In fact, the study says that only 20 percent of the IT budget is allocated toward innovation, which is a 30 percent drop since 2002. As if this wasn't bad enough, 30 percent of business executives think the IT budget is wasted.
To address these perceptions, IT must address process and applied innovation requirements.
To elaborate on the need for process improvement, studies show 80 percent of the problems IT encounters are created by human error, and IT operations expense budgets are consumed with unplanned work levels as high as 45 percent. In other words, human error isn't just creating incidents, it is one of the largest, if not the largest, underlying causal factors for budgets being blown and innovation on the decline.
If people are constantly firefighting, then they don't have time to do other things. As management witnesses expenditures that don't further the business, a spiral can set in where less money is allocated toward IT. And with even less total funds to spend, IT will react by cutting innovation even further just to try to stay afloat.
If the organization is staffed for reactionary firefighting versus proactive engineers, then the organization may very well have the wrong resources to go to the next level.
The answer isn't to get better at fighting fires -- the goal must be to prevent the fires in the first place.
To begin addressing human error, organizations must implement change management as more thoroughly covered in the IT Process Institute's Visible Ops Handbook. Without a doubt, stopping human error from entering the production environment is one of the largest improvements that an IT operations group can make.
For development groups to meet expectations, they need to understand strategic objectives, be tightly involved with the business and they also must be effectively managed in terms of how they go about developing new products and services. This requires project management processes and formalized development through the use of well-thought-out System Development Life Cycle (SDLC) methodologies.
These two areas are integral as project management provides a control wrapper within which the SDLC functions. If we listen to the Standish Group and their Chaos Report, the overwhelming majority of projects fail for non-technical reasons. By adding controls through the use of formalized project management and a well-thought-out SDLC, management can mitigated risks confronting the creation, testing and deployment of new systems.
But what about innovation?
For most businesses, raw innovation isn't what matters.
IT must work with the business side to truly understand what risks and opportunities are out there. From there, the groups must work together to identify where to invest time, resources and money. There must be an understanding by all parties that force multipliers are key and need to be focused upon. Borrowing the ''force multiplier'' term from military parlance, the intent is to identify areas where the return is in multiples of the investment.
Some may call this obvious low-hanging fruit, but it goes beyond that. Low hanging fruit may bring tremendous results in a short amount of time but doesn't necessarily mean the returns are sustainable or worthwhile over time, unless some form of time value of money (TVM) analysis is done as part of the business case. For example, cutting the operating budget in half without careful analysis may cause earnings to rise but is unlikely to be sustainable.
To identify force multipliers, teams must recognize that a relative few processes truly create value and drive the organization towards its goal. This inequality is often labeled as the 80/20 Rule, which says that a relative minority of inputs (20 percent) generates the majority of outputs (80 percent). Whether it is 15/85, 30/70, or whatever the exact outcome, the point is that statistically, the minority or processes we perform -- projects we are involved with personally and at an organizational level -- really drive value.
These precious few must be carefully identified and focused upon. If customer service is a vital differentiator that creates repeat sales, go after it. If driving down cycle times in one area of manufacturing is vital, go after it.
To really drive this home, imagine a critical path on a project GANTT chart. If tasks are accomplished that are not on the critical path, then the completion date doesn't change. However, if a task on the critical task list is completed, then there is real movement toward completing the project. Even better yet, if tasks are completed early or resequenced and done in parallel to pull in the completion date, then the objective is realized sooner.
In short, understand the goals of the business and determine what can be done to propel the organization toward its goals faster. This means watching both ways to add value and methods to manage risks. A path with high rewards but also high risks must be carefully considered.
There are two major points to take away from this.
First, operations and development need the proper processes and controls to ensure that risks are managed and expectations are met, resulting in lower unplanned work and more resources to work on planned work.
Second, raw innovation isn't what is needed. Innovation that benefits the business while properly balancing risks and rewards is what is needed. For this to happen, IT must work with the business side to identify both opportunities for improvement and potential solutions that address those opportunities.