Innovation. It’s the watchword of the day and the aspiration of companies of all sizes, in nearly every industry. But, what exactly should companies be striving for: business innovation or innovative IT? The answer is a resounding, “yes.”
By definition, business innovation is the creation of economic value—value for customers or a competitive advantage. That’s nothing new. What is changing is the role of IT in these innovation initiatives.
Business innovation today is driven by the lines of business, co-creating value with IT. This approach sharply contrasts the former vision of IT as a service organization in charge of the infrastructure, where cheaper/better/faster is the order of the day. Today, CIOs need to ask themselves one question: “Do you want to be the chief infrastructure officer or the chief innovation officer?” Clearly, innovation equals relevance.
A recent Dell Inc./Harvard Business Review study tells the story: No longer are innovation and efficiency siloed objectives for CIOs. Rather, they are part of a ‘virtuous’ cycle where innovation and efficiency are deeply integrated corporate strategies.
If you dissect many successful enterprises, large and small, you’ll find a nuanced relationship between IT infrastructure and business innovation. Most often the reference architecture is based on a strategic plan, and the infrastructure itself is simplified, standardized and automated.
The result is an environment that’s ripe for innovation.
Innovation through Agility at Owens & Minor
One good example is Owens & Minor (O&M), a Fortune 500 medical supplies distributor and healthcare supply chain services provider. The company wanted to expand its services to new markets, as well as the sourcing and distribution of its MediChoice® label medical supplies. O&M came to Dell Services to help transform its IT function to fully support this business strategy.
The key was deploying a standards-based, layered systems architecture that makes it easy to plug-in advanced technology, including cloud-based services, Software as a Service (SaaS) applications and device-dependent mobility. Leveraging virtualization and a private cloud increases efficiency and agility while reducing costs.
O&M is already seeing the results in its inventory management function. Before the new architecture, silos of inventory management code were spread among dozens of different supply chain and logistics systems. Now, the company can replace these multiple systems with two—one for planning and forecasting, and one for operational management.
The end result? Better inventory management enterprise-wide due to standardized processes and improved functionality.
At the same time, the new architecture’s capability to support device-independent mobility enables customers to use O&M’s new portal for online ordering, regardless of device type, network or platform.
In this case, standardization and transformation eliminate restrictions.
Healthy Benefits from Mobility
The Hague Medical Center in the Netherlands is on a continual quest to improve the level of service and quality of patient care. To help achieve that goal, the center utilizes an IT infrastructure that supports Wi-Fi and other mobile technology, accessible by clinicians through handheld devices. This strategy brings vital information to the hospital floor in real time, enabling clinicians to respond more quickly, achieve better outcomes and create a continuum of care.
Patients benefit from mobility, as well. Prior to their visits, patients can download an application that instantly alerts physicians when each person arrives for his or her appointment and lets the patient know how long he or she will wait before being seen. All of this reduces anxiety and improves customer (patient) satisfaction.
Without the right infrastructure in place, none of these advancements could happen.
Services Accelerate Innovation at DHL
Perhaps the most dramatic example of this new approach to innovation is a recent joint project between DHL and Dell Services, focused on devising new approaches to DHL’s business using the latest information technology. A key concept was to envision projects with broad appeal. So, instead of point solutions, Dell created systemic technology architecture for innovation that would apply to different aspects of DHL’s business.
While the collaboration generated multiple ideas, the group chose to move forward with an augmented reality solution for component assembly, which is a big part of DHL’s supply chain business.
While DHL is best known for freight forwarding and express delivery, the company also assembles and ships car doors and other products for major manufacturers. If assemblers could visual step-by-step instructions through augmented reality goggles, assembly quality could be improved and staff training simplified—enabling new hires to get up and running more quickly. If successful, the concept could be extended to field service and driver training.
It’s easy to see the potential.
The next step was integrating a system in the lab, then performing a pilot project involving a 10-step assembly. When completed, the project will be turned over to the supply chain business unit for refinement and potential implementation in an actual business situation.
Although the project is still in process at this writing, it illustrates the changing nature of IT in innovation. In this instance, technology is not used to solve a specific problem but to create a solution that prevents problems from happening in the first place.
Innovation: Getting Ahead of the 2.0s
Today, change is occurring in every aspect of business at breakneck speed. Thanks to the Internet, mobility, consumerization and social media, new ideas can emerge, take hold and go viral in continually shorter timeframes.
The response is a re-thinking of how we do everything and is the catalyst for the emergence of the 2.0s; new, globally disruptive, and transformative models, systems, and approaches to the way we manage (Management 2.0), organize (Enterprise 2.0), and buy and sell (Capitalism 2.0). These changing behaviors have an aggregate effect on the economic environment (Economics 2.0) and are underpinned by the emergence, implementation, and application of technology (Information Technology or IT 2.0), and the resulting challenge for the CIO and IT leaders is daunting.
IT 2.0 recognizes that technology is no longer a separate entity from the business but is embedded in the business model, and that efficiency can no longer be achieved simply through supply and demand improvements, but requires real innovation to uncover new solutions with faster delivery and improved quality.
That means IT innovation is critical to enabling organizations to position for the future and meet the new marketplace demands.
It is the CIO who must lead this transformation. And today is the day to start.
Additional resources to research: Change the Conversation, Change the Game
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