initiatives
Being consistent in our
innovation performance
Measuring the value of
innovation initiatives
Refreshing the portfolio of
products and services Internal company teams
Realizing or implementing combined with customers
innovative concepts/ideas All other organizations
Availability of relevant
skill sets

0% 20% 40% 60% 80% 100%


(Percent satisfied or very satisfied)

FIGURE 2

What is more, satisfaction is much higher for survey respondents from companies whose internal
innovation teams are combined with customers (see Figure 2).

The integration of customers, partners and outside influencers beyond the traditional organizational structure
will continue to evolve as the adoption and proliferation of virtual tools and social technologies expand.

In fact, the vast majority of respondents said they used virtual tools for internal and external collaboration.
Internal collaboration systems that allow all employees to share their ideas are the most popular open
tactic used by companies to foster innovation. They are, however, often just the first step. Other tactics
such as platforms to elicit and share ideas with consumers, other companies or crowdsourcing are next
in line. In fact, over the next two years, more executives anticipate opening up innovation platforms to
communicate and cooperate with external resources than with internal resources (see Figure 3).

High Interest in Externalizing Innovation Processes


Does your company use any of the following tactics to gather information and ideas for innovation?

Developing a pipeline of
innovation initiatives

Encourage customers input

Social media

Exchange ideas with


other companies

Crowdsourcing

0% 10% 20% 30% 40% 50% 60% 70% 80%


Yes
Considering in next 2 years

FIGURE 3

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The range of tools available to companies for fostering innovation and collaboration is wide.
Videoconferencing is most popular, but virtual meetings and brainstorming sessions in a virtual town hall
format are becoming more commonplace, as are social media platforms such as Facebook, Twitter and
LinkedIn (see Figure 4).

Virtual Tools Used for Innovation


Which virtual tools do you currently use for your internal and external innovation efforts?

Videoconferencing

Virtual meetings

Instant messaging applications

Brainstorming in virtual townhall

Expert communities

External social media platforms

0% 10% 20% 30% 40% 50% 60%


Internal
External

FIGURE 4

Having embraced the new tactics and tools, companies now face the challenge of integrating them into
an organizational structure that will unlock the value of open innovation, drive superior business
performance and build competitive advantage vis--vis key rivals. Respondents were clear that return on
investment is a top concern when moving from an innovative idea or concept to a commercial product or
service (see Figure 5).

ROI is Top Concern for Turning Ideas into Commercial Realities


What are the primary factors that your company considers when moving from an idea or concept
to a commercial product or service?

Return on investment

Ability to enter new markets

Add value to current product


Ability to increase share
in established markets
Time to market
Grow the number of
complementary products
Introduce a new product category

Desire to refresh product portfolio

Need to protect current market share

0% 5% 10% 15% 20% 25% 30% 35%

FIGURE 5

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Despite the difficulty of quantifying ROI, organizations need to get started on their open innovation efforts,
at minimum conducting a pilot that demonstrates the value of leveraging resources beyond their own
environments or risk falling behind more aggressive and innovative companies.

Thinking beyond the four walls will soon be the norm as virtual tools and social media break down
innovations barriers and enable faster, more profitable ideas to come to life. This way of thinking, while
difficult for many companies to embrace due to data security concerns, the cost of implementing new
technologies and cultural resistance, will enable even the most risk-averse company to convert more
transparent and focused forms of ideation and knowledge-sharing into tangible innovations that drive
business performance over the long term.

This article was abstracted from Innovation Beyond the Four Walls: Breaking Down Innovation Barriers,
a Cognizant Business Consulting report published in May with Forbes Insights. Download the paper at
http://www.cognizant.com/business-consulting/fourwalls.

Methodology
This report is based on a survey of 311 executives. Almost half of the executives (153) came from the U.S.,
and the rest were from Europe. They represented all major industries, including manufacturing (62),
technology (49), professional services (28) and financial services (21). The respondents companies had at
least $1 billion in revenues, with roughly a third with revenues between $1 billion and $5 billion, a third
with revenues of $5 billion to $10 billion, and the rest with revenues over $10 billion.

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Innovation Catalysts

RETHINK

Why Theres Never


Been a Better and
More Important
Time to Innovate
Continuing tight budgets, the emergence of new, low-cost technologies and the
competitive necessity to rethink, reinvent and rewire are creating unprecedented
conditions for a new wave of game-changing innovation. Read on to discover
ways to find overlooked and inexpensive sources of innovation that can make a
meaningful difference to your organization.

By Ben Pring

No one would publicly disagree with the notion that innovation1 is core to success. Politicians, business
leaders, educators and pundits alike routinely preach that the ability to innovate is a key characteristic of
their country, enterprise or college and is central to its future prospects. And yet amid tough times,
investment in the new, the untried, the unproven the risky is commonly among the first expenditures
to be cut by those holding the purse strings.

Research and analysis from the Information Technology Innovation Foundation shows abundant evidence
of the reduction in innovation investment (as measured by R&D density, number of IPOs, startup rates,
improvement in innovation capacity and U.S. corporation capital expenditures) throughout Western
countries over the last few years.2

The implications are all too obvious. When times are hard and money is tight, focusing on the basics, the
fundamentals, the imperatives is the right thing to do. Spending precious capital on anything that doesnt
fit that bill doesnt make sense.

And to many, innovation is clearly not a basic, a fundamental, an imperative. It is higher up the
metaphorical Maslovian3 hierarchy. Investment in innovation, the reasoning goes, can wait for better
times when we can be more relaxed about throwing money around and the possibility of wasting it.

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But in reality as difficult as it may be to internalize and acknowledge innovation is a basic, a fundamental,
an imperative. Indeed, innovation is the most basic, the most fundamental, the most imperative thing that any
country/enterprise/individual must do. Every growth phase that a business, economy or individual has ever
experienced is a direct result of innovation. Would the British have dominated the early phases of the
Industrial Revolution without James Watts invention in 1775 of the steam engine? Would Americas
dominance in the 20th century have come about without Henry Fords work in automobiles or the Shockley
Eights seeding of what became Silicon Valley?4 Would Apples $582 billion market cap (as of early June
2012) have originated without the disruptive innovation of Jobs, Wozniak, Ive and Cook?

Of course, investing in innovation during years of plenty makes perfect sense. Increasing R&D budgets
while in calmer seas and with more favorable trade winds is entirely logical. But imagining that those
conditions are the only ones that merit turning up the innovation dial to 115 is a fundamental mistake that
too many leaders have made too many times.

With little sign of improvement for todays challenging macroeconomic conditions, its becoming obvious
that simply waiting for better times to make innovation a priority is not going to work. We have to innovate
now. Innovate in these tough times. Innovate on the cheap.

As Wharton Business School puts it, Companies cannot grow through cost reduction and reengineering
alone. Innovation is the key element in providing aggressive top-line growth and for increasing bottom-
line results.6 Successful organizations put innovation first, no matter what the business cycle.
Researchers from the University of Brussels have found a strong correlation between commercial success
and long-term and consistent levels of funding for R&D and innovation initiatives.7

The Worst of Times Can Paradoxically Be the Best of Times


Innovating on the cheap actually has a long and storied track record. One could even say that the best
innovations rarely originate from individuals or organizations flush with cash. Wozniak, Zuckerberg and
Benioff to name just three high-profile examples from the tech industry8 were not operating with large
budgets when their breakthrough work was done.

With little sign of improvement for todays


challenging macroeconomic conditions,
its becoming obvious that simply waiting for
better times to make innovation a priority
is not going to work.
Clearly, all sorts of corporate spending is under pressure; projects continue to be cut, and teams are being
downsized. Staff that has not been pink-slipped is being asked to do more. Everyone is running harder just to
maintain their current pace. Against that backdrop, it is no mystery why its so difficult to create the conditions,
the charter and the expectation that people should think differently and take career-defining risks.

But doing exactly that creating the conditions and expectations to innovate is precisely what leaders
must do and what outperforming individuals and organizations are doing. Waiting for the good times to
reappear so that innovation can again be a focus is backwards; good times will only reappear once weve
innovated and created the new ideas, products, services, attitudes, business models and processes that
energize customers imaginations, solve problems, impress rather than frustrate and inspire your
customers to praise rather than criticize you on Twitter or Facebook.

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Seen in this light, now is the best possible time to be highly focused on innovation. Times are tight, and
capital is highly risk-averse at the moment. Thats our new reality for the foreseeable future. But today
is the time to commission your best leaders to plant and nurture the seeds that contain tomorrows
growth. Because of the emergence of new tools and new attitudes, innovation has never been more
affordable, nor more key. Those organizations that outperform competitively are those that understand
innovation is not a luxury; innovation is a fundamental necessity.

Because of the emergence of new tools and


new attitudes, innovation has never been
more affordable, nor more key.
Seemingly unfavorable conditions have often acted as the catalyst for spectacular phases of innovation,
in many different contexts:

New York in the early 1970s: For a variety of reasons, New York City in the early 1970s
was a crime-ridden, rubbish-strewn wasteland from which corporations and visitors had
fled. But precisely because the city was in such bad shape, it was primed to be the location
for an explosion of creative innovation. Young artists, musicians, actors, designers and
entrepreneurs of all types took low-rent living and work spaces and unleashed a burst of
energy that resonates to this day. Apartments in Chelsea or Soho that were once cold-water
walk-ups are now multi-million dollar condos. (Inflation-adjusted median house prices in
New York City have risen from $25,000 in early 1972 to $495,000 currently).9 The
neighborhoods that were once to be avoided at all costs now use velvet ropes to keep out
the hoi polloi. And the next generation of creatives who have been priced out of the
gentrified bohemia are all heading to Detroit, Michigan, a city that has been
ravaged by the decline in U.S. auto manufacturing.
Unaffordable computing for the third world: Nicholas
Negropontes One Laptop Per Child (OLPC) initiative10 has
been seen by many skeptics as an unrealistic, nave dream
for a number of years. The idea of putting affordable
computers into the hands of children in impoverished
third-world countries was simply not doable, the cynics
charged. Yet the MIT professors ambitious goals are
slowly gathering momentum. Leveraging innovations in
design, supply chains, component manufacturing and
distribution innovations that became necessary precisely
because costs had to be kept to a minimum the OLPC project
has enriched nearly 2.5 million childrens lives and is set for even more
ambitious goals in the future. And, in an interesting twist of reverse innovation (e.g.,
innovation flowing from developing countries into Western markets), software
development approaches originating in the Fedora open source development community
supporting the OLPC project are beginning to find their way into commercial projects in the
U.S. and Europe. The Boston-based broadcaster WGBH, for example, uses Fedora in its TV
program archive initiative.
Apples decline, fall and rise: Apple was widely regarded as a flat-lining niche computer
manufacturer that had lost the PC wars to IBM and Microsoft when Steve Jobs returned in
1997 to the helm of the company he had co-founded but been fired from. Jobs faced the
bleakest of scenarios. The companys finances were in disarray, having lost $816 million in
1996 and over $1 billion in 1997. With anemic market share of 4%, Fortune magazine wrote

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in March 1997 that Apple was the Silicon Valley paragon of dysfunctional management.
Knowing there was no safe option, no business as usual, no route to cut for growth,
Jobs focused all of his and Apples energy, time, creativity and focus on innovation. The
result, the iMac, gave Apple renewed life and created the runway that launched the
generation-defining iPod, iPhone and iPad.

These and many other examples (the Nanocar,11 the GoPro camera,12 the Mitti Cool fridge,13 ICICI Banks
microfinancing14) illustrate the role that adversity can play in the genesis of innovation.

Seek Out the Voices of Innovation


Adversity can act as an excuse for all sorts of sub-optimal performance (personal and corporate), including
the failure to create and execute new ideas. The market is tough, everyone is reducing spend, weve
got to stick to our knitting all of these are commonly heard phrases intended to justify not trying new
things for the sake of innovation.

Innovating is tough; its secret sauce will always remain opaque and elusive (if there were an innovation
algorithm, somebody would have surely innovated it by now). Innovation can be challenging, even scary;
the inverse relationship between age and seniority and risk-laden innovation is well known. Not innovating
(i.e., business as usual) is easier and typically more straightforward, particularly where business as usual
has created successful outcomes. Anyone familiar with Harvard Business School Professor Clayton
Christensens seminal work, The Innovators Dilemma, can recall the countless examples of organizations
cited that were unable to leverage new ideas generated internally or react to new ones from outside the
marketplace due to the power held by old ideas.

Tough market conditions can provide the perfect excuse for the cautious, the conservative, the cynical and
the jaundiced to propagate their worldview. These, however, are precisely the wrong voices to be listening
to now. Instead, you should seek out the voices in the organization that are:

Innovating is tough; its secret sauce


will always remain opaque and elusive (if there
were an innovation algorithm,somebody
would have surely innovated it by now).
At the edge of the organization: This includes people in distant geographies, in
operating units, in acquired entities that are not yet fully integrated or in standalone
divisions, as well as subcontractors or strategic partners in advisory firms or independent-
minded consultants. In short, listen to people and/or teams who are not part of
headquarters group think, not vested in decisions already made, and who have little to
lose from saying no.
At the bottom, not the top, of the organization. Top-down, ordered innovation is rare;
organic, bottom-up innovation is chaotic, messy and unmanageable (which is why those
who manage for a living feel so uncomfortable with the process of innovation). However,
such innovation has an inherently higher probability of producing genuine new insight.
The newly hired. New employees can bring fresh, new insights, coupled with experience
of how problems are solved elsewhere. Newly hired managers and executives who have
experienced successes and failures in other venues can act as external change catalysts for
as long as 18 to 24 months into their new role/career.

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Those born digital. Younger generations have less commercial experience but plenty of
fresh perspective, as well as (if youve hired the right ones) that most precious of
commodities: energy the ability to hustle, upturn pre-conceived wisdoms and think anew
about how things could be better.
Individuals too introverted to speak up in open sessions. Frequently in business,
those with the weakest ideas but the biggest voices win; introverts (often highly creative
and original in their ideas and expression) often lack the confidence to speak up or force
their point in the face of intimidating situations and let others dominate and dictate. By
seeking the views of the lowest-key person in the room, you can often tap into new seams
of unmined breakthrough thinking.
The disenfranchised or alienated from the core of the organization. Sometimes,
outside views are lurking in plain view inside; of course, there are many (good) reasons
why some people who dont fit within an organization are excluded from the decision-
making process. But often, a byproduct of the inherent competition within an organization
is that good people with good ideas can become excluded disenfranchised from the
flow of ideas, discussion and decisions. When original ideas are required, these people,
somewhat peripheral and often regarded as difficult, have little desire, incentive or
permission to offer their unusual points of view. Of course, naturally, the franchised are
prone to protect their territories, based on their business-as-usual views.

Much of the innovative technology today has


been born out of low-cost/low-risk environments,
including software as a service applications,
social media and mobile functionality.
Innovation is, by definition, unusual, uncomfortable, edgy, strange, threatening and difficult; tapping
sources of innovation, therefore, by logical extension forces a business or individual to interact with those
people and groups that can catalyze changes in both thought and deed.

Use Lower Cost Tools to Minimize Risk and Empower Breakthrough


Thinking
As previously noted, innovation often stems from individuals or groups operating in lower cost/lower risk
scenarios. Less money requires more innovative workarounds; less risk frees the imagination. Much of the
innovative, new technology that has emerged in the last few years has been born out of low-cost/low-risk
environments. Software as a service applications, social media services, mobile functionality, as examples,
have commonly been developed with budgets far smaller than for the previous generations of enterprise
technology in the 1990s.15 Commercial and competitive necessity has been the mother of Web 2.0 (and
beyond) invention. A new generation of lower cost tools, utilities and functionality is now available, from
which the explosion of mobile and social innovation we now see all around us is being spawned.

Smart enterprises such as General Electric, Jacobs Engineering and DeVry University are arming their
disenfranchised, hungry, introverted individuals and teams, spread in the far corners of the world, with
low-cost, pay-as-you-go technology services (Amazon Web Services, Yammer, Foursquare as just three
examples), as well as a charter to rethink, reinvent and rewire their organizations, products and services
indeed, their very DNA to create the innovation that will open new chapters of growth.

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Smart organizations are not sitting around waiting for the good times to reappear. They are starting to
invest again in handsomely budgeted command-and-control-driven innovation oriented toward five-year
plans sketched out with the help of high-priced consultants. Theyre establishing mentoring programs in
which the young and the old, the important and not so important, those in the best ZIP Codes and
those in the worst, share thoughts, ideas and aspirations and influence each other, to mutual benefit.
Theyre embracing the shock of the new and the discomfort of disruption, and they are welcoming the
benefits of failure.

Now is the Time to Innovate Your View of Innovation


The greatest innovation that any business can affect currently is the ability
to weigh risk and reward differently. The paradox of these tough times
and the great opportunity right in front of us is that the conditions are
perfect for executives to say to their teams, we have never had less
money to spend on innovation than today, but innovation has never
been more important; show me what you can do

Those organizations and individuals that can act on open innovation, and
apply it in measured doses for continuous business improvement, will be
best positioned to win the future. Strange as it may seem, there has never
been a better time to innovate and to enable the Future of Work to work.

Recap and Recommendations


So, how can your organization embrace innovation and catalyze action? Here are a few suggestions on
getting started:

Become an innovation first organization.


Dont regard innovation as a luxury.
Dont wait for better economic times to reappear before innovation is prioritized.
Innovate now.
Motivate your teams with stories of innovations arising out of previous tough times and
conditions.
Take advantage of next-generation, low-cost IT tools and services and resources located in
lower-cost geographies to create new ideas at lower cost points.
Recognize that the lower cost of innovation lowers its risk profile.
Embrace and empower employees at the edge of your organization (in terms of geography,
status and power) to lead and/or influence the search for whats next, whats new and what
could win.
Innovate your process of innovation.

Footnotes
1
Although there are many types of innovation (strategic, tactical, disruptive, sustaining, small, large,
etc.), innovation at its most basic simply means something new or different introduced (ref.
Dictionary.com).
2
Stephen Ezell, The State of Innovation in the States, Information Technology Innovation Foundation, 2012.

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3
The theory developed by Abraham Maslow, American psychology professor, depicting levels of human
need, psychological and physical, starting with basic needs such as food and shelter and ending with
factors such as self esteem.
4
The Shockley Eight are the employees of Shockley Semiconductor Laboratory who left in 1957 to form
Fairchild Semiconductor. Among the eight were Robert Noyce and Gordon Moore, who went on to
found Intel Corp.
5
A reference to the movie This Is Spinal Tap, in which a fictional English bands explanation for why its
live concerts are exceptionally loud is that its amplifiers go up to 11.
6
Tony Davila, Marc J. Epstein and Robert Shelton, Making Innovation Work: How to Manage It,
Measure It, and Profit from It, Upper Saddle River: Wharton School Publishing, 2006.
7
Roberto Venturini, Innovation and Competition: Introducing Network Externalities,
Universit Libre de Bruxelles, 2012.
8
Steve Wozniak founded Apple Computer, Inc., Mark Zuckerberg founded Facebook, and Marc Benioff
founded Salesforce.com.
9
Housingbubble.jparsons.net.
10
For further detail, see One.laptop.org.
11
Manufactured by the Indian auto company Tata Motors, the Nanocar was created for Indian and other
emerging country markets and retails at around $3,000 (U.S.).
12
The GoPro camera brings previously highly expensive, professional-quality cameras built for filming
adventure sports into the price range of those engaging in those sports (i.e., $300).
13
Made of clay, the Mitti Cool refrigerator requires no electricity to keep food fresh. It is intended for
rural populations that may not be able to afford conventional refrigerators due to high initial costs
and the need for electricity.
14
ICICIs micro-financing initiatives are among many from a large number of banks and financial
services institutions operating in emerging country markets. Micro-finance aims to make small
amounts of credit available to those who would have no access to traditional financing in order to
help them develop small businesses, with the aim of kickstarting economic growth and societal
improvement.
15
As an example, Salesforce.coms initial seed money was on the order of $7 million, the majority from
founder (and still CEO) Marc Benioff, and the rest from a small group of investors, including Oracle
CEO Larry Eillison, who invested roughly $2 million.

Ben Pring co-leads Cognizants Future of Work Center. He joined Cognizant in September 2011 after
spending 15 years with Gartner as a Senior Industry Analyst, researching and advising on areas such as
cloud computing and global sourcing. Prior to Gartner, Ben worked for a number of consulting companies,
including Coopers and Lybrand. Bens expertise in helping clients see around corners, think the
unthinkable and calculate the compound annual growth rate of unintended consequences has brought him
to Cognizant, where his charter is to research and analyze how clients can leverage the new opportunities
that are being created as new technologies make computing power more pervasive, more affordable and
more important than ever before. Ben graduated with a degree in philosophy from Manchester University
in the UK. He can be reached at Ben.Pring@cognizant.com.

