A recent corporate study revealed that companies are in a dilemma on how to remain competitive by innovating while at the same time focusing on running the business. At the heart of this dilemma, which the study referred to as the "innovation gridlock", is, as expected, cost. The study, commissioned by HP and done by Coleman Parkes Research, showed that one out of every two business executives felt that their organisation suffered from innovation gridlock.
Almost 70 per cent of the respondents indicated they are unable to invest in new technologies to meet changing business needs. Asked what was stopping them from investing more in IT innovation, one in two respondents indicated that too much budget is spent on operations. Of the respondents' overall budgets, only 30 per cent is spent on new technology initiatives, while the rest is spent on running mission-critical systems (40 per cent) and legacy systems (30 per cent).
Cost on business
Ironically, the worldwide study also showed that because companies are not investing in innovation, the gridlock is costing their business.
Ninety-five percent of business and technology executives said innovation gridlock resulted in lost opportunities for their organisations. Meanwhile, 91 percent felt that innovation gridlock cost their organisations lost effort (from resources).
"The phrase 'time is money' rings true here, as 99 percent of organisations said innovation gridlock cost them lost time," said Piau Phang Foo, senior vice president and managing director for HP Asia Pacific and Japan. "By breaking the innovation gridlock, organisations can regain time to market and capitalise on new opportunities."
If companies do invest in innovation, particularly on IT, realising fruits from such investments may not come easily.
Payback time
Across all countries, the average payback time is 9.8 months. Respondents in the Asia Pacific, however, have been described as more demanding in their estimates, saying the payback time is only 7.7 months. In contrast, respondents from Latin America said payback time is estimated at 12.3 months.
The study concluded that there does not seem to be a common view on the payback window for a major IT project. However, researchers noted that the attitude of respondents on the ideal payback period "is likely to have a major impact on how the success of IT projects is viewed".
Unfortunately, not all organisations are measuring the cost involved in not innovating.
The study showed that only 52 percent of major firms in North America, compared with 76 percent in Asia Pacific and 65 percent overall, evaluate the cost of not doing an IT initiative. In EMEA (Europe, Middle East and Africa), 62 percent of companies also carry out evaluations on the cost of not undertaking an IT initiative.
The study involved 560 executives--410 CIOs and technology executives and 150 CEOs and business leaders -- who were interviewed by phone from February and March 2010. MIS Asia
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