THE ROAD TO INNOVATION IS PAVED WITH INFORMATION TECHNOLOGYimages.forbes.com/forbesinsights/StudyPDFs/NetApp-Innovation-RE… · 2 | THE ROAD TO INNOVATION IS PAVED WITH INFORMATION

THE ROAD TO INNOVATION IS PAVED WITH INFORMATION TECHNOLOGYHOW BUSINESS LEADERS ARE CHANGING THE RULES OF CORPORATE SUCCESS

IN ASSOCIATION WITH:

CONTENTS

Introduction and Methodology .........................................................................................................2

Executive Summary and Key Findings ..........................................................................................4

Agility and Nimbleness Are the Most Desirable Values a Firm Can Hold ......................8

The Roots of Competitive Advantage ..........................................................................................12

CEOs Have a Rosier View of IT Strategy Than Tech Chiefs .................................................17

Top Priorities: Mobility and Full Access at Any Time .............................................................23

Chiefs Have Divergent Views on the Role of CIO .................................................................. 26

Digging Deeper: Case Studies........................................................................................................ 29

1 We’re All in This Together: Chief Technology Offi cer ..............................................30

2 View From the Top: CEO .......................................................................................................31

3 Driving Disruption: Vice President of Innovation .......................................................32

4 Best of Both Worlds: Chief Technology and Innovation Offi cer .........................33

5 Follow the Money: Chief Financial Offi cer .................................................................... 34

6 Across the Enterprise: Chief Innovation Offi cer ..........................................................35

Conclusion ............................................................................................................................................... 36

2 | THE ROAD TO INNOVATION IS PAVED WITH INFORMATION TECHNOLOGY

“Innovation” has become the term du jour these days, but it’s just as

likely to evoke uncertainty as to evoke a sense of business progress.

Many business leaders are still struggling to defi ne what innovation

really means, what it can potentially do for their organizations, and

who is most capable of delivering and leading it. There is one thing that

nobody disagrees on, however: the road to successful innovation is

paved with information technology. From data analytics—which opens

up insights on customers and markets—to collaborative technologies—

which open up participation to employees and partners across the

enterprise—to social platforms—which open up communication

with customers—technology is providing insights that would

never have seen the light of day until recently.

INTRODUCTION AND METHODOLOGY

COPYRIGHT © 2014 FORBES INSIGHTS | 3

To explore how business leaders see inno-

vation advancing their organizations, and

the role technology plays in these eff orts,

Forbes Insights, in association with NetApp,

launched a survey of top executives from a

range of industries. The goal of this research is to illu-

minate leaders’ perceptions on innovation, who should

lead and the role of technology. Forbes Insights also con-

ducted in-depth interviews with half a dozen executives

to provide context for the fi ndings.

The global survey of more than 300 top-level

executive decision makers fi nds widespread agreement

that IT is playing a key role in reshaping and redefi n-

ing innovation. It’s not just IT executives who hold

this point of view, it’s business leaders from across the

spectrum. Along with CIOs and CTOs, many tradi-

tionally “non-technical” business leaders—such as

CEOs and CFOs—are also getting deeply involved

in technology decisions. Ironically, IT executives may

even be a bit more cautious than their C-level coun-

terparts in seeing IT as an innovation driver—they are

more supportive of an enterprise-wide approach to

business development.

The survey was fi elded in September-October

2013, and received a total of 312 responses from senior

executives. Fifty-three percent of respondents were

C-level, while 47% were senior executives at the direc-

tor level or above. For C-level respondents, 18% were

CEOs, 23% were CFOs, 22% were CIOs and 23% were

CTOs (14% were another type of C-level executive).

Respondents hailed from fi nance (18%), general man-

agement (17%), IT (59%) and operations (6%) roles,

spread across multiple industries including manufactur-

ing (22%), healthcare, fi nancial services, media, energy

and telecommunications (10% each). By region, 11% of

respondents came from the U.S. and from Germany,

10% each from Australia, Canada, China, Japan, the

UK and Latin America, while 7% came from South

Africa and 5% from India. Fully 70% of respondents

worked at companies with more than 1,000 employees.

A majority of the executives in the survey, 88%,

indicate they have some infl uence over IT decisions

within their organizations. About one-fourth, 26%, say

they have the fi nal say. Seventy-six percent of CEOs

believe the technology decision buck stops with them,

versus 39% of CFOs, 41% of CIOs and 24% of CTOs.

Many business leaders are still struggling to defi ne what innovation really means, what it can potentially do for their organizations, and who is most

capable of delivering and leading it.

K E Y T A K E A W A Y

The world has changed dramatically over the past fi ve years, and the

rules of business have changed. Businesses are operating in an unfor-

giving, hyper-competitive global economy. New startups with disruptive

business ideas are being launched every day, across all six inhabited

continents. Thanks to the pervasiveness of information technology, the

barriers to entry into global markets are low. It’s no longer enough to be

an established company with a well-known brand. Every organization,

regardless of size or industry, needs to be innovating, every day and in

every way.

EXECUTIVE SUMMARY AND KEY FINDINGS



The survey fi nds information technology is

playing a central role in delivering inno-

vation to organizations. Decision makers

from across the spectrum—from the CEO

on down—are embracing IT and its capac-

ity for innovation.

While technology has changed the rules, it also is

providing unprecedented opportunities to advance into

existing markets, or even build entirely new markets.

With technology, companies can work interactively

with employees, partners and customers to design and

release new products or services. The possibilities of

innovation are limited only to the extent of business

leaders’ imaginations.