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Innovation Best Practices

RETHINK

Ideating, Innovating to
Drive Fundamental
Change
Championed by leaders who understand context, mechanics, goal-setting
and measurement methods beyond bottom-line results, innovation must be
approached as a journey, with learning and incremental improvements
gained and applied along the way.

By Bhaskar Venkatasubramanian

Where do good ideas come from?

This question has occupied many thought leaders minds and has been a subject of many books. Such
books delve into a wide range of topics, from anthropology, to the intricate connections of the brains
neural network, seeking clues from life-changing events of iconic original thinkers Aristotle, Steve Jobs,
Leonardo da Vinci, Thomas Edison, to name a few.

A popularly accepted answer to this eternal question is that good ideas ignite at the intersection of
diverse perspectives. Its that a-ha moment for Isaac Newton, catalyzed by the falling apple. Its what
came to the turtleneck-wearing Jobs, who extended the same seamless notion of fashion to the iPod
design. Digging more deeply inside the minds of these leading luminaries, we see people who typically
mulled a core idea over a period of time; their epiphanies emerged when they viewed their challenge from
another perspective. Jobs called this connecting the dots.

Business magazines and B-school case studies reveal how some marquee companies nearly collapsed
when they failed to notice the change surrounding them and respond accordingly. Kodak and Xerox are
the oft-quoted examples here. Contrast this with college kids experimenting in a garage on a shoestring
budget; they have the adaptability of an amoeba and the nimbleness of a butterfly. Hollywood
hagiography, blockbuster IPOs and billion-dollar buy-outs seem to follow in quick succession.

Facebook and Zappos are good examples of this. Facemash1 was the seed for Facebook that Mark
Zuckerberg famously launched while attending Harvard. A similar story is Zappos, which CEO Tony Hsieh
started as a response to his inability to find a properly fitting shoe. His efforts were handsomely rewarded
when the company was acquired by Amazon for $1.2 billion.2

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For Apple, Facebook and Zappos, innovations were spawned by novel thinking and deep exploration of
new and emerging technologies. As younger companies, it was relatively easier for them to focus on
competitive advantage and differentiation. As startups (at least in the case of Facebook and Zappos),
leaderships agility and appetite for risk opened the door to levels of experimentation about which most
established enterprises can only dream.

So, the question for established enterprises is how to think and act innovatively while retaining
operational efficiency and achieving top- and bottom-line results. How can an enterprise gain the diverse
perspectives needed to innovate, before it becomes too late? How might good ideas be brought to fruition
to address a chosen challenge in a way that balances investment risk with business reward?

A popular lament for most long-standing businesses is that they dont have access to enough Newtons
and Jobs to translate innovation need into reality. Feeding this notion is a theory that disruptive thinkers
find it difficult to fit in an organizational straitjacket. But scan any business magazine survey report, and
the need to innovate often figures among the top 10 expectations of CEOs.3 Closer study of most
companies strategic initiatives reveals a quest among senior executives, who struggle and experiment
with a plethora of innovation programs spanning the corporate agenda.

In their eagerness to pursue the CEOs innovation vision, many senior executives launch several initiatives,
using significant resources. Some of the popular practices are to nominate a few people to drive the
innovation initiative as a stretch responsibility or spend significant effort finding a cool name for the
program, with fancy posters and colorful mailers. These well-intentioned efforts often endure numerous
difficulties and soon face the dilemma of when to preserve the status quo and when to let go, where to
innovate and how to evaluate the new opportunities that are almost always wrapped with uncertainties.

A popular lament for most long-standing


businesses is that they dont have access
to enough Newtons and Jobs to translate
innovation need into reality.
For publicly-held companies, there is an even greater barrier, in the form of the inevitable questions from
Wall Street analysts on the return on investments during quarterly financial results. With no clarity or
guideposts, most enterprise innovation programs face formidable challenges despite their energetic and
high-expectation launches.

What follows are a few helpful pointers for managing enterprise innovation efforts based on our experience
and observations. Some of this may read like a basic golf lesson: Look at the green, look at the ball, take
your swing, hit the ball, stop looking at the ball and complete the swing. If the ball goes in the right
direction, walk toward it with humility; and if the direction is not to your liking, practice more. As with golf,
innovation lessons are easier to understand, and it is with practice that enterprises often get results.

(Disclosure: In our own case, we did not get all our shots right the first time; it took much thinking,
debating and consulting with experts. We were guided by leaders who gave us the freedom to test and
fail, encouraged us and intervened when required. We were also blessed with a large number of
passionate volunteer employees, who stretched beyond their day jobs and supported us with valuable
feedback.)

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Quick Take
Innovation by the Numbers
Last year, 30,193 Cognizant associates (about 20% of our total headcount) contributed 83,918
ideas to our Cognizant 2.0 Idea Management System. After evaluation, 10,813 ideas were
implemented, or roughly one in every eight ideas. We estimated the monetized value resulting
from our innovations at $257 million, covering both tangible and intangible benefits.*

Heres an example of how our all-hands approach to innovation is paying off for one of our
clients. Sales personnel of a leading U.S. automobile brand closed more deals in a shorter
time with a simple yet evocative idea that we proposed an interactive iPad application that
visually generates car model options in real time with features that match the potential
buyer's requests.

As the buyer refines his car wish list (features, colors, price points, etc.), the database delivers
the exact car models and stock availability that match the new requirement, in glorious color,
to the dealers iPad. In its first year of use, this real-time information flow was estimated to
increase car sales for this automaker by 1%, adding roughly $1.71 million to the top line.
* Rishikesha T. Krishnan, Innovation Strategies of Indian Market Leaders, Journal of Indian Business Research,
Vol. 4, Issue 2, 2012, pp. 92-96, http://dx.doi.org/10.1108/17554191211228010.

Innovation Is a Journey, Not a Destination


Many companies approach innovation like a summer holiday travel plan, setting a start date and an end
date, with a few must-see milestones along the way. But to sustain and nurture innovation, enterprises
need to consider more of a joy of the journey attitude than a destination to dismount approach. The
emphasis should be more on instilling the habit of generating more ideas, more often and by more people
rather than worrying exclusively about the ROI generated at the end of every quarter.

Surprisingly, this softer approach results in much higher business impact, and faster than youd expect.
This is because when the business seeks ideas with the intent of earnestly considering all propositions,
it encourages individuals within the organization to reciprocate with a spirit of, ideas need to pay back
the business. The decision of not setting parameters for what defines an acceptable idea makes it
possible for more ideas to be heard from a wider perspective than organizations normally see in traditional
project review meetings.

Contextual Innovation Is More Efficient than Blue-Sky Notions


Popular myth says we should welcome all ideas, without any restriction, and then evaluate all of them on
their individual merits. Fortunately, there are far more efficient ways of generating valuable ideas while
retaining a democratic spirit, by using a few simple execution changes. For instance, you can encourage
teams to generate ideas by doing the following:

Identify specific challenges for which they are keen to find solutions. Some may
arise from daily frustrations (i.e., why do I need to repeat the same task every day?).
Be on the lookout for events triggered by the external environment (i.e., how might
we speed up our healthcare insurance processing in view of newly revised regulation
standards?).
Ask questions that spur new insights (i.e., why do many potential e-commerce sales
drop off our Web site prior to cart checkout?).

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Specific prioritized challenges identified as innovation contexts are helpful directional pointers; they make
it possible for innovation efforts to be channeled in the required direction. Here are a few real-world
examples from our experience:

Context A: For a retail business account team, the challenge was not merely a cosmic
question of how to increase sales and decrease IT costs; instead, the innovation context
became how to make IT support elastic for the retailer business, expanding during the
peak season and contracting during off-season.
Context B: Faster-to-market is an oft-sought innovation outcome; one of our insurance
accounts teams rephrased the context as, how might we shorten the time taken in the
policy risk profiling process between the (larger) broker community and (fewer and highly
specialized) underwriters?

These aforementioned innovation contexts have given our teams a clear direction of why their ideas were
required and toward what use their ideas would be put. In both cases, a wide variety of ideas were
offered, and the ideas were scored and ranked based on which met the objective with the best ROI. At
the end, everybody on the team had the conviction that the idea selected for implementation was the best
for the given challenge.

Research indicates that performance-leading


companies typically allocate about 70% of
their innovation activities toward sustaining
the core, 20% toward enhancing adjacencies
and about 10% toward the pursuit of
breakthrough opportunities.
Imagine the consequences of simply asking for ideas. With no direction, ideas would have been all over the
map, and leaders would have been saddled with the unpleasant task of not knowing how to compare
apples and oranges. In both of the above cases, team members generated a large number of valuable ideas.

The idea implemented in Context A predicted peak IT infrastructure needs ahead of the holiday season (a
time when revenues typically rise by up to 30%), enabling the business to focus on strategy. With Context
B, the top idea was a smartphone calendar that was shared between brokers and underwriters, which
shortened process time by 20%.

Clearly, starting the innovation initiative with a carefully identified question makes the process more
efficient and puts the odds of success in the organizations favor.

Innovation Needs a Balanced Approach, Not a Dartboard


Innovation is a very broad term. Defined as a novel idea that will produce value when implemented, the
extent of innovation can vary from small and continuous core business improvements (contributing to
process or operational excellence), to a major breakthrough in the development of new market
opportunities (blockbuster products or services). Also, in some cases, it may be an enhancing impact in an
adjacent segment, giving an edge to the company in terms of improved margins for a differentiated
product or service.

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It is important that companies strike a balance in allocating resources for the pursuit of their innovation
agendas. While it may vary from company to company, this balance will be dependent on many factors,
such as industry maturity, the companys own stage of development, its state of competition, the
composition of its customer base, its market and its appetite for risk. Research indicates that
performance-leading companies typically allocate about 70% of their innovation activities toward
sustaining the core, 20% toward enhancing adjacencies and about 10% toward the pursuit of
breakthrough opportunities. This approach provides a balanced approach between short-term and long-
term goals and supports more predictable growth. It takes various skill levels, a wide range of
motivational levels and organizational support systems to pursue all three.

Directionless and uncontrolled spread of innovation initiatives, through sporadic energy displays, may
quickly dissipate into frustration. By having a thoughtful plan of objectives, with a measured approach
toward allocating resources, organizations can sustain the energy and become the driver for reliable
growth.

Figure 1 represents how one of our banking and financial account teams charted their balanced approach
to innovation. The X axis indicates the acceptable degree of novelty (newness) of the innovative solution
that this team was stretching for, ranging from improving existing assets and incremental (new-to-the-
company) additions, to transformational (new-to-market). The Y axis shows the aspired degree of novelty
(newness) to the clients market in three tiers or horizons optimizing the existing, expanding beyond the
current market practice and possibly something new to the market itself. It is important to note that the
specifics shown are prioritized from the team's point of view. Also key to this approach is the deliberate
thinking and planning for creating and communicating innovation goals to the entire team.

Balanced Approach to Innovation: Banking and


Financial IT Team of Company XYZ

Where to innovate

Consolidate
application
HORIZON 3:
Venturing into framework
untapped or
unknown markets.
Improve metrics
data quality End-user
HORIZON 2:
productivity
Expanding into User experience across devices
adjacency, new to for HNI customers
current practice.
Improve decision
support systems Testing
automation
Productivity
improvement Reduce
HORIZON 1: operating cost Knowledge
Optimizing
current offering
management
for existing Improve quality
customers. of delivery How to innovate

Existing Assets Incremental Transformational


New Assets Assets

Visual representation based on the Innovation Ambition Matrix by Bansi Nagji and Geoff Tuff, Managing
Your Innovation Portfolio, Harvard Business Review, May 2012.

FIGURE 1

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Innovation Is for Everyone, Not a Privileged Few
Innovation today belongs to everyone. Companies should think in terms of leveraging the wisdom of a
chosen crowd by identifying specific contexts and inviting a large number of team members to offer their
ideas. Invitations should be extended to more people than just those who normally deal with this
challenge in their day jobs.

For example, a software design-related challenge will traditionally be confined to architects and may
include a few lead developers; we recommend opening this challenge to a wider community of
developers, testers and business analysts, with representatives from the user teams, as well. In some
cases if the challenge is appropriately abstracted it may be opened to people outside the regular team.
For instance, a challenge involving invoice processing could find an enthusiastic response from
unexpected quarters outside of finance and accounting; perhaps the point-of-sale data warehousing team
may have an interesting point of view to offer.

Innovation Is Idea Validation, Not a Compromising Consensus


Enterprise leaders have the unenviable responsibility of guiding a large team toward a common goal; it
greatly helps when all team members sign on with commitment and are ready to march toward this
achievement. This gets trickier when the common goal is not fleshed out with a clear roadmap.

The pursuit of innovation is often accompanied by an element of novelty meaning a significant part of
the process is untried and untested (at least within your company). Hence, innovations precise
coordinates are sketchy, at best.

Quick Take
Ideating via the Crowd
While pursuing the wisdom of the crowd has been in vogue for several years now (from Procter
& Gamble, to Y Combinator), we have adopted crowdsourcing and made it safe and secure for
our employees and clients.

Our Idea Management System (IMS) is a context-based, outcomes-oriented environment that


enables easier, secure and scalable ideation. Prioritized innovation contexts are posed as
problem statements, and employees are invited to suggest ideas within the platform. The
platform facilitates crowd evaluation of ideas; idea rating based on selectable parameters by
subject matter experts; comprehensive business cases to be built for the top emerging ideas;
reviews and approvals by the leader; and ROI estimation for participants around the world,
including clients. The implemented innovations range from simple automation tools, to making
significant changes to key business processes or enhancing the customers user experience.

Author, consultant and professor Tom Davenport illustrated many of IMS's benefits in his latest
book, Judgment Calls: Twelve Stories of Big Decisions and the Teams That Got Them Right,
Harvard Business Review Press, 2012.

Through the IMS platform, we have discovered many new solutions some of them small but
statistically significant, and others that are large, with meaningful business-technology
implications.

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To accelerate closure, many executives find it easier to socialize the idea with a few key stakeholders,
reducing the ideation component of innovation to the most commonly accepted view. This is like marrying
someone because a majority of your Facebook friends likes that person. Fortunately, there are far more
effective ways of progressing with innovative ideas. In an innovation context, the equivalent of stop
looking at the golf ball is stop focusing exclusively on building consensus on features. Let the data and
knowledge from the real world flow through a series of small experiments (smaller is often better here)
to help validate which idea is worthy of pursuit and with what modifications.

Surely, this takes a little longer, but it demands far fewer resources and funding in particular, and is far
more risk-mitigated. Hence, CEOs and other business leaders typically love this approach. It is also
possible that several breakthrough opportunities may not be pursued in an enterprise, because that may
disrupt several orthodoxies that have crept into the organization. Breakthrough innovations easily
dissipate in an enterprise because key stakeholders opt to not rock the boat or embrace a please-all
approach. Making the tough call on a few focused innovations demands determination, perseverance
and leadership support.

Innovation Is About Value, Not Price


While resources for trying new ideas can often be found with relative ease, the time available to generate
ideas, spot the most promising idea and validate its viability and release to the market is growing
increasingly shorter. In todays tightly networked world, with information and technology as ubiquitous as
sunshine in the desert, the ability to execute efficiently and flawlessly, end-to-end, is a key differentiator
for those organizations that innovate well.

Winning companies see their own business as


symbiotic with their partners, where a diverse
ecosystem helps all parties survive and thrive.
Innovation is 1% inspiration and 99% perspiration; the sweat comes from overcoming hurdles that
conspire against fruitful innovation. For example, even though business economics demands a global
scale for most innovations, some degree of customization is required for most product or service
breakthroughs, sometimes even an exceptional level of individualization. When this is the case, many
crucial needs need to be fulfilled in order for a specific solution to reach fruition in a relatively short
timeframe once the judgment call has been made to proceed.

Innovations value, in terms of operational and market benefit, is hugely enhanced when the enterprise
embraces true partnership ecosystems rather than working with outside agents that are perceived as mere
vendors. Most companies see external vendors as order takers that offer lower-cost and sometimes sub-
optimal alternatives in areas such as IT, finance, accounting, inventory management, claims processing,
etc. Many companies drive such vendors to cut costs year over year, but there is a physical limit to the cost
savings that can be generated by process efficiencies; far more benefit can be realized by collaborative
win-win partnerships that deliver valuable revenue opportunities in addition to mere cost savings.

Winning companies see their own business as symbiotic with their partners, where a diverse ecosystem
helps all parties survive and thrive. They share their business strategies, roadmaps and challenges beyond
the confines of the contract, and they partner with them in the journey of innovation, rejoicing in the value
that benefits both. A few years ago, when Wal-Mart embarked on an environmentally friendly green
initiative, it enrolled and collaborated with players across its vendor network, enabling the retail giant to
achieve a greater impact than it could have possibly done by itself. When Wal-Mart shrank its laundry
detergent bottles, its three-year savings included 400 million gallons of water, 95 million pounds of plastic,

http://cognizanti.cognizant.com COGNIZANTi 23
125 million pounds of cardboard and half a million gallons of diesel fuel in shipping. Whats more, an ongoing
effort to shrink all product packages by 5% is projected to save the company an estimated $3.4 billion.4

Innovation Is Fuzzy, Not Binary


Innovation programs (e.g., special teams, idea portals, R&D labs, etc.) are not machines with assigned
employees as cogs. Structures such as review councils with pre-determined rules and controls that
require lever pulling and go/no-go signals often do not advance innovation over the long term, nor do
they help in sustaining and nurturing innovation.

Leaders need to see their innovation programs as a valuable way of listening to individuals hopes and
dreams, connected to a higher business purpose. They have to periodically intervene to inspire, renew and
reassure employees, as well as make it easier to try and test ideas without the fear of failure. A few
months ago in a town hall, one of our employees asked for special support arrangements for new mothers;
even though their numbers were small, the leaders took the cue and launched a series of measures geared
toward new moms in our facilities, across locations.

Innovation programs are not machines


with assigned employees as cogs.
In another internal example, one of our IT application development teams hit a rough patch due to the
large number of testing failures. Sensing a morale problem, the project leader tweaked his organization
by joining developers with testers in a single team at the design stage. This paved the way toward
charting a test protocol-driven application development process, thus reducing the need for testing
efforts at a later stage.

Innovation Is Not a Spectator Sport


Leaders need to go beyond vetting their employees ideas and pontificating on the precise next steps. They
need to set a general direction in terms of priority and context and then help the team overcome major
organizational and cultural impediments. They should commit to obtaining the resources to advance ideas
that show promise and share with employees which ideas may not get the required funding. They should
empower their teams to form their own rules and intervene only in high-risk situations.

Leaders need to see their innovation


programs as a valuable way of listening to
individuals hopes and dreams, connected
to a higher business purpose.
Heres an example of how this worked. One of our BPO teams was unable to see the emerging big picture
when a client changed a significant portion of its business practices. The BPO support teams were mired
in silos, aggravated by several groups working across different locations and time zones. The BPO team
leader quickly engaged each group to (literally) draw the big picture, showing how each individual
contributes to the whole and what had changed. He then asked them how their support process could be
improved in the changed scenario.

This leader periodically asked the team for its ideas and actively involved himself in understanding and
identifying the ideas that emerged. He then followed up with the client leadership to implement the best
ideas; this in turn energized the entire team because it could now see how its ideas contributed to the

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clients success. This motivated the staff, propelling it to deliver 20% more productivity improvements by
identifying and quickly overcoming slack spots.

Innovation Entails Change, Not Pain


Some managers see innovation as complicated and threatening, something that is optional and outside of
their regular work. Others see innovation as something that can always be postponed and is to be endured
only when the company is desperate for new ideas. They subconsciously sidestep many innovation
opportunities until they become absolutely necessary and then make changes when they are handed down
by senior leaders as a decree.

Extraordinary leaders see the pursuit of innovation and its accompanying change as an evolutionary part
of business life. They know their livelihood, and that of their organizations, is inextricably linked to
employees finding and adopting new ways of working.

Quick Take
Innovation Should Be Fun, Not a Chore
One of the few remaining joys in the working world is the a-ha moment of getting an idea
and the excitement of experimenting with it. Leaders have the responsibility of making
innovation a fun, enjoyable and rewarding experience; success, therefore, needs to be
redefined as group participation in a journey, rallying around the team and making the whole
notion of innovation inherently enjoyable, not reduced to a chore with an obsessive focus on
quarterly monetary results.

