CXO investigate

IT innovation: Why are US and UK bottom of the pile?

US and UK organisations are putting less into innovative IT than their international counterparts - and well below firms in Brazil.

The US and the UK are sitting at the bottom of international rankings when it comes to investing in innovative IT projects.

Against a global average of 20 percent of IT spend going on IT innovations, the US figure is 14 per cent and the UK's 18 per cent, according to a report by CA Technologies.

"[The research] puts the UK in a worse position than everybody other than the US when it comes to how much money, time and effort are spent on innovation in IT," said CA's UK CTO Colin Bannister.

"It highlights that 80 per cent of budget is being spent on average on keeping the lights on versus business change and innovation," he said.

"There are some positives in there but there are a whole bunch of challenges that we need to address as an industry."

IT's fundamental role

According to Bannister, the report shows every organisation recognises that IT is fundamental to innovation initiatives and growth strategies, virtually irrespective of sector.

"The less positive news is about IT's role as being the instigator of innovation. There's a gap in perception there. There's equally a gap in perception about IT's receptiveness to new ideas from the business," Bannister said.

The survey polled senior IT and business executives from large originations in the US, UK, Brazil, France, Germany, Australia, Singapore and Japan.

Bannister said the research showed that organisations that are perceived as innovative have a structured process through which they drive innovation, which he defines as, "A good idea with a defined business outcome".

"Organisations that have a structure for dealing with innovation are more successful or get bigger benefits. I view that structure as a funnel. So, how do you capture good ideas in the first place, because your good ideas can come from your customers, your employees, your business partners," he said.

"Once you've captured those ideas, how do you prioritise them and how do you do your investment prioritisation? How do you assign resources to those projects and programmes of work? Then the final bit is how do you do your benefits realisation? How do you go back and say, 'Did we get the benefits we thought we'd get from that idea?', Bannister said.

He believes that the biggest inhibitor to innovation is lack of budget and the present pervasive climate of austerity.

"The research would indicate 20 per cent of organisations are not doing any innovation at all of any note, which is really quite worrying. We have to come up with new ideas to grow our businesses," he said.

Second big inhibitor to innovation

The second big inhibitor is a lack of time and Bannister said he believes that to innovate, you may actually have to stop doing something.

"One of my favourite questions for CIOs when I meet them is, 'So how do you make the decision about what you should stop doing?'," he said.

The emerging countries are the ones that are doing innovation well, according to Bannister. The innovation spend figure for Brazil is 29 per cent of IT budget.

"Brazil is the shining light in terms of innovation. That's the threat. We'll be outgunned by the emerging nations if we're not careful and if we don't address the issues."

About

Toby Wolpe is a senior reporter at TechRepublic in London. He started in technology journalism when the Apple II was state of the art.

12 comments
mike-022
mike-022

I agree they have really a huge IT investment.In Finland there are also many IT and many of them are also invested in IT world.In fact i also seen some document management system and other IT stuff at http://www.m-files.com/ which is really amazing in different part of the world has it.

egaash
egaash

I know we're a small country of only 7 million people over the area of Jersey, but how come they never polled Israel? I'm originally from the states, but since I move to Israel, at every IT job I've ever had they have let me dump hundreds of thousands and in one case, millions into making their IT infracture top notch. I think this country innovates and could have been polled. I mean, they polled a country like brazil but not Israel? Come on... We're not riding camels here

Michael Kassner
Michael Kassner

CIOs and companies do not innovate when it comes to IT. Aren't they the users and consumers of IT innovation? One of my biggest regrets was switching to IT from Electrical Engineering as my chance to be innovative went away.

lallen2064
lallen2064

Having experienced several corporate management changes over the years, the constant focus for IT is cost reduction and cost containment certainly not innovation. While upper management states they want innovation, it is not how IT dollars are allocated. If cutting costs can be tied to the term innovation then maybe. For example one of the biggest innovations for a lot of US firms in the last decade was offshoring their IT staff. Innovation has to start at the top. If upper management is not committed to using innovation as a competitive advantage, the IT staff of the organization has no real chance of doing otherwise.