Business leaders across the board—both within and

outside of traditional information technology func-

tions—agree that IT is a potent tool that needs to be

developed and leveraged to move their organizations

forward into this new reality.

The key to deploying IT as an innovation driver is

the ability to transform to a fl exible and nimble infra-

structure. In the process, it is opening up innovation

across the enterprise. “All good ideas don’t come from

a research organization or the product management

departments,” says Abhi Ingle, vice president of eco-

system and innovation for AT&T. “They come from

the understanding of people in the front lines of your

business who are interacting with customers, suppliers

and partners. Innovation is done everywhere, not just

in the sanctifi ed halls of a research institution.”

The convergence of technology and new ways of

thinking is creating an electrifying atmosphere for cre-

ativity and disruption. “This is the most exciting time

I’ve seen in technology in my 25-plus year career,” says

Roger Pilc, executive vice president and chief inno-

vation offi cer for Pitney Bowes Inc. “I’ve never seen

a more dramatic impact on business outcomes from

technology as I see today. The combination of mobil-

ity, social media and Big Data is helping organizations

transform how they interact with and market to their

customers, and how their customers consume their

products. The potential for opportunity is the strongest

I’ve seen in decades.”

The convergence of technology and new ways of thinking is creating an electrifying atmosphere for creativity and disruption.



The following are key fi ndings that have emerged from the latest Forbes Insights survey of top-level executives in large organizations:

Today, executives credit their organizations with delivering agility and nimbleness. In the years to come, they aspire to capitalize more on analytics for decision making.

Eight out of 10 consider agility and nimbleness as their top-ranked quality at this time, and also consider this to be their organizations’ most important quality over the next three years. However, they realize that data analytics—the primary advantage delivered through information technology—is the most essential capability needed going forward. Currently, better decision making through data is ranked eighth among key values their organizations are delivering. Over the next three years, they will prioritize this to be the second most sought-after quality.

Being fi rst-to-market and strong customer relationships are seen as the key to competitive advantage. Technology and digital innovation play supporting roles.

Strategic advantage is all about being fi rst-to-market, satisfying customers and establishing a strong brand. Executives say these are their top priorities for innovation. Big Data analytics, leveraging digital technologies, technological innovation and mobile computing are important, but rank further down the list.

Chief fi nancial offi cers are spurring technology-driven innovation and making the biggest push for investment in new solutions and approaches.

Technology is now providing unprecedented visibility into business metrics, as well as enhancing fi nancial report-ing and insights. This has fueled the CFOs’ vision. CEOs, on the other hand, are less likely to see technology as a leading strategy, as they continue to focus on broad enterprise approaches. For CEOs, their organizations’ ability to adapt and change is a top priority, along with improving customer relationships. Interestingly, CIOs are more focused on delivering business values—such as superior customer service and competitive diff erentiation—than their business leader counterparts.

Executives agree that technology is a key component for their organizations’ plans for growth in the long term.

The majority of executives see their enterprises in the middle of the IT adoption curve. While executives agree that technology has not played a starring role in the past, a majority, 63%, see information technology as a key part of their organizations’ long-term plans. However, only 21% see their organizations as being on the “leading edge” of technology.

KEY FINDINGS


Executives are divided as to what is the best technology investment for business growth.

Customer relationship management ranks as the top type of technology investment that will help deliver busi-ness growth, cited by more than one-third of executives. Close to one-third also cite data security and protection. However, it’s notable that no option gets a majority of the votes.

Making business processes available anywhere, at any time, is the top tech action.

The biggest priority companies are acting on is providing anywhere/anytime access to business processes (55% say they are taking “signifi cant steps”), followed by increasing customer interaction and enabling more fl exible work environments, while few are as actively concerned with collaboration and the BYOD (bring your own device) trend.

Executives are divided on the role of chief information offi cers in the innovation process. However, everyone agrees that IT leaders need to play a key role in overall corporate innovation.

Aligning IT with the business is seen as the main focus area for CIOs at this time, as indicated by 48% of execu-tives. Driving business innovation is the second-ranked area of focus, cited by 43%. In another 37% of organi-zations, the CIO also gets directly involved with business strategy. However, CIOs need to continue focusing on increasing their visibility in the corner offi ce suite. CEOs appear to have their CIOs more pigeonholed into the typical “CIO role,” of maintaining the IT department—just four in 10 CEOs see the role of the CIO as driving business innovation.

Today, executives credit their organizations with delivering agility and

nimbleness. In the years to come, they aspire to capitalize more on

analytics for better decision making.

AGILITY AND NIMBLENESS ARE THE MOST DESIRABLE VALUES A FIRM CAN HOLD



Executives were asked to rank the most

outstanding qualities that currently char-

acterize their organizations, and which

they would like to see emphasized within

the next three years. Overall, more than

80% of executives consider agility and nimbleness as

the top-ranked quality their organizations deliver. Such

swift understanding of market needs and the ability

to adapt to them quickly will continue to be the most

important quality on their radar over the next three

years. Strong leadership follows as the second-ranked

priority, followed by operational eff ectiveness and com-

petent talent (Fig. A1). (It should be noted that majorities

of executives in all categories sought these values.)

Figure A1. Top Values in Organizations Today, and in Three Years (In all cases, a majority of executives cited these as sought-after values.)