By approaching innovation using these tenets, we have achieved several successes that, while
they may not currently qualify for breakthrough status, do stoke our confidence in where we
are headed and our ability to get there faster. Here are a few examples:

200% efficiency improvement in invoice processing for a banking client,


using text mining technology to supplement human intelligence. The challenge
was in the wide variety of invoice formats and range of vocabulary describing
similar transactions. In its first year of implementation, we expect a $1.2 million
impact on the bank's cashflow.
75% efficiency improvement in credit card bill summary preparation,
eliminating duplicate transaction entries. The challenge was in striking the fine
balance between applying too many filters vs. too few.
$20 million impact for an educational content provider in the K-12
market, enabling it to become the face of in-school mobile curricula. We
developed an attention-grabbing tablet interface, enabling students to access
study materials and performance scores, teachers to chart out specific
interventions for each student and parents to monitor progress in real-time.
Estimated conservatively, our innovation contributed $1 in revenue per download.

While walking this journey, another unforeseen but important benefit we are beginning to see is
higher employee engagement, indicating increased business effectiveness and employee
satisfaction levels. The simple act of asking employees for ideas that go beyond their day job
provides a larger challenge and bigger purpose; by posting ideas, seeing their ideas in action
along with their colleagues ideas and competing and collaborating, they feel more highly valued.

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Putting Best Practices into Play
As Henry Ford once said, Thinking is the hardest work, which is why so few people engage in it.5
Organizations must endeavor to turn this notion on its head by enabling a large set of individuals within
the enterprise to think and apply a framework of values that take innovation from a lofty concept to a
bankable reality. The journey can be exciting, but it is never easy. Companies must try out ideas to see if
they work, fail fast if they dont and learn from continuous process improvements that make work more
fulfilling and the enterprise more prosperous.

The overarching aim is to deliver higher value for employees, partners and customers collectively
growing the creative confidence necessary to successfully ideate and innovate. In sum, we advise
enterprises to take a Shakespearean approach. As the great author wrote, Thoughts are but dreams till
their effects are tried.

Footnotes
1
http://en.wikipedia.org/wiki/History_of_Facebook
2
Robin Wauters, Amazon Closes Zappos Deal, Ends up Paying $1.2 Billion, TechCrunch, Nov. 2, 2009,
http://techcrunch.com/2009/11/02/amazon-closes-zappos-deal-ends-up-paying-1-2-billion/.
3
IBMs 2012 CEO Study measures the mindsets of 1,700-plus CEOs across 64 countries and is among
the many studies that substantiates this trend. Leading Through Connections, IBM,
http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03485usen/GBE03485USEN.PDF.
4
Edward Hume, Wal-Marts Green Hat, Los Angeles Times, May 31, 2011,
http://articles.latimes.com/2011/may/31/opinion/la-oe-humes-walmart-20110531.
5
http://refspace.com/quotes/Henry_Ford.

Bhaskar Venkatasubramanian is a Director within Cognizants Innovation Group. He partners with account
and client teams in identifying emerging innovation opportunities and helping them to seed, nurture and
manage their enterprise innovation activities. He focuses primarily on the banking and financial services
insurance and healthcare industries. Bhaskar is an alumnus of the Indian Institute of Management,
Ahmadabad, and is a veteran of the Indian Navy, where he was a submarine captain. He can be reached
at Bhaskar.Venkatasubramanian@cognizant.com.

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Business Model Rx

RETHINK

A Vision for U.S.


Healthcares Radical
Makeover
Just as the publishing and music industries were disrupted and rebuilt by
powerful transformative levers, the healthcare industry is on the verge of a
similar disruptive change that will significantly reshape our experiences and
reorient our expectations across the provider and payer value chain.

By Patricia Birch and Bill Shea

The U.S. healthcare model is unsustainable. This is not news. What is new, however, is the very tangible
evidence of an industry being reinvented, from how care is managed, to how it is paid for, to how it is
delivered.

Healthcares unsustainable cost equation can be highlighted in numerous ways: healthcare as a


percentage of gross domestic product (17.9% in 2011);1 healthcare expenditures as a percentage of the
federal budget (23% in 2011);2 and the transfer of rising healthcare costs to employers and consumers
(since 2008, the annual cost of insurance coverage for a family of four has risen nearly 25%, from $15,609
to more than $20,728).3 These factors have led to additional concerns: a lack of clarity and transparency
about prices, dissatisfaction among patients and physicians with how care is delivered and growing
questions about how to pay for care.

The industry, as well as state and federal agencies, have been responding to these issues, generating
these strong market currents:

Redistributed accountability and risk, as lines between payers and providers blur.
Large healthcare plans are acquiring hospital systems and home care companies; hospital
systems create and sell health plans. We see payer and provider clients working more
closely together to improve quality while finding ways to reduce the costs of therapies and
procedures.
Rise of integrated health management. The industry is experimenting with
Accountable Care Organizations (ACOs) and Patient-Centered Medical Homes (PCMHs).
These entities coordinate a comprehensive range of care for patients and consumers under
a single, often virtual, roof. ACOs and PCMHs hope to streamline the healthcare value chain
for consumers and patients, eliminating the need for them to find their own specialists and
coordinate their own care.

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Increasing vertical/horizontal integration and diversification. Merger and
acquisition activity is brisk across the industry. Among our client base, we see significant
interest in broadening from local to regional and even national customer bases through
mergers and acquisitions. Healthcare players are also expanding their expertise, with
health plans purchasing caregivers (e.g., WellPoint introduced a patient-centered primary
care program) and providers launching their own health plans to consumers, such as that
administered by the University of Pittsburgh Medical Center.
The retailization of healthcare. Healthcare clinics are now available in pharmacies,
big box retail outlets and grocery stores, and such outlets will grow. More marketing of
services and health plans will be direct to consumers, with the industry offering more
individualized products and a greater emphasis on customer service.

Despite the momentum behind these market forces, they cannot transform healthcares business model.
These initiatives the M&A activity, ACOs, redistributed financial risk, etc. generate only incremental
improvements in cost reduction, quality and efficiency. Conversely, creating a truly sustainable foundation
for healthcare will require the industry to eliminate substantial costs, embrace new ways of delivering
care and improve the quality of that care.

Achieving those goals means the industry must combine incremental improvements with the power of
truly disruptive transformative forces, from new technology, to radically different diagnostic tools, to
virtualized means of caring for patients. In other industries, similar disruptive forces have dramatically
changed cost and service delivery equations. Think along the lines of how Apple transformed the music
business with the iPod, how Amazon is reshaping publishing with its electronic delivery model and how
Netflix reimagined the home video market.

Creating a truly sustainable foundation for


healthcare will require the industry to eliminate
substantial costs, embrace new ways of delivering
care and improve the quality of that care.
Disruption and reinvention of the same order is required in healthcare. And it is already occurring. Signs
of radical transformation are emerging, driven by powerful levers that are enabling the reinvention of the
industrys business model.

Transforming Healthcares Business Model


Rethinking healthcare to create a new, sustainable business model requires existing players, as well as
newcomers to the industry, to disrupt current models by harnessing the following transformative forces
some of which already are reshaping the industry.

Technology: Portions of the healthcare value chain will be radically transformed as


segments of the industry are disintermediated through new business models, new software
and new diagnostic capabilities. Some examples: The U.S. Food and Drug Administration is
evaluating whether certain prescription drugs could be dispensed through self-serve kiosks
that ask patients about their symptoms and make drug selection suggestions.4 Tiny robots
tethered to physicians assist in a variety of surgeries, and researchers say these are
precursors to self-guided nanobots that will revolutionize surgery.5 Researchers at the
University of Georgia have developed a quick, inexpensive way to test for flu viruses using
nanoparticles that can be used in any clinic.6

30 COGNIZANTi http://cognizanti.cognizant.com
Innovations like these shake up healthcares traditional structures, making it possible to
eliminate costs while maintaining and even improving access to and the quality of care.

Virtualization: Technology innovation will create new business models capable of


providing care anywhere and allowing new entrants to leapfrog bricks and mortar and go
directly to virtualized, integrated healthcare models. All healthcare will not be local.

A logical next step is making gene-sequencing


part of a typical checkup so that a persons
care can be truly personalized for the ultimate
in preventive care and disease management.
This is already becoming true: Web sites such as Consult A Doctor (consultadr.com) and
Virtuwell (virtuwell.com) let anyone register and receive an e-consult from a physician or
other caregiver. Partners Healthcare offers e-mail-based second opinions to patients and
their physicians. Patients in remote villages throughout the world are accessing high-
quality healthcare through mobile and telepresence applications.7

Globalization: Due to technology advances and process virtualization, the industry will
have access to the highest-quality/lowest-cost services anywhere, creating a unique
opportunity to transform care delivery in the U.S. and around the world. Sustainability will
require leveraging global supply chains and operating systems for quality and talent (e.g.,
offshore reading of radiology images and coding medical charts), thus eliminating major

The Emerging Healthcare Ecosystem


Call Center
Coaching
Family Health
Pharma Disease Management Manager
Drug Info Coaching
Disease Management
Education
Wellness Education
Disease Management
Rx Registries Services
Disease Management
Rx Behavioral Data Wellness Incentives
Coaching
Rx Generic Profiles Dependent Monitoring Alerts
Rx Education
Interventions Periodic Reports
Wellne
ss Outcom
e s/Beha
vior Update
Rx (Refills) s
EHR/PHR Allergies
Concomitant Rxs Child Health
Adverse Events Drugs Monitoring
Co-Pays Alerts
Consumers School Nurse
Rx Vitals Updates Treatments Rxs Case Manager
Rx Medical Conditions Benefits Eligibility Wellness Programs
Rx Treatments ePrescriptions Formularies Wellness Incentives
Rx Medical Outcomes Replenishment Claims Payments
Rx Compliance Wellness Incentives

Treatments Benefits Eligibility


Rxs Formularies
Rx Registries Payments
Rx Medical Outcomes
Premium
Benefits Eligibility Discounts
Formularies Employers
Payments
Healthcare
Providers Employee
Outcomes Payers Enrollment Data

FIGURE 1

http://cognizanti.cognizant.com COGNIZANTi 31
portions of cost. Similarly, U.S. health providers can offer their expertise to expanding
global markets, as Childrens Mercy Hospitals & Clinics in Kansas City has done in creating
a telemedicine partnership with a large hospital in Guangzhou, China.8
Disruptive innovation: Sophisticated medical diagnostic procedures will continue to
move to less expensive settings, from hospitals, to physician offices, to retail clinics, to
homes. Researchers and entrepreneurs can draw on the 200 terabytes of human gene
sequence data generated by the 1000 Genomes Project, which is available free and online.9
Small labs can already use more affordable genome sequencing tools from companies such
as Roche and Illumina, Inc. A logical next step is making gene-sequencing part of a typical
checkup so that a persons care can be truly personalized for the ultimate in preventive care
and disease management.
Next-generation analytics: Clinical decision support systems that leverage artificial
intelligence and big data will revolutionize diagnostic practices, personalized care planning
and actual patient care. Blue Health Intelligence, the analytics arm owned by Blue Cross
Blue Shield Association, has launched a pilot program using predictive analytics to improve
the care of Arkansas diabetes patients while reducing costs.10
Similarly, our clients increasingly are using the big data stores generated by the explosion
of cloud-powered mobile and social computing with advanced analytics to enable fact-
based decision-making. Doing so moves companies from historical reporting on
transactional data to more proactive planning, enabled by the rich insights contained within
the terabytes of data generated by clinical systems.

Demographic shifts: Consumers want their healthcare accurate, fast and reliable, and are
prepared to be more involved in it. We are seeing an explosion in self-care fueled by
mobility, technology and diagnostic innovation. More than 44 million healthcare apps will
be downloaded this year, and the number of U.S. patients remotely monitored will rise to 3
million.11 Evidence is growing that mobile health, or m-health helps individuals take
better care of themselves. Mobile remote coaching and financial incentives improved diet
and wellness activities among patients managing chronic conditions, according to a study
backed by the National Institutes of Health.12 Our clients are working with us to develop
apps to make care more convenient and personal for consumers, patients and physicians
(see sidebar, next page).

A healthcare model incorporating these forces would necessarily be a dynamic one. Just as consumers
first experience the convenience and lower cost of e-books from Amazon or buying music one tune at a
time from Apple and then come to expect similar benefits from all their suppliers of books and music, the
new healthcare business model similarly will shift expectations with new healthcare experiences.

Further, transformative processes are already under way. Trends such as technological innovation and
virtualization will continue to reshape healthcare, regardless of regulatory shifts. The question is how
much of the transformation will be driven by entrepreneurial new entrants to the industry and how much
by established players reinventing themselves. It may be easier for the new entrants to envision, and
establish, new models.

How to Embrace Reinvention


It is vitally important to understand that radically transforming healthcare will not be accomplished
through an incremental, piecemeal approach, such as deploying a mobile technology here or a new self-
care option there. Reinventing todays healthcare model requires visionary thinking and strong champions
to overcome embedded practices and the common belief that a series of small improvements will add up
to radical change. Instead, the model must reimagine how healthcare can be delivered, how its quality
can be measured, how it will be priced and who will pay for it.

32 COGNIZANTi http://cognizanti.cognizant.com
Quick Take
Mobilizing via M-Health
Helping consumers and patients fill an active role in healthcare is an essential component
of the new healthcare business model. The explosion of mobile devices and apps dovetails
with this requirement. Mobile health, or m-health, fulfills two key needs:
enabling consumers to manage their health service relationships more
easily and giving individuals powerful portable tools for managing
chronic conditions and staying well.

One application we have developed at our clients request will


allow consumers to easily manage their health plans from a
variety of computing platforms, including smartphones and
tablets. The app enables them to search for providers, receive
immediate explanation of benefits notices, get messages
about coverage changes, obtain a secure ID card for use at
physician offices and emergency departments, and use a variety
of ease-of-use features, such as click-to-call.

Another app offers personalized wellness management via smartphone or


tablet (see below). This app enables patients and members to easily enter or
automatically download health information, such as blood pressure, blood sugar,
cholesterol levels, weight, body measurements, etc. Then, in easy-to-read charts, the app
shows them how their current results relate to their goals and offers a variety of tips and
information to help them achieve those goals.

Authorized physicians may access data


from the app to monitor patient progress
more frequently, without the time or
expense of office visits. Plans and physi-
cians may also customize the app to be
alerted to changes in a patients condition
that require intervention. Employers may
even use the app in wellness campaigns,
with games and graphics encouraging
participation. The objective of these fea-
tures is to prevent minor conditions from
escalating to more serious problems that
cost more to treat and manage.

Apps like these will put health manage-


ment tools literally at the fingertips of
consumers and patients, giving them the
more active role in their health choices
they are demanding and that will help
reshape healthcare.

http://cognizanti.cognizant.com COGNIZANTi 33
Prospering perhaps even surviving in this rapidly changing world will depend on how well your
organization understands where it will fit in the new health ecosystem and how it will achieve that
position. Consequently, organizations need to devote time and resources to visioning and planning to
provide the necessary foundation for solid execution. Our experience tells us that without this preparation,
organizations can quickly lose their customer base to new entrants or competitors that have been more
adept at reinventing themselves. We, therefore, recommend taking the following steps to get started on
participating in the new era of healthcare:

Develop a broader strategic vision of how the industry could change. Understand
the trends and other forces reshaping the industry and consider various end state
scenarios. End states might range from all primary care being delivered virtually and/or at
retail clinics, to a steady increase in individuals and employers paying for a wider range of
care directly instead of through health insurance plans, to a dozen healthcare super entities
offering comprehensive cradle-to-grave services under a single banner.
Determine your company or organizations role in the new healthcare value chain,
as well as where other entities will fit. Who are your current competitors? Where
might new competitors arise? What parts of your business are growing?
What are the implications for your company or organization depending on its role
in a particular scenario? A health plan might see that trends such as direct contracting
with employers and hospital system-driven ACOs are on the rise in its market area and
determine its best fit is to offer information processing and risk management to those ACOs.
How will customer behavior or buying patterns change? Will social networks be a
strong influence on your customer base? This is likely to be the case among the millennial
population. Similarly, digitally connected consumers tend to want mobile transactions and
be accustomed to smaller-dollar transactions.
What customers will you want to attract/win in the future? And a corollary: What
will be a best-in-class experience for those customers? Defining your target population is
critical to understanding the types of reinvented processes and rewiring youll require.
Serving a younger, healthier population will require a strong, customer-centric mobility
strategy. If long-term care patients are your target, its caregivers that will require mobile
devices to deliver clinical intelligence at the point of care.

Toward the New Sustainable Model: A Roadmap


With your vision and strategic plan in place, your organization is better equipped to understand or create
a role for itself in the reinvented healthcare value chain and how its business model must change to
support that role.

To create the roadmap to your future, you must understand how to use transformative levers new
technologies, virtualization, globalization and diagnostic innovation to achieve the position you want in
the transformed industry. If you have many multinational employers in your region with highly mobile
employees, and your goal is to provide anytime, anywhere care to them, you will need to investigate
global, virtual resources, as well as mobile and telepresence technologies.

Containing the costs of reinvention is critical, so consider identifying potential partners and allies that
have the skill sets you require. Look outside the healthcare industry; telecommunications and other high-
tech companies may have more of the capabilities you need.

As you define the necessary transformation activities, create and implement a governance model to guide
and monitor these activities.

Reinventing healthcare delivery undoubtedly will be challenging, requiring shifts in thinking, training and
attitude from consumers, as well as caregivers and industry players. Paradigm shifts often seem

34 COGNIZANTi http://cognizanti.cognizant.com
unlikely, even impossible, before they occur. But when they do, we can hardly imagine how we lived
without our e-books, smartphones and streamed video.

In the near future, as we text our nurse-coordinators with questions, use our apps to monitor resting heart
rates, transmit home test data and write smaller checks for healthcare procedures, well marvel at how
long we managed with our outmoded current system.

Footnotes
1
National Health Expenditure Projections 2011-2021, Centers for Medicare & Medicaid Services,
http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-
Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdf.
2
Historical Tables, Office of Management and Budget, http://www.whitehouse.gov/omb/budget/Historicals.
3
2012 Milliman Medical Index, Milliman Research Report, May 2012,
http://insight.milliman.com/article.php?cntid=8078.
4
FDA Considers Expanding Definition of Nonprescription Drugs, U.S. Food and Drug Administration,
March 23, 2012, http://www.fda.gov/Drugs/ResourcesForYou/SpecialFeatures/ucm297128.htm.
5
Snakebots Aid Docs in Surgery, Associated Press, May 29, 2012,
http://www.modernhealthcare.com/article/20120529/INFO/305299965/snakebots-aid-docs-in-surgery.
6
New Flu Test from UGA, Athens Patch, Oct. 27, 2011, http://athens.patch.com/articles/new-flu-test-
from-uga.
7
Stephanie Novak, Exploring the Role of Mobile Technology as a Health Care Helper,
The New York Times, May 13, 2012, http://www.nytimes.com/2012/05/14/world/africa/exploring-the-
role-of-mobile-technology-as-a-health-care-helper.html?_r=1.
8
David Twiddy, Childrens Mercy Starts Telemedicine Partnership with Chinese Hospital,
Kansas City Business Journal, May 25, 2012, http://www.bizjournals.com/kansascity/print-
edition/2012/05/25/childrens-mercy-starts-telemedicine.html.
9
1000 Genomes Project Data Available on Amazon Cloud, NIH News, March 29, 2012,
http://www.nih.gov/news/health/mar2012/nhgri-29.htm.
10
Blue Health news release, March 30, 2012.
11
Mobile Healthcare Opportunities: Smartphone Apps, Monitoring & mHealth Strategies, 2011-2016,
Juniper Research, Dec.1, 2011,
http://www.juniperresearch.com/reports/mobile_healthcare_opportunities.
12
NIH-Funded Study Examines Use of Mobile Technology to Improve Diet and Activity Behavior,
NIH News, May 30, 2012, http://www.nih.gov/news/health/may2012/nhlbi-30.htm.

Patricia (Trish) Birch is a Cognizant Vice President and leads the companys Healthcare Consulting Practice
within Cognizant Business Consulting. She has 25 years of experience in healthcare operations and
management consulting and serves on the board of directors of Sylvania Franciscan Health, which
provides healthcare services in the midwest and south-central U.S. Trish is also a published author and
speaker on issues facing the healthcare industry. She earned a BSBA in Finance from Boston University
and an MBA from Jacksonville University. Trish can be reached at Patricia.Birch@cognizant.com.