ePractical
ePractical

Innovation is not so much about money than capability and activity Einstein said "You can't solve a problem with the [Thinking] that created it". Institutions, regardless of R&D funding, stifle innovation out of a need for control. And Designers, in particular, rarely (if ever) talk to customers. No wonder innovation is stifled! Furthermore, top executives (and as an aside, especially our current President) seldom get down from their Ivory Towers and hear what they need to hear from the Customers and especially those primary people that interact with customers. Tom Peters long ago coined the term the ”walk around manager” which critically needs reviving today. Imagine an executive, at the end of the day going down to Customer Service or Tech Support and asking “What did you hear today?” “Anything new?” “What are customer complaining about?” ; “???suggesting“. Want to fire up innovation? Connect a heck of a lot better with your constituents ! ALL of them ! Not just your focus and the ones that “Like” you. (And yes Mr President, BTW, the other HALF of the country that didn’t vote for you).

Tony Hopkinson
Tony Hopkinson

1) UK and US businesses already have a huge IT investment and innovation has to overcome that. 2) The idea that IT can propose innovation to businesses and it be acted on by business, is some sort of bad joke. Or did either of these two minor points make the point you were trying to make, pointless...

wizard57m-cnet
wizard57m-cnet

Rather than a percentage, what might be more revealing would be be actual monetary value of "innovation". Countries such as Brazil may be forced to spend more percentagewise for innovation when compared to UK and USA, where budgets are usually large.

jrthurler
jrthurler

I agree with you that Israel could not be left off this survey, because Israel it??s a big player when the focus is technology. But in your comment when you??ve talk about Brazil if it doesn??t deserve to figure in this list. Brazil today occupies the 5 or 6 position in the major economies of the world, even overtaking this year the position of UK.

AndiMann
AndiMann

Michael, thanks for the comment. I do agree that there is a disconnect between business expectation and IT capability. That is pretty much what the research shows, there is a lot of detail on that. Unfortunately this is reflected all too often in the tendency for non-IT leaders to source new technologies themselves (smartphones, tablets, mobile apps, cloud services, etc.). However, it does not need to happen this way - and it doesn't always. I see (and have written about) IT-led innovation all the time. My new book, 'The Innovative CIO', documents many case studies where IT has been the driving force behind innovation -such as at Tesco, BA, Starbucks, Vail Resorts, and more. IT could - and I think should - have a leading role in driving innovation that delivers real business results, not just reducing IT costs. I hope you can take your energy and enthusiasm to innovate and find ways to make a difference. It is not just possible, it is really important if IT is to remain relevant. Anid Mann CA Technologies.

AndiMann
AndiMann

Tony, re: 1) Yes, for sure. Perhaps that is one reason to explain the discrepency between the US/UK and others? But then again, many other surveyed nations also have long-term IT investments, yet are still innovating more, so maybe not. Worth exploring though. The trick of course for any IT leader is to balance existing investment with new innovation spend - certainly difficult to do with a larger sunk cost. and re: 2) That is not true at all. I have seen and written about many many cases where exactly this has happened - including at Tesco, BA, Starbucks, Vail Resorts, and more. You can read many such studies in my book, 'The Innovative CIO'. They really do happen. Thanks for reading and for your comment. Andi Mann CA Technologies

Tony Hopkinson
Tony Hopkinson

Which one do you think is going go first then? Information or Technology? :( If you are refering to IT as some seperate segment of the business. Nobody at the sharp end thought that was a good idea anyway. Bunch of managers got together, built themselves an empire or two... Going to leave you to the TR audience that is IT management, I've come to the wrong place I think.

Tony Hopkinson
Tony Hopkinson

and in fact the last time I remember it being seen to be doing so, was dotcom.... That didn't work out too well, though I have huge doubts about who was doing waht to whom in those heady days of innovation... Sigh maybe it's just me, when I can come up with an idea that will make loads of money, cost nothing, risk nothing and be ready for last Tuesday, perhaps I'll be a little more positive about things...