Agility/nimbleness

Strong leadership 2 5

Operational effectiveness/efficiency 3 7

Competent, expert employees 4 9

Steady stream of IT-enabled business innovations 5 4

Customizable products, solutions or services 6 15

Notably innovative products, solutions or services 7 16

Better decision making through business/customer intelligence 8 2

Efficient, streamlined approach to doing business 9 13

Process optimization 10 11

Competitive differentiation 11 10

Presence in emerging markets 12 18

Collaborative processes 13 6

Exclusivity of product or service 14 19

Best-in-class product or service 15 3

Cost-effective products, solutions or services 16 12

Scalable products, solutions or services 17 8

Global presence 18 14

Superior customer service 19 17

IN 3 YEARSTODAYTOP VALUES

1 1


Notably, executives are moving toward a signifi cant

shift in priorities. Two among the top three qualities in

three years are currently ranked relatively low. Better

decision making through data is currently ranked

eighth. Going forward, executives would like it to be

in their top two.

Likewise, currently, executives are not as concerned

with their companies’ ability to support delivery of

“best-in-class” products or services—it ranks 15th on

the list, but they would like it to be in their top three

in the future.

Across the leading titles covered in the survey, dif-

ferent priorities and perceptions emerge. While just

about everyone in the C-suite agrees that agility and

nimbleness is the most important quality their orga-

nizations need over the coming years, chief fi nancial

offi cers are the greatest proponents of Big Data analyt-

ics as the driving force for their organizations (Fig. A2).

Thus, Big Data—better decision making through

business/customer intelligence—and off ering solutions

for developing the best products/services should be top

priorities, as they’re clearly very much on the minds

of senior executives and the C-suite. Strong leadership

and innovation will remain in the top fi ve as important

values to execute these new initiatives.

Every business has its own concept of what inno-

vation should deliver. But progress often follows a

well-defi ned “maturity curve,” as pointed out by Ed

Goldman, chief technology offi cer and general man-

ager of strategy architecture and innovation for Intel’s

IT Group. “The fi rst discussions about innovation with

business units will always be around their incremen-

tal issues. As you mature the relationship, and start to

deliver against those things, the conversation turns to

business strategies.”


Agility/ Agility/ Agility/ Best-in-class nimbleness nimbleness nimbleness product or service

Better decision making Steady stream of Strong through business/ IT-enabled Agility/ leadership customer intelligence innovations nimbleness

1

CEOs CFOs CIOs CTOs

79% 79% 84% 82%

71%76% 74% 78%2 Competent Collaborative Superior customer Competent employees processes service employees

68%72% 71% 76%3

Figure A2. Wish List—What Business Leaders Want (in 3 Years)

K E Y C O N C L U S I O N

In an era of heightened global competition, organizations need to be able to quickly identify and respond to trends and needs within their markets, respond to challenges and act on new opportunities. IT and analytics provide the tools and the means to do so, but their eff ective application requires leadership. Top executives acknowledge that technology solutions will soon be enabling innovation on a greater scale than seen before, and will form the foundation of eff orts to achieve greater agility and nimbleness.

Being fi rst-to-market and strong customer relationships are seen as the

keys to competitive advantage. Technology and digital innovation play

supporting roles.

THE ROOTS OF COMPETITIVE ADVANTAGE



Being fi rst-to-market is by far seen as the

most important factor in an organization’s

competitive advantage, as ranked by 60%

of executives. Customer relationships and

strength of brand and reputation round out

the top three elements of competitive advantage (Fig. B1).

Close to half of the executives surveyed state that

leveraging Big Data is an “extremely important” strat-

egy, making this the fi fth-ranked item on the list. Big

Data is increasingly being adopted as a tool for ana-

lyzing and understanding customer preferences and

behavior. Despite all the current buzz around mobile

technology, executives seem relatively less concerned

with converting mobile to a competitive advantage.

With most executives acknowledging the key role

technology is playing in innovation initiatives, why

is it still being downplayed as a competitive advan-

tage? Business leaders understand that technology

development is not a competitive diff erentiator in

itself—rather, it is the collection of tools and method-

ologies that support innovative activities that enable

faster time to market, more developed customer rela-

tionships and stronger brands. As shown throughout

this survey, executives recognize that more has to be

done to boost technology assets, and that technology

plays a supporting role in advancing today’s and tomor-

row’s enterprises.

Figure B1. Important Strategies for Competitive Advantage (Percentage indicating strategy is “extremely important”)

Being first-to-market

Customer relationships

Strength of brand and reputation

Efficient supply chain management

Leveraging Big Data (customer and market intelligence)

Ability to adapt and change

Leveraging digital technologies

More efficient information management

Technological innovation

Marketing and advertising

State-of-the-art IT resources

Successful collaborative partnerships

Leveraging mobile technologies

59%

51%

49%

48%

45%

42%

42%

41%

41%

38%

38%

37%

34%


Ability to adapt Being Customer Being and change first-to-market relationships first-to-market

Customer Technological Strength of brand Leveraging digital relationships innovation and reputation technologies

1

CEOs CFOs CIOs CTOs

55% 53% 54% 79%

63%55% 47% 54%2 Leveraging Big Data Leveraging Big Data Strength of brand Leveraging digital (customer and (customer and and reputation technologies market intelligence) market intelligence)

61%52% 47% 49%3

Figure B2. Wish List—What Business Leaders Want (in 3 Years)

What does the C-suite focus on? CFOs are driving

technology-based innovation and making the biggest

push for investment in new technologies and data ana-

lytics, pointing to the increasing role of technology in

fi nancial reporting. CIOs are more focused on deliver-

ing business values—such as superior customer service

and competitive diff erentiation—than their business

leader counterparts (Fig. B2).