Bill Shea is an Assistant Vice President within Cognizant Business Consultings Healthcare Practice. He
can be reached at William.Shea@cognizant.com.

The authors acknowledge the contributions of Jagan Ramachandran and Dr. Keerthi Kumar, consultants
with Cognizant Business Consulting's Healthcare Practice.

http://cognizanti.cognizant.com COGNIZANTi 35
Life Sciences R&D

REINVENT

Transforming
Clinical Operations
Advances in clinical monitoring and data management processes and technology
can help life sciences companies use resources more efficiently, improve data
quality during clinical trials, get promising therapies to market faster and lower
costs while improving performance.

By Dawn Anderson

Though the concept of clinical drug trials is well known, few people outside the pharmaceutical industry
are familiar with the labor, paper and resource-intensive process of monitoring the trials to ensure patient
safety, data verification and protocol compliance.

Take the traditional workflow for a clinical field monitor, a highly trained professional tasked with
monitoring several ongoing drug trials. First, she calls for an appointment with the physician, or
investigator, conducting the trial, makes travel arrangements, and sends a visit agenda. The field monitor
then pulls data from a dozen or more systems, checks the site status, recruitment rate, outstanding
queries and any outstanding action items, then collates and compiles this information and documents to
carry to the investigative site.

During the visit, the field monitor reviews medical charts, compares these to the electronic data capture
(EDC), and takes notes on compliance. When she returns to her office, the field monitor types the site visit
report into the clinical trial management system (CTMS), which generates a key document substantiating
the visit.

This highly manual workflow illustrates how the field monitor can spend two-thirds or more of her time
on administrative tasks instead of more complex responsibilities that require her core expertise. Yet
despite the time and expense, it can still take months for study results to be placed into systems and
aggregated to identify and distribute critical data to the trials project team. Without real-time data
visibility and management, it becomes very difficult to proactively adapt a drug trial based on revelations
related to a drugs effectiveness, safety and trial compliance or its failure to meet expectations.

When clinical monitoring and data management is reinvented (see Figure 1, next page), pharmaceutical
companies can use resources more efficiently; improve quality of data during the trial; get promising
therapies to market faster; and lower costs while improving performance.

http://cognizanti.cognizant.com COGNIZANTi 37
Transforming Clinical Trials: An Illustrative View

Adaptive algorithms (AC)


trigger site visit based on VDM uses communication
collaboration (CC) solution to Alert sent to VDM via CC to
risk factors and outstanding prepare visit agenda and
workload sends alert to VDM. schedule site visit
integrated calendars pre-visit documentation via
(investigator and field monitor). template forms and reports.

Receive Alerts
Virtual Monitor Enrollment Investigator tracks status
via communication and
Patient Visits Document collaboration solution
and receives alerts on
SDV Due outstanding action items,
VDM uploads site visit uploads eForms (instead
Protocol
documentation via CC solution of scanning/faxing )
New Role VDM Deviations
to alert field monitor that forms and communicates with
are ready for review. sponsor and CROs.
Data Entry
Cycle

Safety
Field Monitor
Data Manager
Queries
Field monitor reviews site
visit docs and status Field monitor
updates on smart device conducts site visit.
via CC connection.
Field monitor
reviews
analytics on Field monitor completes SVR
site status via on smart device in real time
CC connection. and submits to synch with
system via 3G
before leaving the site.

FIGURE 1

Those benefits are achieved by reengineering roles and processes, using technology that ensures all
workflow steps are completed to reduce risk and making proactive decisions based on near-real-time trial
data. In this new model, administrative tasks become the responsibility of the virtual data monitor (VDM),
an individual located in a global hub. The VDM has the same extensive clinical training and experience as
a field monitor.

In reinvented clinical trial monitoring, a threshold or algorithm not a set schedule triggers an alert
when the data calls for a field monitor site visit. The VDM schedules the site visit for the field monitor
using collaborative tools like an integrated calendar; pulls the required site visit documentation and
agenda; and sends these to a cloud-based communications and collaboration portal.

Blogs and instant messaging enable team


members to quickly exchange insights about
the findings including best practices and
ideas for process improvement.

The field monitor confirms her site visit; downloads data the VDM has prepared via a tablet computer
supporting 3G; then completes an electronic site visit report form and uploads this at the end of her visit
for near real-time updating of the database. The field monitor and other project team members use the
cloud portal to access data thats been customized to their jobs, with metrics, alerts and prioritized action
items clearly visible. Blogs and instant messaging enable team members to quickly exchange insights
about the findings including best practices and ideas for process improvement.

With this real-time data visibility and improved collaboration among the project team and trial sites, the
pharmaceutical company can take a risk-based approach to evaluating the trial. Instead of waiting 60 to

38 COGNIZANTi http://cognizanti.cognizant.com
90 days for data to evaluate emerging trial results, companies can measure real-time data against
metrics, key performance indicators and key risk indicators, generating alerts, flags and notifications
revealing predictive clinical data insights. By quickly gaining insights about the drugs performance,
companies can take proactive steps to address safety issues, adjust the trial methodology or protocol, or
decide how and whether to continue, close or adapt the trial. More streamlined processes and better
decisions made sooner are expected to shave as much as 65% off the cost of each clinical trial and reduce
trial cycle time by up to 20%.

Reimagining Clinical Operations


The potential to achieve substantial savings and performance improvements is causing leading life
sciences companies traditionally heavily regulated, conservative and cautious to embrace a unique
opportunity to reimagine key processes in clinical operations, which include clinical trial monitoring and
data management.

More streamlined processes and better


decisions made sooner are expected to shave
as much as 65% off the cost of each clinical
trial and reduce trial cycle time by up to 20%.
New therapies and medical devices go through three progressively larger clinical trial phases before
market approval. By regulation, life sciences companies must monitor each phase and collect specific data
on the safety and efficacy of the drug by verifying the data at the investigator site, often a clinical or
physician office.

The impetus for rethinking clinical operations comes from several directions. The U.S. Food & Drug
Administration (FDA), for instance, has issued guidance to the pharmaceutical industry to use more
predictive analysis of clinical trial data, calling for companies to act on data as it is generated and then
to adapt the trial design as warranted. Alternatively, a company could shut down a trial early if the therapy
is clearly ineffective, taking a risk-based approach to monitoring, such as those developed for use with
adaptive trials.

A typical Phase III trial can involve hundreds of investigative sites, take place over 18 months and require
thousands of site visits by field monitors. The estimated trial cost can run millions of dollars, with the trial
monitoring and data management accounting for more than 50% to 60% of that figure. The industry
already is under economic pressures due to the loss of patent exclusivity, fewer new molecules in R&D
pipelines and pricing competition from generic drugs. So, trial monitoring and data management are clear
targets for cost reduction, improved processes and innovation.

Old Paths Block Potential Benefits


The huge challenge to achieving these benefits pivots around the sad reality that clinical monitoring and
data management processes are predominantly the same today as they were 20 years ago and do not
support real-time data management, predictive analytics or adaptive trial design.

Field monitors conduct multiple site visits to validate clinical data. Much of this
work is paper based and involves gathering data by hand when reviewing medical charts.
Relevant data is stored in different systems, so it is time-consuming to compile
and aggregate data. This means data can be three months old or more by the time it is
available for analysis.
Deeply engrained procedures and processes are followed regardless of their
necessity because they have been sanctified as proven practice at a time when few ways
exist to quickly identify emerging problems.

http://cognizanti.cognizant.com COGNIZANTi 39
Data analysis and verification processes are paper based and typically manual vs.
automated.
Highly trained and expensive field monitors spend only 40% of their time on truly
core source data verification activities, such as ensuring the safety of trial participants,
verifying the quality of the clinical data and confirming trial protocol is followed.

Reinventing Clinical Monitoring and Data Management


As leading life sciences companies reinvent their clinical trial operations, they are incorporating three
perspectives: people, processes and technology. Real transformation is about creating the most efficient
processes, leveraging the right people in the right roles and then using technology for scalability and
productivity.

When adopting a transformed clinical trial monitoring and data management solution that treats people,
processes and technologies as a whole, life sciences companies can achieve:

Cost savings:
> Entrusting noncore but important administrative tasks to virtual data monitors man-
aged by a trusted third party means additional highly trained clinicians can be added
to a trial team, yet management costs still decrease.
> Field monitors are more effective when free to focus on source data validation, rela-
tionship management and quality and compliance, not administrative tasks.
> Reducing overlapping and duplicated processes and roles and breaking down silo
walls between roles improves efficiencies.
Productivity:
> Redesigned, more efficient procedures and workflows enabled by hosted solutions
and mobile technologies support new, streamlined roles and processes.
> Triggers and alerts based on critical risk indicators and targets drive activities, not
static schedules, so companies can quickly see and evaluate risk to ensure proper
timely mitigation.
> Mobility solutions replace reams of paper and enable field monitors to complete and
upload site visit reports during their visits and review critical site data in near-real-time.
> Leveraging e-learning and electronic trial master and investigator site files, as well
as e-forms, allows investigators and project teams to go digital, reducing paper and
improving overall compliance, reducing cycle time and improving quality.
Innovations:
> The industry will see improved data flows, use more sophisticated analytics, gain
and share insights more quickly, eventually creating a fully virtualized trial monitor-
ing process integrated with other automation efforts under way in healthcare, espe-
cially electronic health records (see sidebar, next page).

Embracing Transformation
Reinventing clinical trial monitoring and data management could generate savings of more than 50% per
trial. For a large pharmaceutical company running multiple trials, the annual savings could add up to
hundreds of millions of dollars, improving financial flexibility and creating the ability to apply savings to
other innovations.

The enthusiasm for savings is seasoned with realism: pharmaceutical companies leading these efforts are
developing comprehensive change management strategies. Those selecting a solution encompassing

40 COGNIZANTi http://cognizanti.cognizant.com
Quick Take
Innovation by Phases: Clinical Trials and
Electronic Health Records
An experienced field monitor paging through dozens of paper medical charts at a drug trial
investigation site may suspect the results hes seeing dont track with the previous sites
visited. But does the problem lie with the drug being tested or with how and what data is
being entered? The field monitor today probably wouldn't know those answers for two or
three months, the time it would take to aggregate and analyze all the relevant data.

Thats why electronic health records (EHR) will be critical to the reinvention of clinical trial
monitoring and data management. EHRs will gradually but surely supplant the use of paper
medical records in physician offices, key sites for drug trials. As that occurs, clinical trial data
verification will become more automatic, with data from trial participants EHRs uploading in
near-real-time to electronic data capture (EDC) systems. That automation will eliminate a
significant number of field visits, making it possible to virtually monitor trials in near-real-
time, while reducing product introduction cycle times by enabling better, faster decisions.

To benefit from future EHR use, leading life sciences companies will need to
gradually introduce virtualized monitoring practices and tools, including
virtual teams, cloud-based platforms, and mobility and reporting tools.

In the future, EHRs will speed the availability of near-


real-time data of trial performance for analysis and
measurement. Today, with mobile tools supporting
reengineered workflows, its possible to make timely,
integrated trial result data accessible to management,
project team members, clinical research organizations
and investigators via a cloud-based platform that
highlights relevant metrics and action items by specific roles
to generate insights and support faster decision-making.
Using predictive analytics on data pooled from EHRs belonging to all trial
participants will quickly reveal trial performance trends and support adaptive trial
design. Today, predictive analytics assess trial risk and performance for early
detection and mitigation of potential quality issues. The analytics can quickly
catch and flag indicators of a potential safety issue emerging; the project team
can investigate why the issue occurs at some sites but not others.
With continual data streams coming from EHRs, virtual teams of highly trained
monitors will continuously evaluate trials by analyzing automatically updated trial
results. Today, collaborative tools and dashboards can connect everyone who
must keep abreast of trial developments, regardless of location, forming stronger,
better informed teams.
With proper privacy and security measures in place, EHRs represent big data
that can be analyzed to uncover a patient populations needs for individualized
drug therapies or to identify potential trial candidates a process today that can
take years, further slowing trials. With reinvented monitoring and data
management, companies can gain insights from forecasting, competitive analysis
and performance histories to improve future therapy and device trial protocols,
feasibility and investigative site selection.

http://cognizanti.cognizant.com COGNIZANTi 41
people, processes and technology that can be delivered as a product should find the changes easier to
assimilate with clear training and phased implementations. Taking transformation in phases ensures a
controlled, manageable process, in which theres time to grow comfortable with more virtualized ways of
working. Reengineered processes can be introduced gradually, such as using the VDM to set
appointments and prepare site visit documentation, yet still drive down costs. As one revamped process
is assimilated, another phase can launch. Trial patient safety and data quality are safeguarded and
improved throughout the reinvention journey.

Taking transformation in phases ensures a


controlled, manageable process, in which
theres time to grow comfortable with more
virtualized ways of working.
Reinventing clinical trial monitoring and data management also requires investment in technology to
support smarter use of people and tools. Providing real-time data visibility requires an infrastructure that
integrates the many data silos involved in clinical trials, from the CTMS to pharmacovigilance to third-
party data. The solution must support rapid updates of these data stores so they can in turn feed process
management tasks and analytics and reporting.

The solution must support not only todays tools and mobile devices, but also have the flexibility to
encompass new technology, such as large-scale deployment of electronic health records. Cloud-based
tools and solutions can help deliver these required capabilities at lower costs more quickly.

The transformation of clinical monitoring and data management is a first step toward helping the life
sciences industry to develop new therapies and medical devices more efficiently and cost effectively.
Those will be critical abilities as healthcare becomes ever more cost-conscious, target populations narrow
and individuals increasingly finance their own care. Reimagining how people, processes and technology
can work together to ensure clinical trial data is visible in real-time to support proactive decision-making
is certain to be a best practice; now is past the time to begin the transformation.

Dawn Anderson heads Global Clinical Operations within Cognizants Life Sciences business unit, where
she is responsible for clinical operations strategy and leads the delivery of clinical transformation
solutions. Before joining Cognizant, Dawn was Vice President of Clinical Development at Quintiles, where
she was most recently responsible for leading an initiative to redesign the global clinical development
model, including process optimization, proactive quality enhancement, system and tool enablers and
organizational realignment, across the CRO organization. She also headed clinical development at biotech
companies, led Six Sigma Programs at Microsoft, and worked for leading pharmaceuticals in clinical
operations and program management. Dawn has wide experience across therapeutic areas, especially in
oncology, infectious disease, internal medicine and cellular therapy and is a Lean Six Sigma Master Black
Belt. Dawn can be reached at Dawn.Anderson2@cognizant.com.

42 COGNIZANTi http://cognizanti.cognizant.com
Remaking Retail

REINVENT

Myth-Busting:
Business Process
Transformation for
Retailings New Reality
The global economy, the Internet and social media have forever changed
the retail dynamic, giving consumers abundant choices for where to shop,
what to buy and how to buy it. Winning retailers are reshaping their
organizations, and underlying business processes, to stay one step ahead of
shopper demands and competitors near and far.

By Colleen Coleman

Retails traditional ways and means are giving way to new organizational shapes and processes faster
than you can mark down last seasons merchandise. Here we gather four models that once were
conventional wisdom and explain how retailers can reinvent the ways in which they work to support new
business realities.

Myth #1: Large retailers compete against other big stores.


Old model: When retail was segmented by size and geography, competitors were local
stores that shared the same look and feel.
New reality: Todays marketplace is global. Local sellers remain part of the competition,
but retailers compete with sellers around the world, as well as with small boutiques and
even individuals. As a result, retailers need to follow more markets and create strategies
for sourcing, supply chain and merchandising that flex to accommodate todays dynamic
business demands.
Process reinvention: Expand market research and intelligence, and revamp
merchandising.

The global retail marketplace is a new phenomenon made possible in part by the development of trusted
third-party payment mechanisms. With the advent of PayPal, Square and Google Wallet tap-and-pay
software, online shoppers gained valid options for payment. Small online marketplaces started by the

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likes of eBay and Craigslist eventually flourished as global exchanges, as did alternative venues such as
Etsy, a forum for individual craft makers.

To thrive in the newly expanded landscape, large retailers need to reinvent


competitive intelligence. Traditional market research remains important. But
competitive intelligence today also means hitting the digital streets, so to
speak. It means turning to the global environment for inspiration, by
following and learning from individual markets and perusing small stores
and craft collectives to study up on the shopping experiences there.

It also means observing trends to understand what shoppers are


buying. What are people wearing as they walk down the street? What
are they talking about in social media circles? If you observe a lot of
interest in the bohemian look, for instance, it may be time to add that to
your selection. Inspiration is everywhere.

By incorporating products sold successfully through online marketplaces and boutiques into more
traditional retail store assortments and by bringing a fresh perspective to merchandising, stores can build
sales and increase customer loyalty. Shoppers many of whom lack the time to learn about and visit small
retail outlets will welcome the change.

How can retailers extend their brands and branch into smaller niches such as high-end or handmade? The
first process change is to establish new sourcing partnerships with small craft houses that specialize in
manufacturing short-run items. Supply-chain modifications might include special items sold directly to
customers through non-store options such as mobile, Web and catalog.

By incorporating products sold successfully


through online marketplaces and boutiques
into more traditional retail store assortments
and by bringing a fresh perspective to
merchandising, stores can build sales and
increase customer loyalty.
It is a challenge to integrate non-traditional suppliers into the mix, as well as multiple sales channels.
Soon, however, it will be table stakes. Implementing new software and adapters is only part of the
change. When it comes to easier information-sharing, retailers stores are the front lines of execution, and
it is their responsibility to execute well.

That shift leads to the second process change, which is in merchandising, and it is by far more dramatic.
Retailers need to convey a different story to consumers, as well as convey why its different. They need
to educate shoppers about the new perspectives they are incorporating it into the mix. J. Crew, for
example, has been highly successful selling pricey, limited-offer garments and positioning their exclusivity
as part of the appeal.1

Target is adding a boutique section to some of its stores. The retail giant was a pioneer in private labels
and is now taking its designer cache to the next level by leveraging the innovation of small designers for
its brand and customer base. In May 2012, Target debuted its spin on competing in the global marketplace,
clearing store floor space to host select small boutiques and specialty shops for six-week runs. The initial
buzz on Targets move is positive, although no sales estimates have been released.

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For retailers, the message is clear: A new marketplace has arrived.

Myth #2: Product design and development is best


left to professionals.
Old model: Consumers shopped store designers and house brands, and retailers controlled
the mix.
New reality: Individual style is in. Consumers of all ages want to identify and demonstrate
their own tastes. With social media and flexible sourcing models opening custom design to
the masses, stores need to remodel their supply chains to create personalization
opportunities or risk being leapfrogged in the shopping experience.
Process reinvention: Reshape the supply chain to offer true customization.

Personalization is the key driver in todays product design. While the Internet (what else?) makes this
possible, traditional stores can drive sales and create customer loyalty by embracing the personalization
trend. But first, they have to understand it. Here are three trends attracting shoppers and fueling the
changes in product development:

Individual design. Digital tools have channeled shoppers inner designers. Nike pioneered
the idea with its ID service that lets shoe lovers create custom-colored sneakers, right down
to the famous swoosh. Online network FPGirl is a standout among the new-generation
retailers that have run with the idea. The 3-year-old company (recently rebranded from
FashionPlaytes) welcomes girls between 5 and 12 to design and produce their own clothing
at mid-market prices. It added 100,000 new users in the first quarter of 2012.
Individual styling. Personal stylists arent just for red-carpet walkers. Online style
services provide advice on shoppers best looks. One of the most successful to date is
ShoeDazzle. It suggests product offerings based on your responses to its quiz and offers
fashion advice from notable personalities.
Independent tastemakers. The Internet gives everyone a voice. Teenager Tavi Gevinson
created her own powerhouse brand through blogging. Fashions elite has recognized her as
a style icon for her impact and taste by inviting her to attend exclusive Fashion Week
showings in New York and Paris a level of inclusion that fashion executives everywhere
still covet.

Truth is, large retailers have the building blocks in place to capitalize on personalized design. For one
thing, they have access to enviable streams of customers. According to the 2012 RIS/Cognizant Shopper
Experience study,2 four out of five purchases are still transacted in brick-and-mortar stores. For another,
most retailers have mastered e-commerce by now.

Personalization is the key driver in todays


product design.
With digital tools and customer-facing technologies such as touchscreens dropping in price, retailers are
beginning to put their technology know-how to use, outfitting stores with personalized design capabilities.
The line between online and offline products is blurring, and customer co-creation is here. Whats more,
social media empowers happy customers with new ways to trumpet not only their designs but also their
satisfaction.

