Scratch the surface and it soon becomes clear that IT innovation comes in many different guises. First, basic process innovation involves doing similar things in a better way all the time. The second fundamental level of innovation relates more closely to technology.

“This is ensuring that the IT shop is not going into Betamax cycles, or avoiding technology cycles that could contribute less to an IT landscape,” says Phil Morris, managing director of independent advisory firm Equaterra.

The third and by far the most important level of innovation is using IT as a business enabler.

“Using IT for more than just automation is vital,” says Morris. “Doing things that might not have been possible without the introduction of a clever piece of technology or application.”

This final category can be viewed as innovation with a capital “I” and achieving it requires the right sort of IT people.

But there are many hurdles to overcome before IT leaders can step into the role of innovator rather than operator, according to Capgemini’s 2008 chief information officer (CIO) survey.

“Of all the responses to our survey, CIOs felt the biggest barrier to innovation was the need to focus strongly on operational issues,” says Ivar Sinka, executive consultant for Capgemini.

The research also revealed that CIOs are a fairly pessimistic bunch. Seventy per cent of the 400 CIOs surveyed felt that IT was critical for business innovation, but fewer than half believed their business leaders saw IT as the driver. Worse still, only 24 per cent of CIOs said the IT function was the main initiator of business innovation.

Other analysis illustrates similar trends. Research body the IT Governance Institute (ITGI) recently considered the views of IT and business leaders from enterprises worldwide, and found only 46 per cent of CIOs agreed that business and technology strategies were aligned.

The research from both reports shows that businesses need IT to innovate, rather than just operate.

“The best approach to innovation is to align the business and the IT strategy,” says Lynn Lawton, international president for IT governance body ISACA.

Putting back the spark

However, marrying the business strategy with the IT strategy poses challenges.
One clear problem is communication. “People get bogged down in acronyms and infrastructure,” says Lawton.

Just 18 per cent of users agree that the IT department always communicates its objectives, according to the ITGI report ­ hardly an improvement on the 2005 survey, where just 14 per cent of users felt IT communicated its objectives.

But be aware that poor communication is not just an IT concern. “Quite often business sees the IT department as nothing more than suppliers of electricity,” says Lawton.

Paul Reynolds, chief technical officer for the UK’s Department of Business, Enterprise and Regulatory Reform (BERR), says that the priorities of the user community and IT department often clash.

“Users want everything they see on TV,” he says. “But we need to ensure that the right architecture is in place to support our legal and security requirements.”

Such integration has become more of a challenge in the internet age, with increasing demands on information handling and data processing.

Communication is even more of a problem in businesses where the reporting line runs from the CIO to the chief financial officer, an executive whose focus often tends to be on cost cutting.

Capgemini’s Sinka says that in general, the most innovative companies have a direct line between the CIO and the chief executive or chief operations officer.

The chain of command might be important, but Equaterra’s Morris says a ttitude is just as important as organisational hierarchy.

“If a company is going to successfully innovate, then it needs to move away from seeing IT as simply an automation function,” he says. “And there needs to be a strong dialogue between business people and IT people.”

Close dialogue means the roles of CIO and IT director must be clearly defined. Corporate IT strategist Chris Potts says the CIO should not spend time running the IT department. “He or she should be driving innovation strategy, while the IT manager focuses on operational excellence,” he says.

Others disagree and a clear majority of CIOs surveyed by Capgemini felt the roles should be combined. Still, splitting management roles has worked for the Met Office and BERR, where CIO and IT management roles are separated along clear lines and the IT function is driven by business needs.

Both organisations have worked to become more business-facing ­ and the initiative has meant keeping the lines of communication between business and IT open. For BERR, a key issue was not to become fixated on strategy. “We are on the third or fourth iteration of our strategy because we’ve been talking to business and refining their requirements all the time,” says Reynolds.

Not so long ago, only financial institutions and technology companies could lay claim to having a strongly aligned IT and business strategy. But the UK government’s Transformational Government initiative has changed the agenda for public sector organisations.

“Cross-government communication has improved massively over the past few years,” says Reynolds. Various groups have been set up ­ the CIO Council, the CTO Council, the Knowledge Council ­ to share information across departments.

A key development is that a successfully implemented project now sets the trend for other departments. “We’ve stopped reinventing the wheel and that is a huge step forward,” says Reynolds.

Thinking the unthinkable

Learning from the success and mistakes of others can help save time and money. The Met Office, for example, looked to BT for ideas before embarking on its IT change programme.

If communication failure is one of the biggest barriers to innovation, then too few or too many skills is another major obstacle.

Crucially, many long-term outsourcing agreements do not allow for advancements in technology ­ and the arrangement has left many organisations dependent on their suppliers.

Users also want to work more flexibly and make better use of the so-called Web 2.0 technologies, such as social networking, corporate blogs and wikis.

Instead of turning to the IT department, many users are creating their own collaborative solutions. The trend places increased demands on security and business governance.

Nigel Reed, the Met Office’s head of technology development, says one particular challenge is that today’s users have a basic understanding of IT. Many users can write software, have PCs at home and are beginning to understand how straightforward technology can be.

“What many non-IT professionals do not understand, however, is that there is a huge difference between writing software and generating operational business solutions that work 24 hours a day, 365 days a year,” he says.

Many companies often feel threatened by new web technologies and do not want employees spending too much time on social networking sites.

On the bright side, however, collaboration can create opportunities for innovation. Equaterra’s Morris says Web 2.0 technologies have huge potential, but only if firms can break down traditional ways of thinking. He points to the origins of the internet to back up his argument.

“The web is a global facility that emerged out of a simple need for scientists to communicate rapidly across corporate boundaries,” he says. “That has set a precedent and there is absolutely no reason why the same cannot happen with new technologies.”

Microsoft, for example, already has 4,000 active corporate bloggers. “The benefits are huge,” says Steve Clayton, chief technology officer for Microsoft’s partner group. “It helps me connect with partners and customers and has shifted the perception of Microsoft as a leviathan.”

Microsoft’s corporate blogging policy is considered to be among the most enlightened in the world, giving employees more freedom than many companies would feel comfortable with.

In a nine-step programme, Microsoft tells bloggers what they can do and what not to do ­ such as respect confidentiality agreements, do not break news, respect prior employers and identify yourself.

As a major technology player on a global scale, you might expect Microsoft to be leading the way. However, there is still plenty of room for other businesses to exploit new technologies. After all, corporate blogging is simply scratching the surface of innovation.

Green IT is where it is at

Corporate IT strategist Chris Potts says another opportunity for innovation lies in green and clean technologies.

The experienced CIO is in the unique position of understanding how best to invest in business change and exploit technology.

“Today’s CIO should be using the skills and knowledge gained through managing IT to ensure that their companies become expert investors in green technology,” says Potts.

Internally, BERR is already innovating with green technologies. The organisation has reduced its offices from 12 to two by allowing employees flexible working hours and technology provision.

UK CIOs wishing to play a leading role in the future direction of their company will, therefore, need to be more than just excellent technicians. They will need to communicate well and they will also need to be highly creative.

Certain organisational structures can help drive innovation, says Morris. Such structures could be in the form of innovation universities where dedicated
people from all areas of the business interact with suppliers, product developers and research specialists within the technology organisation.

If UK CIOs do not step up to the innovation challenge, somebody else will. Countries like China and India, for example, have declared innovation a national priority. Progress overseas must be seen as a threat, but also as an opportunity.

“Innovation accelerates innovation,” says Morris. ‘We need to understand why it is happening and use that to create the next level of innovation. Engage with it and see where it takes you.”