“Compliance really encompasses so much of what

we do in each of our businesses, but we can only be

eff ective if we have greater and more-eff ective IT

tools,” says Paul Reilly, executive vice president of

fi nance and operations and chief fi nancial offi cer of

Arrow Electronics, Inc. “In this slow-growth eco-

nomic backdrop that we’re all operating in, so much

is centered around centralization and standardization

of functions. But most important is the automation of

processes. It’s great that you centralize and standard-

ize, but if you don’t automate, you’re not going to get

the right level of effi ciency. Automation comes from IT

tools and capabilities.”


Figure B3. What Influences Business Investment Decisions

Cost projections of implementation/use

Savings projections from use of product/service

Level of efficiency expected from vendor

Level of support from vendor

Ease of integration with other IT systems/processes

Cost of vendor vs. that of competitor

Flexibility for length of agreement

Vendor’s ability to supply up-to-the-minute upgrades

55%

49%

31%

31%

30%

18%

17%

15%

When looking across the six key industry groups

covered in the survey, distinctions emerge in terms of

innovation strategies. For example, while fi nancial ser-

vices and technology industry executives place their

highest priority on being fi rst-to-market with product

innovations, those in charge of media operations are

most inclined to focus on the strength of their brand

and their company’s reputation as a competitive dif-

ferentiator. For telecommunication executives, the top

priority is being able to leverage mobile technologies—

in line with their core product off erings.

Business investment decisions are driven by cost

and savings projections on development/use of tech-

nology. Innovation is strongly associated with agility

and productivity, but business leaders still look at the

bottom line fi rst (Fig. B3).

Executives recognize that costs are only part of the

equation. “The costs of innovation are easily measured,

but the benefi ts are not so easy to quantify,” says Reilly.

“You do need to build a business case to support inno-

vation, but sometimes you have to take risks when you

can’t quantify the benefi ts. Sometimes that’s just part of

innovation if you want to go forward.”

Interestingly, CEOs are not as concerned about

costs as they are about how new investments will fi t in

with existing enterprise systems and processes.

Their C-level associates, however, including CIOs

and CTOs, will put costs and potential savings fi rst.

CFOs are naturally most preoccupied with savings pro-

jections from use of the product/service, and CTOs are

most concerned with cost and savings projections for

implementation and usage. Interestingly, CIOs and IT

industry executives are by far the least concerned with

fl exibility for length of agreement (Fig. B4).


Ease of integration Savings projections with other IT from use of Cost projections of Cost projections of systems/processes product/service implementation/use implementation/use

Savings projections Savings projections Cost projections of Cost projections of from use of from use of implementation/use implementation/use product/service product/service

1

CEOs CFOs CIOs CTOs

45% 58% 49% 76%

63%41% 45% 43%2 Ease of integration Ease of integration Level of efficiency Level of support with other IT with other IT expected from vendor systems/processes systems/processes from vendor

34%34% 37% 38%3

Figure B4. What Influences Business Investment Decisions—by Title


While this survey report focuses on the role of technology in innovation, it’s important to keep the ultimate strategic goals in focus—leading the market, actively engaging with customers and building a brand. Business leaders understand that technology development is not a competitive diff erentiator in itself—spending money for the latest and greatest solutions will not automatically generate innovation. Innovation, assisted by technology, springs from leadership and engagement.

Executives agree that technology is a key component for their organi-

zations’ plans for growth in the long term. The majority of executives

see themselves in the middle of the IT adoption curve. While there are

a number of initiatives under way, such as customer relationship man-

agement, executives are divided as to what is the best technology

investment for business growth.

CEOS HAVE A ROSIER VIEW OF IT STRATEGY THAN TECH CHIEFS



Most enterprises consider themselves

to be “moderate” to “conserva-

tive” adopters of IT. Top executives

clearly recognize the power of IT to

transform and advance their busi-

nesses, but there are a myriad of reasons that many

do not see their organizations as leading the technol-

ogy wave. There are often skills constraints, as well as

entrenched legacy systems that need to be modernized

and integrated into new platforms. The majority still

see technology—at least as it is deployed within their

enterprises at this time—to be a force within the walls

of their enterprises, delivering effi ciencies that will

boost the productivity of their workforce and the eff ec-

tiveness of their processes (Fig. C1).

The employment of information technology as an

external force for the business—opening up or even

creating new markets, acting as a disruptive force—is

still in the early stages. Yet executives expect to rely on

information technology to enable their organizations

to compete on analytics, which will drive new insights

into customer trends and acquisition. About one in fi ve

enterprises consider their organizations to be leading-

edge adopters of information technology.

Even the most tech-savvy enterprises are learning

to structure innovation as they would a startup, with

lots of collaboration along the way. Intel’s Goldman,

for example, says his company concentrates on mea-

suring “yields” from innovation proposals coming

in from employees and partners. “In the proof-of-

technology phase, a lot of it is seeing whether or

not the technologies that are happening can actually

be assembled to solve the problem you’re thinking

about,” he explains. “We’re looking for about a 50%

yield. Then we involve our customers and other peo-

ple into that process, to make sure that we bring them

in, to make sure it is indeed solving it, and do a proof

of concept with them.” As the innovation moves

through this process, the yields increase as well, he

says. Interestingly, non-tech C-level executives give

their organizations savvier tech ratings than tech

executives do (Fig. C2).

Figure C1. How Executives Perceive Their Organizations’ Use of IT

21% 58%

Leading-edge IT adopter. We compete at the cutting

edge of innovation, using IT as a driver for corporate innovation.

We have management commitment and funding.

Mainstream IT adopter. We use IT to improve

productivity, product quality and customer service, but we

generally do not use it to compete on price or innovation.