Some retailers have already embraced the trend. Premium sunglasses maker Oakley set up touchscreens
in its retail stores and Sunglass Hut outlets that invite shoppers to select frames, lenses and colors and
have the custom shades shipped to them. In its London flagship store, British retailer John Lewis is

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partnering with Cisco Systems on a pilot installation of digital mirrors that use 3-D cameras to let
shoppers try on different styles with the swipe of a hand.3

Retailers first steps should be exploring new operating models, as well as sourcing store operations for
greater flexibility. They should leverage existing relationships, as well as invest in new ones. FPGirl
founder and CEO Sarah McIlroy bootstrapped her business with $20,000 and built a back-end
manufacturing operation from scratch.4 If McIlroy can do it, retailers with existing supply-chain muscle can
reshape their sourcing arms, too.

Myth #3: Minimize in-store labor costs.


Old model: Stores were a cost structure, and labor was a cost to be minimized.
New reality: Stores are customer interaction opportunities. Each customer contact
represents the culmination of a retailers marketing and inventory investments, converging
with potential sales and brand advocacy. Retailers should invest heavily in training and then
measure, manage and reward stores based on the quantity and quality of customer
feedback.
Process reinvention: New tools in labor scheduling and training can increase efficiency
and efficacy of in-store brand advocates.

The stores purpose is evolving. The trend of brick-and-mortar establishments turning into showrooms for
online sellers is a wake-up call for retailers. Unnerving, yes. But in a smart twist on that reality, retailers
can embrace the showroom concept, viewing stores as customer interaction points where they have the
opportunity to close more sales. Well-trained associates with specific schooling in the art of selling
are a key factor.

Just as shoppers have beefed up their knowledge of products and vendors, store associates need to step
up their level of expertise, too. When shoppers walk through the doors of stores, they are looking for
answers, as well as products. May I help you is history. Todays stores are about genuine engagement.5

The first step is restructuring the store training process and investing in a stratified approach. Smart
training strategies drive home sales concepts through a combination of traditional instructor-led classes
and new digital learning approaches such as gamification, which applies online game mechanics to
training topics.6

The trend of brick-and-mortar establishments


turning into showrooms for online sellers
is a wake-up call for retailers.
With a better-trained workforce, stores are abandoning the outdated view of store labor as a necessary
cost to be minimized. The rise of the metric return on investment labor (ROIL) turns that mindset on its
head: Associates jobs are to deepen customer relationships and boost sales. Employees are assets that
deliver value. Apples retail stores have more associates per customer than any other retail venue, and the
stores over-perform in key metrics of sales per square foot and customer satisfaction. Apples emphatic
message is that customer satisfaction comes first.

The Container Stores strategy includes employee empowerment as a key tenet. The $650-million retailer
bills itself as employees-first and backs it up with 200-plus hours of training for new employees.
Associates are coached to engage customers in conversation and discover more about their storage needs.

48 COGNIZANTi http://cognizanti.cognizant.com
Employee empowerment is one of the best sources of customer satisfaction. Hospitality giant The Ritz-
Carlton achieves this in a big way, permitting every employee to spend as much as $2,000 on a guest. The
protocol can be used to ameliorate a customer complaint, as well as to simply provide an outstanding
experience through a modest expense, such as champagne and chocolates for a honeymooning couple.7

Stores can take a page from The Ritz-Carlton and train associates to make on-the-spot decisions with
customers. To capitalize on showrooming as an opportunity, retailers need to equip employees in two
ways: First, by arming them with mobile devices like tablets and smartphones and, second, by
empowering them to make decisions at the moment of engagement that is, when working with a
customer in the showroom who prefers to buy online.

The rise of the metric return on investment


labor turns that mindset on its head:
Associates jobs are to deepen customer
relationships and boost sales.
Dynamically generated single-use coupons have the potential to be key tools with which stores can both
save sales about to be lost in the showroom and also deepen their relationships with customers. The
coupons are easy, traceable ways for associates to offer personalized prices. Associates can issue each
coupon as a price match, good for that day and for that shopper only. Such coupons
preserve retailers infrastructure and control; the margin is reduced but the sale is
made. The new credo is save the sale, delight the customer and build the brand.

Myth #4: Floor space and inventory


investment determine product offerings.
Old model: Products needed to be planned,
merchandised and replenished so consumers could touch
merchandise before purchasing it.
New reality: Retailers are in the business of fulfilling
customer needs, which includes products and services. They
are creating the endless aisle by extending their product lines
and adding services through creative partnerships and alternative
venues.
Process reinvention: Create alliances and partnerships to stretch the brand into new
products and services.

Alliances and partnerships offer retailers the chance to expand without space limitations or capital
expenditures. Home improvement retailers Lowes and Home Depot sell cabinets, for example, but they
also offer subcontracting services for installation. Warehouse club chain Costco knows its customers
demographics well solid earners who are price sensitive and willing to do due diligence and extends
its brand with additional items such as automobiles, house painting and travel services to suit them.
Cosmetics superstore Ulta sells beauty products, as well as salon services. The message? Its business is
to help customers look and feel better. Developing a partner network starts with understanding customer
needs that go beyond store sweet spots and that can be met through brand-extending partnerships.

The endless aisle requires new processes that make retail organizations more complex. Most retailers still
follow the standard organizational triad of merchandising, supply chain and stores, and many have added a
sourcing arm to create private labels. Alliances and partnerships are the newest extension to that organization.

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For most retailers, the new arm will be a variation of their sourcing arms, and sourcing and lifecycle-
management software solutions will eventually evolve to support partnership processes. Retailers will
need to institutionalize the new processes in much the same way that they made e-commerce an integral
part of their organizations, leveraging what they learned in multichannel operations to this newest way
of stretching their brands.

Process Makeover Mandate


Stretching is at the heart of todays retail reinvention: expanding processes in new ways to fit the new
retail realities.

By taking the next steps to reinvent their processes and future-proof their businesses, retailers will be
ready to capitalize on the revenue-generating opportunities amid retails changed dynamic.

Footnotes
1
Top Ten in Fashion, Fast Company, http://www.fastcompany.com/most-innovative-
companies/2011/top-10-fashion.php and Meredith Lepore, The Story of How J. Crew Became the
$3 Billion Dollar Company Everyone was Fighting Over, March 2, 2011,
http://www.businessinsider.com/the-story-of-how-jcrew-became-the-3-billion-dollar-company-
everyone-was-fighting-over-2011-3?op=1#ixzz1wI8GjrId.
2
2012 Shopper Experience Study, RIS/Cognizant, http://www.slideshare.net/peterguidi/2012-
shopper-experience-study.
3
Sarah Frier, Keeping the Customer Digitized, Bloomberg Businessweek, May 1, 2012,
http://www.businessweek.com/articles/2012-04-30/keeping-the-customer-digitized.
4
Kristine Hansen, Tween Girls Fashion Website Makes a Mint, CNN Money, March 29, 2012,
http://money.cnn.com/2012/03/29/smallbusiness/tween-girl/index.htm.
5
Building the Intelligent Store, Cognizant Technology Solutions,
http://www.cognizant.com/InsightsWhitepapers/Building-the-Intelligent-Store.pdf.
6
Gamification: Its All About Processes, Cognizant Technology Solutions,
http://www.cognizant.com/InsightsWhitepapers/Gamification-Its-All-About-Processes.pdf.
7
Robert Reiss, How Ritz-Carlton Stays at the Top, Forbes.com, Oct. 30, 2009,
http://www.forbes.com/2009/10/30/simon-cooper-ritz-leadership-ceonetwork-hotels.html.

Colleen Coleman is an Associate Vice President of Merchandising within Cognizant Business Consultings
Retail Practice. She has 25 years of experience in retail information technology and a bachelors of science in
industrial engineering from Iowa State University. Colleen can be reached at Colleen.Coleman@cognizant.com.

50 COGNIZANTi http://cognizanti.cognizant.com
Application Development

REINVENT

Where Lean
Principles Meet Agile
and Global Software
Development
As organizations mature and globalize their operations, IT must
embrace innovative processes and structures that deliver business
applications faster, better and cheaper.

By Anbu G. Muppidathi & Lakshminarayanan Ramalingam

Amid ongoing economic challenges, IT organizations continue to seek ways to reduce application
development cycles to control costs, achieve faster time-to-market and ensure end-user acceptance.
Many are looking to Agile development and its less linear approach to software development as a means
to this end.

Agiles core principles including more timely and effective end-user collaboration, short development
iterations with targeted goals and frequent interactions among team members are increasingly
attractive to IT managers at a time when project funding comes with major strings attached.

Agile adoption has grown swiftly over the years. IT organizations have learned to adjust to Agiles nuances
and have remade their cultures and processes in ways that improve application delivery efficiency. The
biggest change is fitting Agile into the emerging model of global delivery. The ubiquity of global delivery
is motivation for IT organizations to leverage Agile to get the best from both methodologies across
individual projects and large-scale programs.

However, even if Agile and global delivery can be effectively blended to raise the quality of application
development/delivery, each is insufficient unto itself to rescue IT organizations from the spaghetti-code
sins of the past. As a result, the Lean philosophy is beginning to make inroads from its roots in
manufacturing into the software development process.

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With its focus on maximizing system-level throughput, eliminating waste and reducing variability at each
point of interaction as well as identifying and removing rigidities in IT processes Lean principles offer
IT organizations yet another lever to pull for increasing the effectiveness and efficiency of application
development and support in a global, distributed delivery model. Since Lean does not prescribe specific
solutions, some of the approaches and interventions for solving business-IT issues seem indistinguishable
from other software development methodologies, including Agile.

Management through measurement is critical in distributed teams to ensure that resources are optimally
applied across the team. Productivity has always been an elusive measure in the IT industry. While many
organizations have yet to reach internal agreement on a mechanism to formally measure and improve
productivity, some organizations have matured in their application of Lean principles, creating a
framework for building a measurable form of throughput maximization.

Organizations must combine Agile, Lean and


distributed delivery to not only optimize their
IT investments but also to leverage each
methodology to create software that drives
business innovation.
Common Agile and Lean themes entail reducing waste and optimizing code delivery. Agile is already
optimized to an extent by creating just enough documentation, focusing on working software and allowing
changes in the middle of the software development lifecycle (SDLC), in addition to giving top priority to
the most critical or high-value feature. However, there is still scope for further optimization by leveraging
distributed Agile methods.

Nearly every organization that has applied Lean principles, Agile methodology and/or the global delivery
model has reported tangible success over a period of time. Organizations have reported faster time to
market, reduced cost and improved end-user acceptance using all three of these approaches. Hence,
organizations must combine Agile, Lean and distributed delivery to not only optimize their IT investments
but also to leverage each methodology to create software that drives business innovation.

Three basic steps should be considered when integrating Agile, Lean and distributed development
processes:

Establish an office of Agile adoption (OAA).


Reinvent IT development lifecycle activities to integrate Agile, Lean and distributed
team models.
Align the organizational structure to better administer the integrated delivery model.

Office of Agile Adoption


Many organizations do not have a company-wide technology office that establishes guidance and
enforces controls on Agile adoption across the enterprise (see Figure 1, next page). Whether the office is
an independent entity or part of an existing one, an OAA helps avoid the introduction of nonstandard
processes and tools, which can become a nightmare if centralization is desired at a later point of time.
Sharing best practices, collaborating among the development community, introducing reusability across
the company and linking Agile experts/expertise across the enterprise all of these goals become easy
to meet when a focused control entity manages it.

Note: To generate a scaled up view of Agile and Lean implementation, we have taken the approach that,
in general, Agile (as a solution) is implemented at the execution team level (leaf-level teams). It is likely

54 COGNIZANTi http://cognizanti.cognizant.com
to be the end IT execution team, as opposed to Lean, which in principle is applied within an ecosystem
that makes these leaf-level teams interact and coexist under various umbrella programs.

A typical OAA should focus on the following:

Strategy: Develop an Agile adoption strategy that clearly lays out the overall vision of the
IT organization and the benefits assured. The strategy should enhance the capabilities of
global delivery and the benefits of Lean if they are already implemented within IT. Losing
the benefits of Agile adoption is the last thing the CIO wants to see.
Planning: Chart a course for expected Agile standards in terms of
processes, engineering practices and tools (e.g., continuous
integration, automated regression packs, etc.), key roles of
individuals and their responsibilities, a proposed
organizational structure for ongoing governance and a set
of clear measures. The plan should also focus on
necessary adjustments to effectively introduce key Agile
processes. This should include steps for Lean
implementation (i.e., optimizing processes and resources)
and for identifying variability in the Agile adoption process.
This way, any potential waste can be identified and
eliminated in advance of applying Lean. The planning process
should identify potential value levers, if any, on which the execution
team should focus, so that each iteration yields the expected execution
values. Additionally, it is important to establish a collaboration forum through which
distributed teams can continuously connect.

Office of Agile Adoption: Functional View


Optimizing Processes & Resources Managing Operating Practices
End-to-end design of the iteration Metrics at all levels
Waste elimination Visual boards
Focus on value levers Performance dialogs
Variability reduction
Operating Management
Practices Systems
1. Strategize

Develop an Agile
adoption strategy for
your organization.

2. Plan Agile 4. Monitor

Establish standards, Adoption Facilitate execution of


roles, responsibilities, the methodology; learn to
organizational structure Lifecycle continuously improve and
and measures. adjust the strategy.

3. Align

Communicate, hire and train.


Establish forums to ask and
answer queries and sync up
with the field.
People Management
Role modeling culture Execution Management
Mindset, Capability
Skill set planning Skill building
Core
Behavior and and

Elements of Lean
Communication culture Culture Execution Execution discipline
Structure and systems Measurement
Measurement culture Continuous improvement

FIGURE 1

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Aligning: The established strategy and processes should be aligned with the overall IT
organization by means of effective and ongoing communication, training on established
standards and embracing required processes and tools. Necessary adjustments in the
existing IT lifecycle activities need to be made. It is important to understand the mindset,
capabilities and workforce culture (both IT and business) to effectively align Agile, global
delivery and Lean processes across the organization.
Monitoring: The OAA should monitor the execution of the established methodology. It is
extremely important to reinforce the need for tirelessly observing and measuring value

It is important to understand the mindset,


capabilities and workforce culture (both IT and
business) to effectively align Agile, global delivery
and Lean processes across the organization.
levers (KPIs) to continuously eliminate waste and identify areas of improvement. It is
equally important to establish a mechanism to evaluate the skills of resources across
geographies to enable continuous improvement. An operating committee needs to be
appointed to resolve ever-present queries and concerns. And necessary mechanisms should
be devised to connect with external forums and industry players (consultants, integrators
and vendors) to introduce best practices and drive continuous improvement over time.

Reinventing the Development Lifecycle


The global delivery model (GDM) provides cost efficiency through resource optimization across
geographies by harnessing talent across teams that are not co-located. In contrast, Agile centers on co-
location and close interaction among team members. Getting both to meet is critical to unleashing process
innovation and the tangible benefits of software that powers process innovation and business advantage.

Comparing Agile with the fundamentals of GDM, we observe many mismatches and key adjustments that
must be made to deliver the best of both methodologies (see Figure 2, next page). An assessment of how
each of the Lean and Agile components should be administered by globally distributed teams will help
plug the gaps and decide on the necessary remedies. The following should be considered:

Modularizing the scope to help development teams make adjustments to achieve co-
location of talent and task distribution.
Validating the communication and build processes to drive adjustments of code
management practices.
Analyzing the roles and responsibilities for each location to realign people
management practices.
Aligning the business, IT and partner teams to reveal gaps in quality assurance and
knowledge management techniques.
Brainstorming on the important measures that are needed for continuous
improvement to help define Agile, Lean and GDM metrics and the associated
measurement mechanism.
Binding the OAA with the existing steering and operating governance bodies to
streamline overall IT administrative processes.

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Linking Software Development Methods
Agile Manifesto Agile Global Delivery Key Adjustments
Processes Processes Made

People-driven Process-driven
Co-located teams Distributed teams Location of teams
Scope distribution
Individuals & Project and process
Interactions management approach
Customized training
Structured design on Agile processes
Iterative development and development Knowledge management

CONFLICTS
Code and executables Documentation and
are primary coordination-driven Communication
Working techniques
Software
Technology environment
management for
compatibility issues
Customer Formal knowledge QA strategy by adjusting
Informal knowledge
Collaboration management and better management and traditional QA for Agile
knowledge dissemination dissemination development
Build strategy for
continuous integration
Metrics mechanism
Responding for continuous
improvement
to Change Continuous and Discrete and
spontaneous change controlled change
control with increased management with
scope control challenges rigid processes

FIGURE 2

Aligning the Organizational Structure


The Lean philosophy calls for identifying and eliminating waste to improve overall system-level
productivity. Such betterment should happen as part of the business-as-usual process and not through an
external one-time audit. An analysis of a typical team model of Agile reveals that there are few roles that
can be availed when identifying waste. Additionally, the GDM relies on intimate team coordination.
Redefining and aligning the role of site coordinators and team leaders will help implement Lean and Agile
processes more effectively.

Having observed successful programs that effectively administered Agile, GDM and Lean processes, there
are numerous personnel adjustments that we recommend for tying these models together to broaden the
implementation scale. Key organizational structure and role changes include:

Leading Group
> The coach/master: Coordinates and solves group problems.
>> Adjustment needed: Coaches per site will help synchronize decision-making. We
have seen successful models in which a coach adopts multiple sites and is
involved in key coordination and decision-making activities. Eventually, the coaches
can function as site coordinators when it comes to multiple (primary and second-
ary) sites. Similarly, coaches should be part of the GDM site management team to
effectively oversee execution of Agile program delivery. As Agile is a project-level
activity, an important part of the coachs activities is intra-project or program-level
communication alignment and team structure/team information flow.
> The tracker: Manages the group diary, measures group progress, manages and
updates the boards.

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>> Adjustment needed: The tracker should focus on Lean measures, as well as
tracking Agile implementation progress. Since measurement is a continuous
activity, we recommend having a tracker for every site/team. Giving teams a cul-
ture of self-reporting and self-analyzing will advance the cause in the longer run.
> The methodologist: Guides and supports the other team members on the software
development method applied in the course.
>> Adjustment needed: The methodologist should be familiar with Lean and GDM
processes, so it is important that (s)he is trained in these areas, as well.
Customer Group
> The customer: Tells customer stories, makes decisions pertaining to each iteration,
provides feedback and defines and develops acceptance tests.
>> Adjustment needed: It is important to educate the customer on Agile processes.
Equally important is to educate them on the existing GDM and Lean processes to
a level that is pertinent to the organization.
> The acceptance tester: Works with the customer to define and develop accept-
ance tests, guides the topic of test-driven development and communicates this to
the other team members.
>> Adjustment needed: It is important to involve the user group in any QA adjust-
ment processes that are made at the OAA. Automation at the atomic level is an
extremely valuable activity that will help improve efficiency. The role of the
tester is critical in a test-driven development model.

Success requires periodic evaluation and


evolution, with a focus on continuously
improving as more and more projects are
executed combining these methodologies.

Maintenance Group
> The presenter: Plans, organizes and presents presentations and demos, as well as
schedules allocations.
>> Adjustment needed: The presenter should be provided with necessary templates
to present Lean and Agile measures.
> The documenter: Plans, organizes and presents the project and process documentation.
>> Adjustment needed: The documenter should have proper templates to gather
and report Lean measures, as well.
> The installer: Plans and develops an automated installation kit; supports and
instructs other teammates in the process.
>> Adjustment needed: A key success criteria is the ability to work with each
sites code group. By design, establishing a clear connection with multiple sites
will ensure the success of the installer.
Code Group
> The designer: Maintains the current design, works to simplify the design, searches
for refactoring and ensures proper execution of the design.

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>> Adjustment needed: Lean measures gathered during the course of the project
should be fed back to the designer for improving design and execution. It is
important to involve coaches and designers at the measurement definition stage.
> The code reviewer: Establishes and refines group coding standards; guides and
supports the maintenance of the standards and tools.
>> Adjustment needed: It is extremely important to educate code reviewers on
opportunities to identify reusability, waste and better coding.
> The unit tester: Establishes an automated test suite; guides and supports team
members in the development of unit tests.
>> Adjustment needed: There should be a clear focus on automation at the atomic
level. Unless the unit testers are trained and provided assistance, automation is
not possible. It is important to visualize the entire scope, iteration and coding
strategy to establish an Agile project automation project plan.
> The integrator: Establishes an integration environment, including
source control; publishes rules pertaining to the addition of
new code using the test suite; guides and supports other
teammates in the integration task.
>> Adjustment needed: As in the case of the
installer, the integrator should also align with site
coordinators of multiple sites to ensure control.

