Jonathan Reichental, Ph.D.

Internal IT innovation is all about converting ideas, those specifically supported by new technologies, into business value. These innovations often focus on needs such as improved internal processes or alternative and creative ways to support market activities. Four years into leading PwC’s IT innovation efforts, I’ve certainly observed enough of what works and what creates challenge to write a book on the subject.  For this blog posting I’m going to briefly discuss an element of what I’ve experienced. It’s what I will call the 3 tensions of internal IT innovation.

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How much new value did you provide your organization today? Did you suggest creative ways to go about a common task that resulted in better outcomes? Are your work behaviors keeping you relevant? If these questions are not top of mind for you yet, they will be. Your future gainful employment may depend on being able to answer them with resounding positivity. Intrigued? Read on.

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Each of us are painfully aware of the new economic reality in which we find ourselves: national, state, and local government debt is skyrocketing. Simply put, it costs a lot more to provide and maintain government services than is taken in through taxes and other sources of revenue and thus we are forced to borrow to cover the difference. Every commentator on this subject offers essentially only three near-term solutions to the problem: raise taxes (some argue for lowering taxes), cut services and programs, and reduce the civil service payroll.  And while all of these have historically played an important role in some form of debt remediation, I’m struck by the absence of the role of innovation in this national discourse. I’m not talking about entrepreneurial innovation which of course is a considerable generator of income and taxes; I’m talking specifically about cost-based innovation.

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Deciding to share ones location using a mobile device is not a new phenomenon.  Several geolocation applications, described as those that use system location awareness as its core function, have served this market for some time. For the most part, the value here is that of forced serendipity.  For example:  if you’re my friend and you decide to share your location and I am in the area, perhaps I can drop by and have a chat. In many cities this is how groups of friends are assembling. Not through a process of phone calls and lengthy coordination—how old school!—no, today for many it’s about meeting up by displaying your location and hoping you are discovered or by you discovering the location of others. Clearly it’s not for everyone and subsequently, to date it has had a relatively niche following.

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Since it started in late 2006, I’ve been a registered member of Twitter—the popular 140 character-limited microblogging service. However, I’ve only recently started to use it on a regular basis. I’ve suddenly found it quite useful. Many of the folks I socialize with are confounded by its value; they cannot see why people post the detail of their most inane activities and they are equally baffled by those that read the postings. I do neither of these things and yet I am able to derive value from it. To understand how, I thought it would be worthwhile to briefly outline the reasons why I think it is a rather compelling service.

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An Apple iPad is currently selling at a rate of one every three seconds. Since its launch in April, over two million have sold. These are numbers for the United States alone! It is only beginning to become available in other countries, so the pace of sales will gather further speed. In a good economy this kind of sales volume would be good. In a bad economy that’s close to phenomenal.

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In a recent blog I argued that in order to prosper as an IT professional in the new, sobering world of alternative sourcing, new skills may be necessary. These skills are being necessitated by the changing role of IT within organizations. While it is possible to outsource much of the commodity technology and related services required by organizations, there is an increasing need for creative, complex problem-solving technology skills. This layer of technology need requires high doses of innovation and the attendant right-brained skills to make it happen. Rather than discretionary innovation for both the IT professional and IT organization, I called this essential innovation and coined the term essennovation. While my intent was to bring clarity to a common theme currently being discussed within IT circles and in board rooms across the world, I was delighted by the high degree of new conversation the blog provoked.

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It’s likely not lost on many of us that large chunks of the internal information technology (IT) department at businesses are being outsourced. Rather than a new phenomenon, strategic sourcing–a term that covers the myriad ways resources and services can be alternatively provided by vendors– is picking up pace. We’re seeing more and more organizations choosing to move many of their technology functions to an external provider.  Among many factors, increasing commoditization of technologies and services make them easier to offload to someone else. When we say commoditization in this context, we mean, for example: standard hardware and software, and services that can be relatively easily documented, then duplicated and repeated.  Think about common technology needs such as data storage or software testing.  By outsourcing, organizations can take advantage of, for example:  lower labor costs; larger pools of scare talent; and the ability to easily increase or decrease needs, and subsequent cost, based on demand. In fact, strategic sourcing has been a boon for these types of business objectives. Only in the long term will we be certain of the wisdom of this strategy, but there is no doubt that short-term value is being recognized. At some point, one could certainly conclude that IT is simply becoming a utility and from a strategic perspective, ‘IT may not matter.’ But this conclusion, in my view, would be wrong.

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Every second, the Large Hadron Collider (LHC) near Geneva, Switzerland produces 40 terabytes of data.  That’s more data than can be currently stored and analyzed.  The scientists working on the project are forced to collect just a slim set of the data and they hesitantly ignore the rest.  While this example is at the top end of the data deluge that our increasingly digitized world is creating, we can all relate to other, closer to home examples:  Every minute, 20 hours of video is uploaded to the popular video-sharing site, YouTube.  On Facebook, the biggest and most popular social networking site, 2 billion photos are uploaded each month.  Whether it is our text messages (a volume greater than the population of the earth are sent each day), or credit card transactions that reveal the intimate details of our purchasing behaviors, or recorded search entries in search engines that tell us so much about the human experience, or the cameras that photograph and video us as we go about out daily activities, the quantity of data that humanity is collecting and storing is staggering.  And it’s increasing exponentially.  We are moving from data scarcity to data abundance and disrupting our conventional view of economics. We call it big data.

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