Conservative IT adopter. We compete on the thin edge

of cost margin or economies of scale. Management regards

IT primarily as a tool for reducing costs.

21%


Leading edge Mainstream Conservative

Figure C2. How Executives Perceive Their Organizations’ Use of IT—by Title

14%

72%

14% 13%

66%

21%30%

43%

27% 26%

58%

16%

CEOs CFOs CIOs CTOs

The survey explored the role of technology in

innovation, and perceptions about its role. While exec-

utives agree that technology has not played a starring

role in the past, a majority, 63%, see information tech-

nology as a key part of their organizations’ long-term

plans (Fig. C3).

“It doesn’t have to be technology that drives

that innovation, but increasingly it is,” says David

Kieselstein, CEO of Penton. “The power of mobile, of

apps, of SaaS platforms, of the web, of data capture and

analysis, is driving almost all of the new product devel-

opment that we’re doing within the company now,

which is very far from where this company was even

a few years ago. We actually launched eight new prod-

ucts just in the last three to four months of last year,

leveraging technologies. We also augment the chief

data offi cer’s management suite with a world-class

engineering team.”

Figure C3. Importance of Technology to Business Planning (Percentage “strongly agreeing” that technology is...)

...a key component of my organization’s plans for growth in the long term (beyond 18 months) 63%

..a key component of my organization’s plans for growth in the short term (coming 12-18 months) 47%

...a key contributor to my organization’s past ability to succeed and grow 28%


Executives were asked about the types of tech-

nologies that are delivering the best results for their

organizations. Customer relationship management

(CRM) systems rank as the top type of technology

investment that will help deliver business growth, cited

by more than one-third of executives. The ability to

better engage with customers, and understand their

requirements across a life cycle, means greater oppor-

tunities to reach new markets (Fig. C4).

In tech circles, security solutions are often seen as

necessary components to prevent damage from data

breaches. Typically, these solutions are not seen as

adding to business growth or productivity. However,

executives take a diff erent view on these types of solu-

tions, ranking them second on the list of technology

delivering value—close to one-third cite data secu-

rity and protection as their best investment for business

growth. This shows an understanding that data secu-

rity solutions deliver potential savings far beyond the

initial investments. The costs of data breaches include

staff time to audit and trace breaches, potential fi nes

from government agencies, costs incurred for notifying

aff ected parties, and potential loss of business due to

lack of confi dence from customers or potential custom-

ers in the security of their information.

Big Data analytics tools are also a top choice

among executives as savvy investments for business

growth. Executives see it as a corporate capability that

will help them glean insights from a range of infor-

mation coming into their organizations, including

machine-generated data from sensors and applications,

user-generated data from social media, on-site collab-

orative environments and productivity applications, as

well as “traditional” structured transactional data.

While cloud computing and analytics are key ini-

tiatives for sizable segments of organizations, there

is also growing interest in related areas. “Today, we

have quite a few eff orts around the Internet of Things

going on,” says Intel’s Goldman. “We also are using

analytics to make user experiences more dynamic in

the future. We try to stay in the lead with technol-

ogy to fi gure out whether there a business case for

it.” However, Goldman adds, even though Intel is a

leader in technology adoption, the company recognizes

that technology is one of several tools in the innova-

tion process. “Technology is an ingredient of the set of

activities,” he says.

Figure C4. Best Technology Investments for Business Growth

Customer Relationship Management (CRM)

Data security and protection

Analytics tools (leveraging Big Data, capturing metrics, etc.)

Customer service and support

Cloud computing capabilities

App-development capabilities

IT storage

Digital marketing and customer communications

Enterprise applications

Digital technologies for internal collaboration

34%

32%

30%

30%

27%

25%

22%

17%

14%

13%


Analytics tools Customer Relationship Customer Relationship Customer Relationship (leveraging Big Data, Management (CRM) Management (CRM) Management (CRM) capturing metrics, etc.)

Analytics tools Data security Customer service (leveraging Big Data, Data security and protection and support capturing metrics, etc.) and protection

1

CEOs CFOs CIOs CTOs

41% 50% 41% 34%

34%38% 37% 30%2 Customer service Data security Data security App-development and support and protection and protection capabilities

29%34% 26% 27%3

Figure C5. Best Technology Investments for Business Growth—Preferences by Title

For most of the executives—inside and outside of IT—

customer relationship management is consistently viewed

as the technology area that delivers the greatest value to

business. CTOs, on the other hand, take a diff erent view,

suggesting that analytics tools are the best way organiza-

tions can spend their technology dollars (Fig. C5).

Investment priorities diff er across the major indus-

try segments. For example, CRM does not rank high

among IT or media industry executives, who tend to

see Big Data analytics tools as their most urgent invest-

ment area. Media executives also see IT storage as a key

investment area, and believe outsourcing IT is a key

innovation strategy that often opens up new oppor-

tunities. Outsourcing is part of “achieving the right

balance with technology,” says Penton’s Kieselstein.

“People will swing from left to right, from feeling like

they need to have entirely captive staff s to outsourcing

everything. I think the answer’s usually somewhere in

the middle. We typically go with a 70%-30% blend,

with 70% of our IT capability coming from within.

There are always going to be needs for external sup-

port, and you should be open to that. You’ll have

short-term bursts of volume, you’ll sometimes have

very specifi c technical needs, and certainly it’s very

expensive to always be running at 100% capacity.”

Because innovation is an informal process with

unpredictable results, traditional cost-benefi t analysis

often can be counterproductive. “We don’t do cost-

benefi t analysis up front,” says Rickey Burks, senior

vice president and chief technology and innovation

offi cer at USAA. “We will go far enough to put some-

thing in, and put analytics in it, and do a look back

to see what value we’re getting. So we’re allowed

to go far enough to really explore a particular idea.