Management Matters
As methodologies evolve and mature, management processes should
evolve in parallel to enable organizations to better control IT activities and
derive greater value. It is extremely important to put the structural components
in place in the form of dedicated bodies for companies to have meaningful control
over Agile, global delivery and Lean models. Balancing the level of detail in managing these components
is certainly a challenge. The only way it can be achieved is by having a clear understanding of the
organizations culture, processes, standards and tools.

It is also not a one-time job. Success requires periodic evaluation and evolution, with a focus on
continuously improving as more and more projects are executed combining these methodologies.

In the past, many development models, such as waterfall, object-oriented, iterative etc., have been
successfully integrated with global delivery models. Sure enough, Agile, global delivery and Lean will also
be successfully integrated to drive IT process innovation and enable businesses to more effectively
leverage the value of software applications that are not only delivered more cost-efficiently and
effectively but support innovation initiatives across the business, as well.

Anbu Muppidathi is a Vice President within Cognizants Banking and Financial Services Business Unit,
with 20-plus years of industry experience. He manages the companys relationships with key global
banking and financial services clients in North America, Europe and Canada and is among the principal
architects for the units growth strategy, delivery and operations initiatives and pioneering methodologies
and implementation plans. He can be reached at Anbu@cognizant.com.

Lakshminarayan Ramalingam is a Senior Director within Cognizants Banking and Financial Services
Business Unit, with over 15 years of delivery experience. He manages the delivery from India for key
global banking and financial services organizations in North America and Europe. He can be reached at
Lux@cognizant.com.

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IT Infrastructure

REWIRE

Recalibrate Before
Revamping Your
IT Systems
To transition from plumbers to innovation-enabling service brokers, IT
organizations must worry less about turf wars and more about how the new
master IT architecture can advance business objectives.

By William Strain

Change isnt coming to your organization; change is here, as seen in everything from new social- and
mobile-focused business models, to the iPads and smartphones that are increasingly the platform of
choice for employees and customers.

Businesses need their IT organizations to help them innovate in this new world. Whatever the hottest new
mobile device or social tool, it is IT professionals who will eventually have to wire them into the rest of
the organization, ensure their security and reliability, and help ensure business value and positive
experiences for all. It is IT who must enable the new SMAC stack (social, mobile, analytics and cloud
services) that will help companies transform from old, industrial stovepipe models and enable more
flexible and fluid digital ways of working.

All too often, however, IT organizations cant do this because theyre stuck in firefighting mode, spending
much of their budget maintaining existing IT infrastructure or as we old-timers say, keeping the lights
on. Before they can rewire IT to support innovation, IT leaders must change their mindsets. Specifically,
they must:

Stop thinking from the bottom up about the IT plumbing, and start thinking from the top
down about how to solve business problems.
Stop thinking about the cool apps and services they could build internally, and start thinking
about how to broker what the business needs from inside or outside of the organization.
Stop defending their turf and ensuring control over every IT initiative, and start fine-tuning
core services to keep in-house, while turning over to trusted partners everything else
thats non-differentiating (or context).

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Whats Blocking Innovation
Todays IT organizations often cannot help their enterprises move into the future because theyre having
so much trouble managing the present. Most are quite competent at managing infrastructure for highly
visible services such as e-mail or ERP. But they have far more trouble quickly delivering the servers,
storage and network resources required for smaller, more dynamic environments such as those used for
development and testing. This is a major roadblock to innovation because it is often such grassroots
efforts where some of the most creative thinking in the organization occurs.

This lack of robust service management makes it difficult, if not impossible, to manage routine changes in
current service requirements, much less those aimed at sparking innovation. For example, far too many IT
groups cannot quickly ramp up dozens or hundreds of servers to test a new application that allows the
organization to tap a new market or deliver a new service, or free those resources for other uses when
testing finishes. They often find it challenging to integrate legacy systems acquired through a merger or
acquisition that is designed to expand the organizations customer base or breadth of offerings. Nor can they
cost-effectively roll out applications to popular devices such as smartphones or tablet computers, or cost-
effectively deliver mobile or social application services to new mass audiences in an external public cloud.

Beyond their ability to drive innovation, experienced IT managers often lack the enthusiasm for it. And
who can blame them, given the fact that they rarely get rewarded for their behind-the-scenes work
enabling new business initiatives. Not only have they struggled for years to keep their aging, brittle
infrastructures working, but they are also the first ones to get slammed if an untested change brings down
a production system. Even though many understand the need for transformational change, IT executives
are often too consumed by tactical requirements to work to achieve it.

IT has trouble quickly delivering the servers,


storage and network resources required for
smaller, more dynamic environments. Yet it is
often such grassroots efforts where some of the
most creative thinking in the organization occurs.
The final nail in the innovation coffin is economics. Budget cuts have left many IT organizations without
the strategic planners or business-savvy enterprise architects who can take time from keeping the lights
on to map high-level business needs to elements of the IT architecture, and then make the business case
for change.

The result, all too often, is that IT organizations know they need to create a new master architecture to
enable the SMAC stack, but they are paralyzed without the budget, skills or incentive to move forward.
This is not only a threat to the future of the internal IT function, but it is also bad for the business. That is
because the internal IT staff has the deep institutional memory and abundant domain expertise to most
effectively deploy the technology that will move the organization into the future.

An Innovation-Enabling Infrastructure
Before asking how to rewrite an innovation-enabling infrastructure, lets define what it would look like.
An infrastructure that can enable and even drive innovation must first be extensible and flex up and down
to meet changing business needs. While this is a basic capability provided by the cloud infrastructures
that many companies are adopting, it also produces a powerful and immediate change when the IT
organization can say yes instead of no to possible business-transforming initiatives such as new

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applications. For IT organizations that have already made improvements, such as reducing server
provisioning time from months to days, the next step is to build on that success, so they can efficiently
and securely deliver servers and associated storage needs in hours or even minutes.

Once an IT organization can easily scale existing services up and down, the next step is quickly adding
and, when finished, deleting new services, as needed. This allows the organization to effectively deliver
new applications or business models without investing in expensive infrastructure. These new services
might include applications to reach and support mobile users whether for new business services or to
extend corporate application services to an increasingly mobile workforce.

An infrastructure that can enable and even drive


innovation must first be extensible and flex up
and down to meet changing business needs.
The first step is to assess and optimize the existing infrastructure. One effective approach to build
momentum is to start with some of the elements of the infrastructure that are not critical to the business to
demonstrate value while minimizing risk. A good way to get the attention of stakeholders, in fact, is to start
with that portion of the infrastructure that has been generating the loudest complaints for the longest time.

Based on that assessment, the next step is to develop actionable plans a transformational roadmap
for IT service management and technology to improve the critical infrastructure elements, being careful

Quick Take
Rewiring for Innovation
To meet changing business needs while minimizing costs, IT organizations are seeking
flexibility (to more quickly adopt new technology,) simplicity (through highly available, secure
and integrated systems that are still easy to use) and predictability (service-based models
that allow precise execution to meet service level agreements and budgets).

At the same time, they must transform legacy applications to support a new age
of social and mobile applications, new capabilities such as analytics and
new delivery models such as cloud computing.

An example of this rewiring for innovation is the work we


recently completed for a client, migrating the companys
application services to a new, highly available, tightly integrated,
utility-like compute, storage, network and security services
platform, complete with the latest business service management
systems. In addition, we created a five-year transformational
roadmap that addresses how the company will implement
private/public clouds, invest in business analytics and allow
employees to engage in BYOD (bring your own device) to enhance their
productivity and promote collaboration.

This client-specific roadmap will be continuously updated to ensure it remains current and
relevant to technology and service innovations. This will drive ongoing improvements,
including cost savings, improved service and efficiencies, and a flexible, agile model,
whether services are delivered internally or externally.

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to measure progress on a regular basis against the roadmap timelines and business objectives (see Figure
1). This not only helps the improvement effort stay on track, but it also sustains funding for it by showing
how the initiative is delivering business value against stated business objectives.

With these capabilities in place (which, again, may be as straightforward as reducing server and storage
provisioning times), the IT organization can approach an internal user group that in the past was
displeased with its service and explain how we can now provide the scalable services theyve requested
in the past. The use of the word we (rather than I) is important because it sends a message that the
IT department now thinks of itself as a partner, rather than an adversary, of the business.

Using the word we (rather than I)


sends a message that the IT department
now thinks of itself as a partner, rather than
an adversary, of the business.
The IT organization can now begin delivering against the transformational roadmap goals that have been
created collaboratively with its internal business partners, through executable plans and with known
timelines, deliverables and measurable success.

As it refines its IT management capabilities and expands those capabilities to more parts of the IT
infrastructure, the IT organization is now able to not only support business requests quicker and more
efficiently but also begin proactively setting expectations with the business about the costs, time required
to implement, and risks of innovation-enabling changes to the infrastructure. This completely changes the
conversation from one in which IT is just taking orders from the business (or worse, refusing or unable to
fulfill orders), to jointly discussing the costs, benefits and risks of a range of possible innovations.

End-User Workspace Transformation Vision

Provide the right workspace from any device to every user.


Provide a productive work and collaboration platform,
Customer experience
while ensuring effective security for corporate management.
information and ease of access. Collaborative support
communities.
BYOD initiatives
Customer satisfaction. fully implemented.
Self help/self heal. On-demand application
User profiling-based provisioning through
Robust desktop desktop strategy. self-service portals.
management and service
desk introduced. Robust application Combination of
delivery and image application virtualization,
Standardized golden management user state virtualization,
Distributed support images and core load.
teams, no common infrastructure. VDI architecture.
processes. Application packaging Application Enterprise app store
mainstream. virtualization mainstream
No image management. offering multiple apps
Limited application and VDI for task users. in a secure manner.
No application virtualization and virtual
packaging. MDM across multiple
desktop infrastructure
OS/device types.
No virtualization. (VDI).
No mobility. Mobility limited to
BlackBerry Enterprise
Server and ActiveSync.

Inception Functioning Performing Best In Class

FIGURE 1

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Quick Take
Innovation at Work: Mobile Access
A major, pressing challenge that all organizations face is not just enabling users and
customers to bring their own devices but to provide access to all the information they need
from these devices, while enforcing the appropriate authentication, access control and
security rules.

One example of how an innovation-enabling infrastructure can enable this is


VDI (virtual desktop infrastructure). While often thought of as a
replacement for traditional thick-client user devices, VDI can also be
used to push role-based virtual desktops that provide, based on a
users profile, the applications and services they need to whatever
mobile device they are using.

Similar to other innovations, such as transformation of the overall


data center or IT infrastructure, the use of VDI to deliver
appropriate end-user workspaces on portable mobile devices is a
multi-step process. As IT delivers more and more robust
management and delivery mechanisms, it not only reduces costs but
also enables more innovative ways for employees to do their jobs and for
customers and partners to engage with the organization.

Over time, as its understanding of the IT environment and its links to the business evolves, IT and the
business together can evaluate which IT activities are core meaning they help differentiate the
organization in the marketplace and should be kept in-house and which are context and potentially
best delivered by a third party.

Neither of these efforts (refining in-house capabilities and deciding what to keep in-house) are one-time
endeavors. They are, rather, twin processes, aimed at driving additional operational excellence and
efficiency within those activities considered context and enabling innovation in more and more core areas
over time. Specifically, what is considered a core service today may ultimately become context and be
moved to an external provider for support.

An IT organization might, for example, improve its in-house capabilities through an enterprise architecture
effort that eliminates redundant systems or an IT service management program that slashes the cost and
effort of daily operations. It can refine the internal/external split over time by continually reassigning
external capabilities (such as those offered by new cloud service providers) and its internal requirements
(such as the need for agile development of mobile applications).

Change Your Thinking


Whats common to all these steps is the degree of new thinking they require. IT professionals are
accustomed to building new capabilities themselves and (ever attuned to the possibility of system
failures) feel most comfortable with as much control over their infrastructure as possible. They tend to use
off-the-shelf software as much as possible for their production systems and deploy this on an
infrastructure they build and control. And once deployed and working, they are very hesitant to make
modifications and changes.

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But what feels like a comforting level of control is actually a set of chains that keeps IT professionals
and their business partners viewing IT as plumbers who keep the bits and bytes flowing, not as
strategic partners who drive innovation. Rather than fighting competition from external providers,
internal IT groups can help enable the use of outside services for innovation. They are the ones who
understand, for example, which service or quality improvements would best ensure customer loyalty;
which applications should or should not be outsourced for regulatory reasons; and which business units
have the best reputations and thus the most latitude to pioneer new efforts.

Most IT organizations will evolve from being


in-house technology providers to brokers
of IT products, services and applications.
Driving innovation requires no longer looking at problems primarily from a technology perspective but from
a business perspective, and keeping an open mind about whether the answers can best be found in-house
or outside the organization. As new alternatives such as the cloud mature, most IT organizations will evolve
from being exclusive, in-house technology providers to brokers of IT products, services and applications,
offering their internal customers the best sourcing option internal, external or a mix of both.

The Road Forward


Very few IT organizations will move from being plumbers to innovation-enabling service brokers
overnight. The journey will happen one step at a time, building their credibility through an ongoing
program of assessment, development of a transformation blueprint and creation of a managed services
framework that can support both internal and externally delivered IT services.

IT organizations can speed this transformation by focusing on the most pressing business challenges.
Applying the SMAC stack to high-value activities can initially uncover new market opportunities and
enable new business capabilities, while reducing compute costs and increasing operational agility that
can lead to meaningful change across the enterprise.

None of this can happen, however, without senior management support for making the organizational and
process changes needed for IT to move from plumbing to enabling business change. By continually
improving what is core, while redefining what is context and should be accomplished by an external
provider, the IT organization of the future will develop the SMAC stack technologies, disciplines and
mindsets that enable an innovation-enabling infrastructure.

William Strain is Vice President and CTO of Cognizant's IT Infrastructure Services Business Unit,
responsible for defining and driving technology direction, product development and service line strategy.
Bills team is also responsible for the units strategic partnerships and alliances. He also has responsible
for the units Global Solution Center, which provides pre-sales business development support for IT
outsourcing opportunities. He can be reached at William.Strain@Cognizant.com.

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Working Wirelessly

REWIRE

Unlocking the
Business Value
of Mobility
Enterprise mobility is much more than wireless enablement of your
Web site, intranet and related business processes; its about leveraging
smart devices and tablets to spur technological innovations that power
disruptive change. To make this leap, enterprises must overcome a host of
organizational and technological challenges, preparing for the operational
benefits that can be achieved along the way.

By Jeff Wallace

Ubiquitous wireless infrastructure and the explosion of smart mobile devices are enabling businesses to
leverage mobility in previously unimagined ways. Spurred by workforce virtualization, early adopters have
significantly boosted efficiency by enabling wireless operations. Now, enterprises are unlocking business
value by leveraging mobility to innovate, and they are disrupting industries rather than letting themselves
be disrupted by change.

Mobility first appeared in the business world decades ago, but its progress accelerated dramatically with
the appearance of smart mobile devices, including the smartphone and tablet. Whereas enterprise
mobility used to focus primarily on making the corporate Web page look good on a mobile device, it is
now forging a path to new ways of doing business.

But enterprise mobility forces many changes on an organization, both culturally and technically. Well after
the bring your own device (BYOD) movement exploded onto the office scene, IT executives are still
grappling with the plethora of security and governance issues introduced by this phenomenon. Now,
executives are realizing that innovation in mobility requires both a shift in mindset as well as technical
expertise in areas such as middleware and integration, or at least partners that can help fill in the gaps.
It also requires precision guidance for managing the organizational and process shifts required to truly
transform the business. The key is to be proactive and to effect change rather than let yourself be
blindsided by it.

Mobility is one important component of a new master IT architecture social, mobile, analytics and cloud
(the SMAC stack) that is emerging to help organizations shift from old-world industrial models to more
digitally powered ways of working. Mobility is providing reach, ubiquitous connectivity and new ways of
interacting with employees, partners, customers, consumers and prospects. Innovative mobile solutions
can radically increase convenience and productivity for various constituencies and provide them with a
superior experience, to boot.

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Today, mobility is about using smart devices and tablets to spur technological innovations that power
disruptive change. Competitive advantage is being achieved by companies that leverage enterprise
mobility to create viable new business models (see sidebar).

Levels of Enterprise Mobility


At the first level of enterprise mobility, or Mobility 1.0, companies seek to mobile-enable or mobile-
optimize their Web sites, existing Web apps and digital assets to increase productivity for employees and
customers. The challenge is to keep ahead of the proliferation and constant state of flux within smart
devices, development platforms and mobile operating systems.

With Mobility 2.0, organizations typically look to transform business processes via mobility. For example,
expense account reporting has always been a cumbersome process for employees, requiring them to save
paper receipts, fill out forms and then send everything to corporate accounts payable for payment. By
contrast, a mobile-enabled expense-submitting process is much quicker and easier. Employees need only
take pictures of their receipts with their smart device, categorize them with a simple pull-down menu and
click a submit button to send them to accounting for reimbursement.

Quick Take
The Disruptive Power of Mobility
Smart mobility, ushered in with the dawn of smart devices, has disrupted entire industries and
product categories not to mention companies and their business processes in short order.

Enabled by the Internet, the digitization of content instigated the transformation of industries
such as newspapers, music, books and periodicals. But beginning in 2007, the meteoric rise
of smart mobile devices dramatically hastened the demise of traditional business models in
these sectors. Many companies that were once high-flyers could not make the
transition and in some cases have simply ceased to exist.

In just the last two years, small video cameras like the Flip and
point-and-shoot cameras have been displaced by smartphones.
These devices offer ever-improving image resolution for
everything from submitting accident photos to insurance
companies, to fixing or assembling equipment with the help of
video. The 120-year-old Kodak filed for bankruptcy protection
just five years after the smartphone emerged, and Cisco pulled
the plug on its once-promising Flip acquisition, a near $600
million endeavor, after less than two years when it became clear
that handheld video now solidly belongs to the smartphone.

The news industry has been forever wounded by consumer perception that
Web-based content is free, while journalism has been upended by the advance of
consumer-generated content and reporting combined with social media, all fueled by the
smart device revolution.

Meanwhile, the rise in social content and crowdsourcing are profoundly altering the way
companies develop and go to market with new products. Clearly, companies need to look at
enterprise mobility as an opportunity to innovate, and to do so now. Better to obsolete your own
cash cow before someone else does, which in the world of mobility is a very definite possibility.

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Businesses are also mobile-enabling processes (e.g., order management) for their customers. The payoff
here is fewer errors, greater convenience, boosted productivity and higher satisfaction levels among
customers, partners and employees.

To be sure, at this early stage of the smart mobility era, most companies are still at mobility levels 1.0 and
2.0. Few have yet ventured into Mobility 3.0 territory, in which organizations leverage mobile technology
to create entirely new business models and revenue streams. In Mobility 3.0, both B2B and B2C
companies have greater opportunities to reach their target markets directly to improve profitability or add
new customers. Mobile payments on feature phones, as well as smartphones, are enabling access to
whole new continents of consumers (see sidebar, page 75).

Square: Mobility 3.0 Innovator


Square is a good example of a company and revenue stream that was born from mobile technology. With
Square, anyone consumers and businesses alike can accept credit card payments, thanks to the
addition of just a tiny device installed in the headphone jack of a mobile device. Square breaks the barriers
that constrained traditional credit card use there is no cost for someone to obtain the device, there is
no intermediary financial institution, and fees to the payee are often less than those for traditional cards.

And the ability to accept credit cards is exciting and fun for individuals, enabling them to extend their
business, often in unforeseen ways. For example, it used to take a major investment for taxi cabs to obtain
credit-card processing equipment. Now, drivers just need a smartphone and the Square device to instantly
increase their value to customers. In an age where the use of cash is disappearing, this is a major innovation.

Taxi drivers just need a smartphone and the


Square device to instantly increase their value
to customers. In an age where the use of cash
is disappearing, this is a major innovation.
Near Field Communication (NFC) is another example of a technology with the potential to revolutionize
whole industries. NFC allows a device, usually a smartphone, to collect data from another device or NFC
tag at close range. Its similar to short-range networking technology like Bluetooth, except that instead of
programming two devices to work together, they can simply touch to establish a connection.