We don’t have a basis to say what the value’s going

to be. That’s going to empower folks to be creative.

You can’t do everything that way, but a number of

our ideas, we actually move them into production, we

gather the data of what we’re seeing coming back. And

then we stop and work with our business partners to

see if this is something we want to scale.”

Projected 2014 IT spending tracks similarly to the

IT adoption curve. Close to a third of executives expect

their IT purchasing to increase next year, while 23%

expect it to decrease (Fig. C6). The telecommunica-

tions sector will see the most robust spending increases

during 2013, with more than two-fi fths of executives

within this industry foreseeing spending boosts.

Figure C6. Planned Increases in 2014 IT Spending

Decrease by 10% or more

Decrease by 5% to 9%

Decreased by less than 5%

Stay about the same

Increase by less than 5%

Increase 5% to 9%

Increase by 10% or more

1%

1%

21%

47%

15%

10%

5%


Executives have diff erent opinions on the role of IT in business growth. But they all agree IT is an essential part of this growth. Most see their organizations as lagging or mediocre in their ability to leverage technology to achieve innovation—and are willing to make the necessary investments to change that.

Customer collaboration and easy, anywhere/anytime access to business

processes are the top technology expansions recommended by exec-

utives. Encouraging—and not fi ghting—the “BYOD” (bring your own

device) trend also ranks high on the list of suggested actions.

TOP PRIORITIES: MOBILITY AND FULL ACCESS AT ANY TIME



The biggest priority companies are acting

on is providing anywhere/anytime access

to business processes—more than half say

they are taking “signifi cant steps” to open

up their processes, and technology helps

provide needed visibility and manageability. This is fol-

lowed by increasing customer interaction and enabling

more fl exible work environments. At the same time,

relatively few are as actively concerned with collabora-

tion and use of any device (Fig. D1).

Executives within the IT and media sectors are

concentrated on creating fl exible work environ-

ments, while fi nancial services executives are focused

on increasing customer interaction. The remainder of

the industry categories are focusing on open access to

technology.

Eff ective business innovation through technology

requires that organizations do a good job looking after

the basic IT requirements, says Goldman. “You have to

run the systems in order to be able to do projects and

activities to advance the business. If you run your sys-

tems well, you move to the next level, which allows

you to partner and innovate with the business. And if

you fail on any of the lower levels, the conversation

goes right back there. Innovation is part of an advanced

relationship with your business lines.”

So how do executives educate themselves about

innovation, to identify their priorities? Overall, infor-

mation about innovation tends to come from traditional

sources. Today’s innovation may encompass transfor-

mation to the digital enterprise, but ironically, business

leaders still turn to traditional venues for more informa-

tion and enlightenment on the topic. Senior executives

turn in the largest numbers to business print publications

to stay up to date with new ideas or ways to innovate. A

majority report these sources as the way they stay on top

of trends, followed by executive conferences or events,

and general interest publications (Fig. D2).

Figure D1. Strategies for Expanding Technological Capabilities (Percentage reporting they are taking “significant” steps)

Provide anywhere/anytime access to business processes

Increase customer interaction

Enable greater collaboration with customers

Enable more flexible work environments

Expand visual collaboration via video

Promote greater collaboration internally

Enable greater collaboration with suppliers/partners

Allow use of “any device”

55%

44%

29%

43%

33%

33%

30%

47%


Business print publications

Executive conferences or events

General interest online publications

Technology print publications

General interest print publications

Technology vendors

Reports from analyst firms

Trade shows

Industry- or topic-specific blogs

Peers or colleagues

Social networks

Figure D2. How Executives Keep Up-to-Date With New Ideas or Ways for Their Companies to Innovate

77%

67%

61%

54%

51%

51%

48%

47%

47%

46%

40%


The mobility wave is sweeping through enterprises, and with it, greater access to technology resources for employees at all levels. This opens up the door to even greater and more widespread innovation as the workforce gets involved. At the same time, executives have a wide range of resources available to help them elevate their roles as catalysts of this new innovation.

CFOs are leading the charge for more technology-driven innovation.

Executives are divided on the role of CIOs in the innovation process.

However, everyone agrees that IT leaders need to play a key role in

overall corporate innovation.

CHIEFS HAVE DIVERGENT VIEWS ON THE ROLE OF CIO



The survey revealed the attitudes of various

business leaders toward the role of tech-

nology in innovation, as well as how they

perceive the CIO’s role changing. For the

CIO’s job these days, it’s all about business.

Aligning IT with the business is the main focus area for

CIOs, as indicated by almost half of executives.

While there are some diff erences in perceptions

about the CIO’s role in the evolving enterprise, some

organizations are embracing the partnership role they

need to play. For example, at Pitney Bowes Inc., the

CIO is an equal partner at the management table, says

Roger Pilc, the fi rm’s chief innovation offi cer. “Our

CIO [chief information offi cer] is an incredibly impor-

tant partner to my own organization, in terms of

providing the technologies and the capability that will

help us innovate and create new products for our cus-

tomers more quickly. The same thing is absolutely true

for operations, and services and support, as well as for

the marketing and sales parts of our organization.”

Accordingly, driving business innovation is now

the second-ranked area of focus for CIOs. In addi-

tion, the CIO often also gets directly involved with

business strategy. The leading IT-centric area of

focus—improving IT performance—pops up only in

sixth place among the focus areas (Fig. E1).