One possible NFC application is in public transportation. Under a pilot program, commuters in Germany
and Spain already pay for their train and bus fares using NFC-equipped devices.1 Consumers can also use
their NFC devices to make transactions at Peets Coffee and other retailers. The user swipes a payment
device with an NFC-equipped smart device; transaction data is immediately sent to the bank or card
issuer's payment service, which first authenticates user identity and then authorizes payment. NFC works
with most contactless smart cards and readers, meaning it could easily be integrated into the public
transit payment systems in cities that already use a smart card swipe.

Augmented Reality: Manufacturings Secret Weapon


On the B2B front, manufacturers are using mobility to revolutionize the way their field forces access parts
and repair documentation. Traditionally, it would have taken several individuals with specialized training
to repair a piece of equipment with guidance from a massive paper manual. Now, a repair person with
general training can use a three-dimensional augmented reality (AR) iPad app to move step-by-step
through the repair, identifying all the parts and seeing exactly what actions to take via animated video
clips. This approach was not created sui generis from mobility, but it is a significant improvement over the

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paper-based world. A manufacturer that successfully creates this type of app could even sell it to other
manufacturers, creating a new line of business for itself.

Oil and gas producers are exploring the idea of using an AR application that would leverage mobile-based
sensors to detect leaks, possibly helping to avoid explosions.2 Another example of mobile AR is the Merlin
Mobility app, which delivers AR-based tech support to smart mobile devices. So, if a consumer needs help
assembling an IKEA POANG chair, the Merlin Mobility app can interact with the paper-based instructions,
making them much easier for the individual to follow. The same tool can be used to ensure that a mistake
has not been made.3

Mobility 3.0 requires a mental shift from seeing mobility as a pathway to convenience and efficiency, to
viewing it as a potent driver of innovation. Smartphones are no longer primarily communication devices;
they can assist organizations in delivering experiences to numerous constituencies. As the Square example
illustrates, mobility becomes the computing environment, as opposed to just a useful adjunct to it.

BYOA (Bring Your Own App)


Companies are already struggling with the burden to secure and support the wide range of mobile devices
that employees bring into the workplace. The simple act of employees accessing the corporate network with
their devices introduces a host of control and security issues that IT had not previously considered and, as a
result, is now just catching up with. BYOD happened before IT even had time to identify the phenomenon.

Now, mobile apps are the next frontier for IT departments both from the perspective of employees
wanting to use consumer apps for work (messaging, telecom and file storage/sharing apps are top
examples), as well as companies that want to host their own enterprise app stores. Companies that act
quickly enough in their respective industries stand to gain first-mover advantage read: new revenue
streams if they can create and host cloud-based enterprise apps that can be delivered across the
spectrum of mobility platforms and device formats.

Mobility 3.0 requires a mental shift from


seeing mobility as a pathway to convenience
and efficiency, to viewing it as a potent
driver of innovation.
For our associates, we deliver a wide range of enterprise apps for use on Android and Apple iOS devices
via a homegrown apps hub. Our hub not only allows for app discovery and distribution, but it also provides
a full suite of security and management services. We recommend organizations take a similar approach
and make these apps available to their users by working with third parties that have already invested in
such repositories and delivery models. In this way, companies can take advantage of the more flexible and
lightweight IT infrastructure that mobility enables, including continuous functional improvements without
prolonged release cycles. Most organizations will find it quicker and easier to take this approach than
creating their own app repositories.

Transforming Your Business and Innovating via Mobility


Embracing the innovations that can result from enterprise mobility requires some fundamental changes at
the organizational level. Most existing IT infrastructures, for example, are not equipped to deliver mobile
apps. For one thing, mobility is so much faster-paced than the traditional IT world. Organizations that have
mastered mobility might move from concept to deployment of an app in six weeks using a new generation
of tools, including middleware and related integration systems. Traditional developers, on the other hand,
may try to create and maintain mobile apps using older tools and timeframes.

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Once a mobile app is developed, it can be a major challenge to extend its functionality. Due to the diversity
of platforms, changes in mobile device operating systems happen so frequently that features and
functionalities that work one day on one device may not work the next day on the same device, mandating
code re-writing and extensive regression testing across platforms.

User expectations are causing another major shift. Consumers set the bar in the mobile world, expecting
an engaging and yes fun experience on their smartphones and tablets. Traditional metrics for usability
and interactivity do not apply in the slick, new world of mobility. Many companies provide a more
entertaining and fast-paced user experience via their mobile apps; LinkedIn, for example, is more
engaging in its mobile format than its old-school Web site (see Figure 1). Todays developers need to think
like movie or video game producers as they develop apps, and the race is on to see which companies will
understand and embrace this first.

Todays developers need to think like movie or


video game producers as they develop apps,
and the race is on to see which companies will
understand and embrace this first.
Moving an IT organization along the learning curve for enterprise mobility may take much longer than
expected. Indeed, the technical challenges are just the start. On the organizational side, Mobility 3.0
demands that companies rethink everything from governance, to legal provisions, to work-at-home
policies. Since mobility enables increased productivity and efficiency, companies will need to rethink how
they measure performance and compensate employees, emphasizing outcomes delivered as opposed to
hours worked. Traditional measures, such as utilization, fly in the face of newer efficiency-oriented
mobility tools. HR organizations will have to tackle performance and compensation management
challenges with steadfast determination to reap enterprise mobilitys vast benefits.

LinkedIn: Web vs. App

FIGURE 1

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Some pundits believe employee compensation issues led Microsoft Corp. to squander its early mobility
lead, pointing to the companys stack system of employee ranking as a particular culprit. This system of
performance assessment in which every group includes one exceptional performer, one unacceptable
performer and many in the middle of the pack, regardless of outcomes stifled innovation as employees
fought to outperform other internal groups rather than competitors.4

Creating an adaptable plan one done in


pencil, not ink is your best shield against
the many disruptive forces at work.
Change management issues such as employee compensation and resistance to change can arise with any
technology initiative, but they happen more quickly with mobility. Mobility has the potential to make you
fail faster (which in some cases, like Agile software development, is a good thing), but can be deadly if
your organization falls further behind earlier adopters or market leaders. Creating an adaptable plan one
done in pencil, not ink is your best shield against the many disruptive forces at work.

Getting Closer to Customers


Advanced mobile apps enable companies to provide a much richer customer experience than old-style
mobile apps. Information from location-specific services can be merged with personal/device information
and device data, for example, to deliver a uniquely tailored user experience that would not have been
possible in the browser-based world. For example, Target allows customers to opt in to a mobile coupon
program in which coupons are sent to their smartphone based on where they are located in the store.5

Mobile devices invite users to perform micro transactions (i.e., check a bank balance or find an ATM
quickly rather than settle in for a half-hour session of paying bills online). This usage pattern multiple
touches for specific information gives companies a chance to redefine their customer relationships and
engage with customers much more frequently than with the traditional channels of the call center and

Freedom Within a Framework


IT can develop an ecosystem for enterprise mobility that enables both
freedom and control.

IT builds and owns


the framework

TECHNOLOGY

Innovation Business Objectives


GOVERNANCE
SUPPORT

Design User Experience Use Cases

COMPLIANCE & SECURITY

Business drives market-driven


FIGURE 2 solutions within this framework

74 COGNIZANTi http://cognizanti.cognizant.com
Quick Take
Five Steps on Your Enterprise Mobility Journey
As exciting as it is to contemplate unlocking the value of mobility, it can be difficult to know
where to begin. Here are the five things you should do know to work toward a successful
implementation of enterprise mobility.

1. Develop an enterprise mobility strategy. This involves asking the big


questions, like, What is your business objective for mobility? What will be
your competitive advantage and ROI? Identify the processes and technologies
that will be affected. Most importantly, dont forget to define your success
factors so you will be able to demonstrate success.
2. Future-proof your investments. Let your service provider
worry about supporting new platforms and operating
systems do not take on that risk for yourself. Build
apps within mobile application development
platforms (MADP) and leverage mobile device
management (MDM) and mobile application
management (MAM) solutions. And dont forget to
establish a comprehensive testing strategy to
ensure top-quality apps and user experiences.
3. Ensure both business freedom and IT control
(see Figure 2, previous page). Essentially, this is our
prescription for refereeing the tug of war being waged in
nearly all companies between IT and the business units
regarding who has ultimate ownership of the enterprises mobility
initiatives. We call this Freedom within a Framework. The business can have
the freedom to build market-driven applications to support core initiatives,
including innovation, while IT can maintain the control (including governance,
compliance and security) required to ensure the stability and security of the
initiatives across the board.
4. Create an approved BYOD strategy. As we see it, enterprises have two
choices when it comes to BYOD do it now or do it later. One thing is for
certain, though: You will not stop employees from constantly bringing in new
devices and asking IT to make it work. Each organization should make the
appropriate decisions about the BYOD policy, including a list of approved
devices, liability, reimbursement, etc.6
5. Find an enterprise mobility partner. Select a partner that understands IT
and the business, preferably with expertise in integration, security and cross-
platform mobile development. Make sure your team can stay ahead of
constant evolution. And ensure that you are confident in the long-term stability
of your chosen partner. Many younger companies might not survive or will be
acquired by larger entities as the marketplace consolidates, potentially
jeopardizing your solutions and engagements with them.

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Web site. Exchanges on mobile devices afford companies more opportunities to understand customer
wants and needs, as well as to share how the company might be able to meet those needs.

Although companies will likely need to make some changes to their IT infrastructure to deliver advanced
mobile applications, the good news is that the costs are comparatively much lower. To try to deliver this sort
of high-touch, intimate customer experience in the traditional world would be a costly endeavor indeed.

The entire computing realm is going mobile. Mobility allows much greater efficiency of computing tasks
and makes life easier for users. Of course, Mobility 3.0 is a disruptive technology for companies that serve
businesses and consumers alike, across industries. Along with social media, analytics and cloud, mobility
will form the basis of a more flexible, agile IT infrastructure. For enterprises that can harness this
disruptive force to create entirely new ways of delivering products and service to both existing and new
segments of customers will find that mobility is a welcome gateway to the future.

Footnotes

1
Sarah Kessler, NFC Technology: 6 Ways It Could Change Our Daily Lives, Mashable, May 6, 2010,
http://mashable.com/2010/05/06/near-field-communication.
2
Visualizing Pipeline Sensor Datasets Using Augmented Reality Based Prototype, International Journal of
Advanced Science and Technology, Vol. 32, July 2011, http://www.sersc.org/journals/IJAST/vol32/10.pdf.
3
Merlin Mobility Augmented Reality IKEA Instructions, YouTube,
http://www.youtube.com/watch?v=THG_isbHqkU.
4
Microsofts Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech
Giant, Vanity Fair, July 3, 2012, http://www.vanityfair.com/online/daily/2012/07/microsoft-downfall-
emails-steve-ballmer.
5
Target Stores to Bring Mobile Coupons Mainstream, Mobile Marketing Watch, March 9, 2010,
http://www.mobilemarketingwatch.com/target-stores-to-bring-mobile-coupons-mainstream-5694.
6
Making BYOD Work for you Organization, Cognizant Technology Solutions,
http://www.cognizant.com/InsightsWhitepapers/Making-BYOD-Work-for-Your-Organization.pdf.

Jeffrey Wallace is Assistant Vice President and Practice Leader of Cognizants Mobility Practice. He is
responsible for evangelizing mobility and helping clients approach mobility from a strategic perspective
and lay out roadmaps for implementation. Prior to joining Cognizant, Jeff was co-founder of Vivido Labs,
a solutions provider offering enterprise mobile applications for sales, marketing, business intelligence
and mobile employee productivity. In addition, Jeff is on the advisory board for the Enterprise Mobility
Exchange and a steering committee member for the Americas SAP User Group (ASUG) Affiliate Advisory
Council. Jeff earned a bachelors degree in economics and finance from Rutgers College and a masters
degree in business administration from the Haas School of Business at the University of California,
Berkeley. Jeff can be reached at Jeff.Wallace@cognizant.com.

Ved Sen, Director of Cognizants Mobility Practice, contributed to this article.

76 COGNIZANTi http://cognizanti.cognizant.com
Fact-Based Insights

REWIRE

Maximizing the
Returns from Big Data
The rise of social and mobile computing means huge volumes of precious
customer and prospect insights are available for the taking. Extracting and
making sense of this raw data, as well as data from traditional systems of
record, requires definitive use cases in which tangible business objectives drive
experimentation with new tools, analytical techniques and operating processes
for pinpointing potential returns on information and investment.

By Debasish Mukherjee and Karthik Krishnamurthy

Data, data everywhere and not the least bit of insight. The phenomenon known as big data1 is exploding
across every industry sector, creating both challenges and opportunities for companies large and small,
industrial and consumer-facing, worldwide.

One driver behind the data deluge is the push by many companies to better understand customer behavior.
Progressive companies are sifting through the burgeoning array of unstructured and semi-structured data
contained in social media and mobile commerce platforms, as well as the growing volumes of structured
data housed in traditional systems of record, for a glimpse of the future. They seek to understand not just
customer buying behavior but also their own interactions with customers to inform move-forward
strategies and extend growth.

Another big data driver is the proliferation of sensors in nearly every industrial business sector, from
manufacturing through utilities. For example, the energy industry is moving from monthly readings of
consumer electricity and water usage, to smart digital metering to help consumers plan energy
consumption in real-time and power generation companies to more efficiently adjust operations during
daily/seasonal peaks and valleys.

And get this: It is estimated that about 90% of available data has been generated in just the last two
years. In fact, IDC2 estimates that data volume is growing at 50% per year, or more than doubling every
two years.

Big Data and the Data Deluge: Challenges and Opportunities


That businesses are swimming in data is nothing new. Digital data has been exploding since 2000, when
it accounted for roughly 25% of all information stored; by 2007 its share increased to 94%. In fact, the
amount of data stored has grown from one exabyte in 1960 to almost 1 zettabyte in 2010. That figure is
expected to soar 44 times to nearly 35 zettabytes by 2020, according to IDC.

The proliferation of digital data is fueling the need for innovation across the discipline of enterprise
information management. Semi-structured and unstructured data generated by social networks and the

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proliferation of mobile devices is growing at a faster pace than the structured data contained within
traditional systems of record (see Figures 1 and 2). The emergence of consumer, company-sponsored and
media blogs, tweets, Facebook chats and m-commerce transactions is spurring the need to store, process
and make sense of this data, which is rich in strategic insight. This change in the variety and complexity
of data has left companies feeling overwhelmed.

Moreover, the hyper-competitive global economy places a premium on making decisions faster and with
better precision. Data captured from social networks and mobile devices are time sensitive, not only when
it comes to capturing it but using it to inform efficient decision making. Capturing quick quality insights
from this data is therefore critical to maintaining or extending competitive advantage.

Data Sources Impacting Growth

Mobile Texting

Machine-generated data is
projected to rise from todays
200 exabytes to 1,000
Social Internet of things
(where all devices are IP addressable)
exabytes by 2015.

FIGURE 1
Source: International Data Corp., "Worldwide Big Data Technology and Services Forecast," 2011.

The Reality: Massive Data Growth

Multi-structured data content is


Stored Digital Information (exabytes)

the primary driver of new data.


Complex,
Multi-structured 80% of this new data is digital,
Web
Application
which is complex to analyze
Data in its native structure.
Business
Transaction
Data Relational Digital data is growing at
62% annually vs. structured
1970 1980 1990 2000 2010 data at 22%.

FIGURE 2
Source: IDC, As the Economy Contracts, the Digital Universe Expands, May 2009.

Established businesses relying on decades-old, but successful, data models often struggle to incorporate
reams of unstructured data into their established enterprise information management infrastructure.
Moreover, they face threats from newer, more nimble and technologically-savvy companies that can
leverage the vast pools of proliferating data and create services and products that do not exist today.

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Managing Big Data Efficiently: A Problem of Perception
Sadly, data is expanding with minimal governance and management. A lack of expertise and usable
enterprise tools, combined with the complexity of big data implementation and usability, is undermining
businesses ability to scale their infrastructure, processes and strategic planning to meet the challenge.
Various tools and technologies have emerged to store, aggregate, analyze and visualize big data. But
because these tools and techniques originate from several fields, including applied mathematics,
statistics, economics and computer science, organizations seeking to derive value from big data need to
open their minds and adopt a flexible, multidisciplinary approach.

The complexity becomes evident when you consider even a simple three-layer model of storage, data
processing and analysis that encompasses many different tools and technologies, each addressing a
specific problem at hand. A mix of platforms must coexist to combine structured and semi-structured
storage. Data processing is performed using distributed techniques and analysis. Visualization techniques
range from SQL-like tools to newer data access and analysis tools. Moreover, extensions to traditional
business intelligence and statistical tools are released by the day, which makes it tough for most
organizations to keep pace. (See page 85 for a glossary of tools and techniques to consider.)

Traditionally, companies have used siloed solutions from third-party vendors to manage function-specific data
queries. This approach often prevents them from extending the right experience or offer to the right customer
and undermines customer satisfaction and business objectives. However, big data solutions (including the
consolidation of structured and unstructured data) along with specialized tools and techniques offer ways to
enrich customer experience with a personalized approach that enables true customization of services.

Even before they make tool selections, they must


develop proofs of concept, or use cases, in which
an ecosystem of business partners and customers
are aligned to help broaden the accessibility to
and analysis of useful structured and unstructured
data that can generate meaningful insights.
While tools are an important foundational element, companies need to rewire their thinking as well as
their infrastructure to effectively tap the potential of big data. Even before they make tool selections, they
must develop proofs of concept, or use cases, in which an ecosystem of business partners and customers
are aligned to help broaden the accessibility to and analysis of useful structured and unstructured data
that can generate meaningful insights.

How Big Data Drives Business


We believe winning organizations are those moving forward with big data via exploratory activities. For
instance, we recently worked with a consumer goods company to create negotiating leverage in its supply
chain. We built a customer sentiment analytics solution based on data pulled from social media sites such as
Facebook and Twitter that provided consumer insights on the companys products and their buying experience.

On deeper analysis, we found that the most important negative sentiments were related to customers
perceptions of a poor in-store experience, such as a lack of product availability or shipment data. These views
are rarely expressed in person and could only be captured by mining social media conversations. We captured
and thoroughly analyzed these expressions by using our homegrown integrated sentiment analysis and
reporting tool, iSMART. This helped our client determine key pain points, understand how to effectively
address these challenges and leverage the entire supply chain to improve the consumers in-store experience.

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This approach could easily be applied to other business sectors, particularly those where data generation
is significantly higher and growing exponentially. These include media and communications, process
manufacturing, government and healthcare. Financial services sectors that include banking, insurance,
securities and investment services also have more data stored per company than any other, on average.

Heres how some of these sectors can exploit big data:

Financial services: Early-warning fraud detection systems, identity threat management.


Life sciences: Physician interaction optimization, proactive manufacturing surveillance,
next-generation genetic sequencing.
High-tech: Smart data management, sentiment analysis.
Insurance: Claims fraud monitoring.
Healthcare: Cross-channel analytics, campaign optimization and fraud detection.

Big Questions and Challenges


With all the attention on big data, the big question is whether the trend is overhyped and if, or when, the
investment required will translate into business value. Some companies are already aggressively sifting
and interpreting big data and developing new business models from it. As with every new technology
trend, it will take time to identify relevant and appropriate use cases. However, the process of
experimenting, prototyping, iterating and validating results is crucial to deploying solutions that prove the
value of big data analysis. (See sidebar for indicative scenarios.)

Quick Take
The Case for Big Data Analytics
The following are use cases to better illustrate how organizations can apply big data analytics
to connect with customers and create competitive advantage:

Use case 1: Dynamic pricing for mobile phones. Operators facing bandwidth
congestion could consider dynamically adjusting price as a function of the
bandwidth used by each consumer. For example, a consumer watching a video
stream at peak hours could be alerted and automatically charged more if he or
she continues to watch (after being alerted). If the user chooses to continue, the
device will generate more value, and the population using the mobile device will
shift toward heavy users. As a consequence, a pricing plan for regular users
may include a clause for service degradation during peak hours.
Use case 2: Utility companies analyzing consumption patterns in real time.
Applying the same principle as above, per-household pricing can be adjusted
based on energy consumption detected by smart meters, or sensors. Value-
added service could be offered to help individual households rationalize energy
usage during peak hours and offer more attractive prices to those that conserve
when it is advantageous to the utility.
Use case 3: Consumer goods companies applying social media analytics. Most
consumer goods makers do not have direct access to consumers, as they work
through distribution channel partners (middlemen, retailers, etc.). Through social
media analytics, they could, nevertheless, understand what their end-customers
think about their brand and can better adjust pricing strategies, quality of
products, etc., as the earlier consumer goods case study suggests.