Executives across the various categories have dif-

fering perceptions as to what key roles CIOs will be

playing in innovation. CEOs appear to have their

CIOs more pigeonholed into the typical, IT-centric

“CIO role”: namely, aligning IT with the business and

improving IT performance. Overall across the C-suite,

however, the CIO is the one seen as the innovation

leader (Fig. E2).

Some executives believe strongly in the CIO’s role

as a business partner and advisor to the organization.

“IT is a true business partner of our organization,”

says Paul J. Reilly, executive vice president of fi nance

and operations and chief fi nancial offi cer of Arrow

Electronics, Inc. “IT has transitioned to be an inte-

gral part of most organizations. For us, there is a new

level of sophistication for our IT function. And that’s

something that our CIO brings as a partner, provid-

ing thought leadership around social media, clients and

converting data to information.”

Figure E1. What CIOs Should Be Focusing On

Aligning IT with business

Driving business innovation

Refining business strategies

Identifying opportunities for differentiation

Forging IT/business partnerships

Improving IT performance

Ensuring cost control for IT purchases

Leading technology change efforts

Ensuring cost control for the organization

48%

43%

37%

29%

29%

28%

21%

20%

12%


Aligning IT Identifying opportunities Refining business Driving business with business for differentiation strategies innovation

Improving IT Refining business Aligning IT Aligning IT performance strategies with business with business

1

CEOs CFOs CIOs CTOs

62% 37% 49% 71%

55%45% 37% 46%2 Identifying opportunities Driving business Driving business Forging IT/business for differentiation innovation innovation partnerships

32%34% 34% 41%3

Figure E2. What CIOs Should Be Focusing On—Opinions From the C-Suite


The CIO’s role is rapidly changing—from caretaker of technology assets to partner in business growth. As organizations increasingly turn to information technology to successfully carry out their digital journeys, top executives across the board recognize that technology paves the way forward for their organizations, and that CIOs need to take a leadership role.

The six case studies that follow provide context, texture and examples

that illuminate the fi ndings of this study.

1 . I N T E L C O R P O R A T I O N

2 . P E N T O N

3 . A T & T

4 . U S A A

5 . A R R O W E L E C T R O N I C S

6 . P I T N E Y B O W E S

DIGGING DEEPER:CASE STUDIES



WE’RE ALL IN THIS TOGETHER: CHIEF TECHNOLOGY OFFICER

Intel Corporation is one of the world’s leading designers and manufacturers of integrated digital technology platforms, used in a range of applications, such as personal computers, data centers, tablets, smartphones, automobiles, automated factory systems and medical devices. Revenues were $53 billion in the most recent year.

Innovation is not something that comes out of a struc-tured process, but out of more-spontaneous events. “There’s no simple, single process of ‘follow these eight steps and innovation will occur,’” says Ed Goldman, chief technology offi cer and general manager of strategy archi-tecture and innovation at Intel IT.

Intel seeks to identify and nurture innovation opportuni-ties through an internal venture capital fi rm. “Think of it in terms of a pipeline, and trying to get yields at diff er-ent points in the pipeline. Within that innovation path, we break it up into four phases—basic research, proof of technology, proof of concept, transition to production.”

Goldman works with an internal group within Intel called IT Labs. While innovation happens across the company, Goldman’s group “is more focused on what technologies are coming, and how might they lend themselves to solv-ing some of our big problems, and trying to evolve the process such that we can go solve all the issues that will create a larger business value for Intel.”

Goldman’s IT Labs works with other teams that focus on product innovation. The role of IT Labs is to introduce a technology perspective to new ideas. “We partner with them, so we have interaction across both of those envi-ronments,” he says. “Our goal is, how do we make Intel better, faster, cheaper, in delivering what we do for our products and services, from an Intel IT perspective.”

I N T E L C O R P O R A T I O N1

Innovation is not something that comes out of a structured process, but out of more-spontaneous events.



Many chief executive offi cers are incorporating a new label in their job descriptions—technology leader.


Many chief executive offi cers are incorporating a new la-bel in their job descriptions—technology leader. While this doesn’t necessarily mean CEOs will be learning to write code or run quality assurance tests anytime soon, the top executive needs to have a grasp of the power of technol-ogy. “You can’t aff ord as a CEO to pretend to know what’s going on vis-a-vis technology anymore,” says David Kie-selstein, CEO of Penton. “You really need to have a least a 15,000-foot view and understanding of what’s going on. You can’t truly be expert, but you need to understand the business dependencies created by leveraging technology, how to shape technology for user needs, how to create built-for-purpose opportunities, versus kitchen sink. If you’re not at least reasonably well versed in that, you’re going to miss opportunities, you’re going to miss com-petitors eating your lunch, and ultimately the business is going to suff er.”

Technology is playing a key role at Penton, which has evolved from publishing company to a leading digital and data services provider. “We have evolved signifi cantly,” says Kieselstein. “Technology is driving all of the innovat-ing we’re doing, for the most part. The complexion of the company has changed a lot, and technology has played a big role in that transformation.”

The product portfolio keeps rapidly evolving, in large part due to Penton’s increasing immersion in technology-driv-en innovation. “In the last two years, almost 40% of the team is new, because we’re adding new roles and new skill sets that are oriented towards knowing how to use and leverage technology. Getting insights to our customers and leveraging tech and data to launch new products is so critical to us at Penton that we recently created a new role of chief data offi cer,” Kieselstein says. “Whether it’s people that are experts at engaging the social commu-nity, user interface, SEO and digital product development, we’re bringing in a lot of new energy.” This isn’t limited to purely technical talent either, he adds. “In sales, we’re bringing strategic sellers into the organization who know how to sell strategic marketing services packages—which is not off the rack anymore. These packages are more complicated and more strategic.