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Certain concerns must first be addressed to take full advantage of big data (see Figure 3). They include:

Quantity of data. The amount of data and information available is gargantuan and only
getting bigger, if projections are true. Business analysts and executives must decide what
kind of data they need to use to address key business objectives.
Right technology/tool. For better usability and results, business leaders need to select the
most appropriate analytics tool. If the right tool is applied, it will help make sense of the
data collected and streamline the solution to the business challenge.
Association of structured, semi-structured and unstructured data. Regardless of its
composition, data has to be used as a single, complete set and must translate bits buried
in streams (e.g., keywords, speech, etc.) into machine-usable material.
Specialist and talent management. To better exploit burgeoning data, organizations
need a specialized talent pool that understands how all the information comes together and
who can validate key insights. Big data calls for an approach previously applied to data
mining but with a wider scope; the pool should consist of representatives from both
business and IT, possibly using iterative development techniques and hypothesis testing,
before scaling up.
Speed of treatment/architecture. Given the vast amount of data and the diverse nature
of unstructured information at hand, specialized platforms should be deployed alongside
transitional solutions. At some point, the two will merge (e.g., combining unstructured
social data conversations and transactional data). However, this will require a blended
infrastructure in which the optimal enterprise information management architecture will
support operational data collection in warehouses and a wide array of analytical tools.

The Four Axes of Big Data

Velocity Volume
TA
DA
BIG

Variety Complexity

FIGURE 3
Source: Cognizant

Moving Forward with Big Data


There are many grey areas that prevent organizations from leaping into enterprise-wide big data analysis
strategies. By taking stock of the following points, organizations can get a better grasp on how to
approach big data solutions.

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Business leaders need to identify the desired value transformation objectives they
want to achieve and the issues they want big data to solve. These issues can revolve
around changing customer purchasing behaviors, pricing mechanisms, brand acceptance,
service extensions, etc. (see use cases, page 82). A win-win model that benefits both
customers and the business should result from this analysis.
Once the business objectives are clear, an information value map (consisting of
what, when, where, how) should be created. This should result in identifying the data
needed to achieve these goals.
Based on the value map, specific strategies/platforms/transformations/analytical
processes must be defined; only then can strategic execution start.

The proliferation of data has augmented


the need to have the right talent specially
trained to realize ROI both the return
on information and investment.
To effectively use big data, enterprises need to understand the parameters that are driving value in the
minds of their customers and then gain an understanding into the various dimensions that must be
analyzed. As discussed above, a variety of structured and unstructured data sources provide the basis for
the insight needed to achieve this.

The Verdict: The Big Scale of Data Matters


Big data is now being collected and sifted for insights that reveal hidden business secrets, ranging from
customer preferences to performance drivers. If used properly, big data can help senior leaders make
strategic decisions based on clearly delineated, customer-driven facts rather than gut instincts.

The proliferation of data has augmented the need to have the right talent specially trained to realize ROI
both the return on information and investment. To fully succeed, senior leaders need to focus on how
best to harness this data explosion and create use cases that build better and brighter enterprises.

Big data has enormous potential to accelerate business growth through product and process innovation
and increased employee and partner productivity that improve consumer satisfaction. Ultimately, the
ability for any organization to survive and thrive in the marketplace depends on its ability to adapt and
exploit enterprise and social data assets that can inform the radical change needed to overcome the
inertia that prevails in most businesses.

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Glossary
Hadoop: An open source software framework for processing huge data sets on certain kinds of problems
on a distributed system.

MapReduce: A software framework introduced by Google for processing huge data sets on certain kinds
of problems on a distributed system.

Distributed system: Multiple computers, communicating through a network, used to solve a common
computational problem.

NoSQL Database: An open source database management system designed to handle huge amounts of
data on a distributed system.

Structured data: Data that resides in fixed fields, as in relational databases and spreadsheets.

Unstructured data: Data that does not reside in fixed fields like free-form text, video, image and audio
data.

Semi-structured data: Data that does not conform to fixed fields but contains tags and other markers to
separate data elements like XML, HTML or tagged text data.

Visualization: Technologies used to create images, diagrams or animations to communicate the results of
big data analysis.

Debasish Dave Mukherjee is an Associate Director in Cognizants Enterprise Information Management


Practice. He has numerous years of experience in information management and consulting, managing and
implementing strategic technologies in Fortune 500 corporations. Daves educational background includes
MBA degrees in finance and MIS and a Ph.D. in information sciences from the University of North Texas
in Denton, TX. He can be reached at D.Mukherjee@cognizant.com.

Karthik Krishnamurthy is the Global Business Leader in Cognizants Enterprise Information Management
Practice. In this role, he drives strategic initiatives, business pursuits and key customer relationships
across the globe. His focus areas include the creation of innovative next-generation solutions, entry into
new markets and building thought leadership in the enterprise information management space. Karthik
holds a diploma in business administration from IIM Lucknow and earned his bachelors degree from BITS
Pilani. He can be reached at Karthik.Krishnamurthy@cognizant.com.

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The Last Word

Innovation:
Not a Choice, But a
Series of Choices
We have reached a point where innovation must extend beyond
clever ideas to meet required business needs. There is no cookbook,
but the best ingredients for large, complex enterprises to capitalize on
meaningful innovation is to ensure they understand from the get-go
where to start and how to get there.

By Bruce J. Rogow

During the past year of IT Odyssey interviews with over 120 executives, three resounding themes emerged
that are best summarized by the following quotes:

Our business model must change if we are to survive and thrive in the future.
The IT of the next few decades will not be the IT of the past few decades.
Given broad uncertainties and tight financial constraints, the required changes must be
done with limited resources.

The underlying changes were described in my earlier Cognizanti article, We Better Have a Plan B for the
Something About Services Era.1 The articulated changes are the same, but the tone of imperative and
urgency has increased.

Most businesses are faring well despite steep global economic challenges, so todays imperative is more
about a growing recognition of a smoldering, not burning, platform. Executives look around and see
consumer technologies enabling them to do new things in new ways in their personal lives. They have
little patience with why their businesses cannot take advantage of what these new technologies enable.

Even where IT is viewed merely as a cost of doing business, the perceptions, attitudes and expectations
for what IT should deliver and how it should deliver it have also changed. Meanwhile, the economics,
alternative delivery vehicles and sources for IT enablement are shifting dramatically. Not since 1982 have
I seen such dramatic and broad shifts in the trade winds forcing change in both the business and IT arenas.

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Invention and Innovation Arent the Game Change Is
Lets face it. It is fun to hear about neat, new things people are doing. We clamor for more war stories
and case studies of innovative efforts. But many enterprises must move beyond the show us another
exciting (but unrelated to our situation) case study or heres what we are doing in the innovation lab,
to how and where they are making material business and IT changes happen. As one CEO told me:
Enough with the ideation. We are short on key business changes we need to be viable, long term.

The futurist Thornton May has an outstanding differentiation of invention vs. innovation that get us closer
to how we must reshape our thinking:

Invention: Take money and turn it into ideas.


Innovation: Take ideas and change them into money.

Current times demand that we go further to focus innovation on enabling the material changes the
business needs.

A happenator is the person absolutely


responsible and accountable for ensuring that
the change happens and does so with passion.
In those heady innovation days of the early 80s (excuse me: mainly manufacturing and banking) and IT
(excuse me: data processing), a mentor of mine brought us back to earth by asking:

At the enterprise level, what has to change and to what?


To get material value or a contribution toward that enterprise level of change, what has to
change (to enable change)?
> If you dont know what has to change, how do you identify, spot, sponsor, channel
and nurture the innovations essential to enabling the change?
> You dont want to stifle or cut off bottom-up or ad hoc innovation, but in tight times
with urgent needs, it is critical that executive management ensures the essential
changes happen, get attention and thrive.
Specifically who are the happenators and change agents? A happenator is the person
absolutely responsible and accountable for ensuring that the change happens and does so
with passion.
What are the elements and factors of your change matrix, as shown in Figure 1?
Can you describe what you are going to do differently tomorrow to turn the innovations into
material change?
What is the process or pathway to nurture innovation and change? Where are your efforts,
and are you making progress?
If you cant answer these questions, what makes you think innovation will result in change
happenation?

Noted author Peter Keen and I studied the common characteristics of enterprises that were the most
successful at achieving material change from innovation.2 I had previously conducted a similar initiative
with Dr. Marianne Broadbent,3 then of Gartner, and later with Don Tapscott, to examine which
organizations were best at making material change happen from innovation. From my IT Odyssey
interviews, a set of Maxims of Happenation have emerged.

88 COGNIZANTi http://cognizanti.cognizant.com
Basic Elements of a Change Matrix
Statement of the material enterprise change desired.
Major enabling material change outcome required for the material enterprise change.
For each enabling material change outcome:
> What has to happen to enable the change outcome (happenation)?
> What has to change in the business to enable the happenation?
> What innovations are necessary for enabling the changes needed in the business?
> What is the status of the innovations?
> What are the challenges for each innovation to happen?
> How are the challenges being addressed?

FIGURE 1

Reciting the Maxims of Happenation


Not all successful organizations exemplify each of these maxims. Everyone has his own name for each
maxim. Each maxim must fit into the culture of the organization. However, the more maxims that are in
place, the more likely happenation becomes. The fewer maxims that are in place, or diligently performed,
the lower your odds of happenation.

Maxim I: Manage the Happenation Endeavor Distinctly at Three Tiers


The overall process of nurturing individual innovation efforts should have three distinct levels of
management, as seen in Figure 2. There must be a clear, passionate and engaged sponsor/owner of the
overall endeavor aimed at the material change. Being supportive is not enough.

Perhaps the most critical level is that of the program manager, who must break down the business
changes required, develop the change matrices, identify the linkages to the needed or relevant
innovations and keep the innovation effort growing in scope, impact and breadth. Dealing with ambiguity,
finding financing, forcing organizational change and overcoming obstacles are daily encounters.

The program manager is the key happenator. His or her career must be committed to the success of the
program in terms of what it contributes to the overall endeavor. It is up to the program manager to ensure
that the vast array of innovation and change efforts are not seen or treated as unrelated, not left as
orphans and not treated with the same priority.

The project-level manager or innovation entrepreneur is responsible for the success of the individual
project or innovation effort. Such people are typically highly focused.

There are three critical success factors when implementing such a three-tiered approach. First, dont share
or overlap responsibilities. The tiers should have distinct individuals with distinct objectives. Second, each
level requires very different personal characteristics, skill sets, interests, styles and focus. Very few
individuals are suited to more than one level. Third, expect major conflict between the levels. If there is
no or minimal conflict, there is likely something wrong.

Key question #1: To what degree does your organization have an effective, formal three-tiered
management structure in place to turn innovation into material business change?

Maxim II: Turn the Why into the Purpose


As described in an earlier Cognizanti article,4 there must be a clear articulation of the enterprise why,
or expected outcome, which then translates into purpose. That purpose must be at the core of the process

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Three-Tiered Management Structures Are Critical

Objective Role Focus Style


Endeavor: Achieving the next- Understand the Set realistic Executive sponsor
The journey from generation business criticality expectations Collegial and
innovation to model Sustain the Support and monitor continually engaged
material business Delivering journeys journey progress Visionary, inspirational
change differentiating momentum
business value

Programs: Building next- Journey Balancing reach and Pragmatic


Building the generation business coordinators grasp Flexible
capabilities capabilities, trust Next steps Priorities Engaging
and working Husbandry Identify risks, players, Credible
relationships scope, scale
Keep the journey Diplomatic
moving forward Base camp frameworks
Journey progress

Project: Deliver the Innovator Time, budget Heads-down


Innovation efforts individual next- Determine what Day-to-day meeting and Often undisciplined
and projects generation and who is working relationships Possible zealot
innovation efforts needed and Detail Innovative
get it Proof of concept Creative

FIGURE 2

to turn the innovations into enterprise-level material change, or happenation. Otherwise, many isolated
innovations may result, leading to little real change.

As an example, a manufacturer determined that it had to reduce break-even by 25% to survive the next
downturn in the business cycle. That was its why. This translated into four major purposes or outcomes
for its innovation imperatives:

1. Simplify the product and piece parts scope and complexity by 60%.
2. Reduce the work in process inventory by 50%.
3. Decrease routing and the labor required by 40%.
4. Slash the customer interest-to-order-to-cash cycle by 30%.
Over a five-year period, 1,000-plus innovations emerged. On further inspection, the key 150 were
sponsored, identified as being material, nurtured, groomed, promoted and brought to an institutional level
that had a true material impact. The war room next to the board room visually displayed the relative
progress and contribution of each innovation, as well as gaps where sponsored innovation was needed.
Progress and needs were flashed like banner ads across intranet portals. When the global economic
downturn hit a year earlier than expected, the companys break-even was already reduced by over 30%.

Key question #2: What percent of your innovations are contributing to advancing your why?

Maxim III: Manage, If Not by Time, Then by Materiality Pathways


Years ago, an IBM executive gave a talk to CEOs describing how his company was organized by time. He
explained how IBM Labs were dedicated to the technologies and their possible application in the far
future. The advanced development folks looked at where the markets, capabilities and products would be
over a five- to seven- year horizon. The development resources and processes were tasked with
developing products, market awareness, skill sets and enablers for the two- to five-year horizon. I was in
a group developing systems management to contend with the complexity of the System/370 environment

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while introducing it to customers. There were resources to manufacture, sell and install product over the
next year. Lastly, there was the day-to-day customer support.

Each time tier had a demand and supply side. There were major points of contention between demand
and supply, as well as between time tiers. In a perfect world, enterprises today would like to be able to
organize their innovation efforts in such a demand/supply- and time-based structure. However, few can
afford the resources and structure.

An alternative is to establish a materiality pathway, such as in Figure 3. Each company has its own name
for each episode, stage or plateau. The critical issue is that you recognize the need to have a structured
framework, language and process for placing, evaluating, nurturing, killing and furthering innovation
efforts. The criteria, funding, skill sets and success factors are different for each plateau.

The beachhead is where individual innovations are identified and proved to be useful and practical.
Criteria such as detailed ROI and cash flow are premature discussion and data points. The objective and
materiality of the base camp is to identify those beachhead innovations that have been proved in one or
limited instances and then prepare them for further deployment or scale. Ideally, it is at the base camp
plateau where innovations with the highest material impact are given more focused attention. The
momentum plateau is where you look for the pull from the business to deploy the innovation that is
hopefully now ready for prime-time material contribution.

As an example, a financial institution tested a social media effort for customers in a limited part of its
business. It took four iterations at the beachhead level to achieve utilization by 3% of its targeted
customers. That met the organizations beachhead criteria. A competitor used a mature ROI model best-
suited for a later plateau to kill a similar effort after achieving 4.5%.

The objective and materiality of the


base camp is to identify those beachhead
innovations that have been proved in one
or limited instances and then prepare them
for further deployment or scale.
Once 3% was reached, the effort was turned over to a base camp team that was better skilled and
prepared to grow the effort to 11% with greater functionality. The momentum plateau has taken the effort
to over 30% of its customers, and it is now a key part of the companys differentiating effort. The
competitor is still struggling with how to take an idea and grow it. It is stuck on the beachhead.

Key question #3: To what degree do you have a formal and accepted structure and language to
identify, nurture and grow innovations into material contributions?

Maxim IV: Look, Look Again and Force the 360-Degree


Innovation Pathways
Some companies try top-down innovation. Others try bottom-up. Others master lateral innovation. Some
start ideas in major markets and then move them to minor and third-world markets. Prahalad and Krishnan
promoted co-creation through global networks.5

The IT Odyssey interviews suggest that todays businesses must force themselves to not only be aware of
innovation across all of these orthogonals but to also be ready to force deployment up, down and across.
Such efforts of discovery, material potential assessment, nurturing and growth must be formally built into
all other maxims.

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Adopt a Materiality Pathway Approach

Materiality: Scale, Scope, Consolidation and


Cost, Return, Risk Optimization
LL
PU
Nth Plateau
Integration and use
Momentum among silos
3-X Plateau Architectural and
Major attempt at broad structural discipline
deployment Recognition or
Enable deployment and command for the
SH support platforms greater good
PU Base Camp Broad coordinated execu- Major behavior changes
tion, enablement
2nd Plateau Still silos
Broaden beachheads
Acknowledge business
Further original beachheads platform change
Test for repeatability and Formalize disciplines
Beachhead end-to-end
Manage program
Establish governance
1st Plateau Broad governance
Templates
Test pilots, Broad architectural
assumptions Consider scaling
discipline
Establish Set priorities
beachhead Time

For major business change, some enterprises identify an idealized timeframe, usually three to 10 years,
and identify steps to get there. Others first assess how long they believe each step will take and derive
the overall time from there. The best approach is often a matter of context, degree of change, culture and
leadership.
FIGURE 3

Key question #4: To what degree do you have formal and effective mechanisms to identify and
then grow innovations across the enterprise to make material contribution to enterprise-level
change?

Maxim V: Dont Fake the Materiality/Purpose, Tiers, Pathways,


People and Details of the Change Matrix
All too often, I see companies struggling with turning innovation into material change at the enterprise
level. When executives are asked about their approach vs. this list of maxims, they usually respond with
great management phrases such as: not exactly or sort of or we intend to (and have been so inclined
for the past decade) or you need to understand why we cant do that. Turning innovations into material
contribution doesnt work at the PowerPoint parameter of implementation, nor does it translate into
success at the resource identification and intention level.

Successful, repeatable and sustained happenation demands very detailed, gritty identification,
specifically talented but differentiated people, discipline and measurement of progress. Frankly, it has
been my experience that it takes extremely gifted executives to sort out all the details of happenation and
then see that they are working.

Key question #5: To what degree have you identified what enterprise material happenation
will require and put the resources, processes and frameworks in place?

The Future is Now


Almost every IT Odyssey interview tells me we are past the point of thinking about the future. The changes
are cascading into and around the enterprise. There is no choice but to change to remain viable.

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Rather than being very proud of literally thousands of isolated innovations, the enterprise must identify
and target some percent of innovations at the required enterprise level of material change. If the company
is serious about making the change at the enterprise level, the choices outlined in the maxims above must
be made.

Successful, repeatable and sustained


happenation demands very detailed, gritty
identification, specifically talented but
differentiated people, discipline and
measurement of progress.
In the real world, there are hurdles to turning these maxims into an effective prescription. It is very easy
to get off-course and find that innovation is either misguided, under-capitalized or misaligned. The ability
of business leaders to establish enterprise-level process buy-in and resources is always a huge challenge.

Over the next few months, I will be blogging on ways organizations can get innovation back on an
enterprise-minded course. My hope is that this Cogizanti blog will establish a dialog where readers can
share insights on the material benefits of innovation, even when the maxims can only be partially
happenated.

Footnotes
1
Bruce J. Rogow, We Better Have a Plan B for the Something About Services Era,
Cognizanti Journal, Vol. 4, Issue 2, 2011, http://cognizanti.cognizant.com/index.php?option=
om_content&view=article&id=522&catid=22&Itemid=12.
2
Peter Keen and Bruce J. Rogow, The Pathway Differentis Papers, 2002, Guildford, Surrey, UK.
3
Bruce J. Rogow and Dr. Marianne Broadbent, Projects, Programs and Endeavors,
Gartner Executive Program, 2001.
4
Bruce J. Rogow, Making Sure the Future Doesnt Just Happen, Cognizanti Journal,
Vol 4, Issue 1, 2011, http://cognizanti.cognizant.com/index.php?option=
om_content&view=article&id=522&catid=22&Itemid=12.
5
C. K. Prahalad and M. S. Krishnan, The New Age of Innovation: Driving Co-Created Value Through
Global Networks, McGraw-Hill, 2008.

Author Bruce J. Rogow is a Principal at IT Odyssey and Advisory in Marblehead, Mass. Known as the
counselor to CIOs and CEOs on IT strategy, Bruce has for the last 15 years conducted independent, face-
to-face interviews with over 120 IT executives annually. Previously, he spent five years as Executive Vice
President and Head of Research at Gartner Inc. Prior to that, he was Senior Managing Principal at Nolan,
Norton & Co. Bruce can be reached at Bruce@ITOdyssey.com.

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About Cognizant
Cognizants single-minded mission is to dedicate our global
technology and innovation know-how, our industry expertise and
worldwide resources to working together with clients to make their
businesses stronger.

To learn more about Cognizant, please visit: www.cognizant.com.

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