“When you’re thinking about accelerating your use of technology in an organization, you really need to be thoughtful about not just the technological skill base you’re bringing, but also the structure—how that group is going to interact with the rest of the organization,” adds Kieselstein.

VIEW FROM THE TOP: CEOPenton is a professional information services company that engages and informs millions of professionals every day, helping them decide how to grow and solve their most critical business challenges. The company runs 65 trade shows and conferences, 145 digital prop-erties, 20 paid data products and 86 print products in fi ve core, scaled sectors.

P E N T O N2


“The work plan we adopted two to three years ago was to radically open up the workspace, everything on wheels, with no assigned seating or desks or offi ces,” says Abhi Ingle, vice president of ecosystem and innovation at AT&T Inc. “This is very diff erent from our history, but it has actu-ally now been adopted by our corporate real estate team as the work plan for AT&T’s workspace as we head toward the year 2020. All the new remodels are happening in this philosophy.” Along with open, informal workspaces, the management of the AT&T Foundry is based on the Ag-ile and Lean methodologies that have been developed and refi ned over the years within IT environments. And AT&T’s technology leaders have taken note. “Our Big Data and emerging business channels teams have actually co-located in the Foundry, and are taking on completely Foundry-based methodologies, including the workspace, the rapid, short design, the user-centric, design-oriented Agile sprint,” Ingle says. “We even have a word for that—when we want to get things done fast, quick, innovate, we say, let’s just ‘Foundry’ it.”

The AT&T Foundry is part of an eff ort within AT&T intend-ed to open up the innovation process, says Ingle. “We have a quarter-million employees. That is a strength, but it’s also a weakness—if a product manager tried to listen to 250,000 people who were trying to suggest ideas, he would never succeed.” That’s why AT&T introduced The Innovation Pipeline, or “TIP.” TIP is “a crowd-sourced pro-gram that gets employees to sign up, collaborate online and come and pitch their ideas, and people essentially crowd-reviewed their ideas.” Currently, up to 130,000 of AT&T’s employees participate in the program, Ingle says. “At the end of every quarter, we essentially do an American Idol on them. Think of American Idol meets Shark Tank—but a much kinder, gentler Shark Tank. The best ideas, the actual people who put them in get to pitch them to some of the most senior people at AT&T.”

DRIVING DISRUPTION:

VICE PRESIDENT OF INNOVATIONAT&T is a provider of global telecommunications services, including wireless communica-tions, local exchange services and long-distance services. Revenues were $127 billion in the most recent year.

A T & T3

Along with open, informal workspaces, the management of the AT&T Foundry is based on the Agile and Lean methodologies that have been developed

and refi ned over the years within IT environments.



At the United Services Automobile Association (USAA), one of the largest North American insurance companies, innovation has always been percolating throughout the organization, but now technology is being employed to harness this innovative energy. Such an eff ort requires leadership from across the enterprise.

“The relationships you build across the organization are probably the most critical to innovation,” says Rickey Burks, SVP and chief technology and innovation offi cer. “It’s more critical than your technical skills. It’s in the re-lationships of being open and living out with the business folks, and understanding what business challenges are there. Because that’s where the creativity begins.”

Over the past year, USAA has created a “more formal innovation organization that helps get us focused on in-novation for our business, for our members, for our em-ployees,” he explains. In his relatively new job role, Burks reports to the company’s chief information offi cer with his “chief technology offi cer hat” on, as well as to the chief administration offi cer with his “chief innovation offi cer hat.” He observes that the dual role brings together two teams, one of which is “thinking innovatively and about disruption,” while a companion team is “thinking about standards and technology, and how do we keep things operationally healthy and moving along.”

BEST OF BOTH WORLDS: CHIEF TECHNOLOGY AND

INNOVATION OFFICERUSAA is a diversifi ed fi nancial services group of companies off ering banking, investing and insurance to people and families that serve, or served, in the United States military. The organization serves 10 million members, with annual revenues of $20.7 billion in 2012.

U S A A4

At the United Services Automobile Association (USAA), one of the largest North American insurance companies, innovation has always been percolating throughout the organization, but now technology is being employed to harness this innovative energy.



Technology-driven innovation is reaching an important corner of the enterprise not typically known for innova-tion—fi nance executives. The most logical starting point and greatest business value for fi nancial executives is le-veraging the power of data analytics to look at informa-tion in new ways.

“Finance teams are usually very good at generating data,” says Paul Reilly, executive vice president of fi nance and operations and chief fi nancial offi cer of Arrow Electron-ics, Inc. “But we need to do better at generating informa-tion from that data.” At his own company, Reilly says he has been using data analytics for the past two years for corporate auditing purposes. Employment of IT tools in fi -nancial reporting is helping the company “identify, ahead of the curve, areas of geography opportunity and trans-action execution trends,” he says.

“The other thing we’re using around technology is data analytics,” he adds. “We’re evaluating not just short-term

trends, but macro trends over the long term in the global economy. But that evaluation is being done at a country-by-country level, as we begin to try to match what our strengths and capabilities are to developing markets and developing geography.”

In the process, fi nance is taking a new role in enterprises by using technology tools to facilitate and promote inno-vation. “One of the things that fi nance teams are good at is looking backwards—’here are the results of last month or last quarter,’” Reilly explains. “Innovation is possible when we can look forward as well. What does this in-formation tell me about trends? Do we speed up or slow down as an organization? Do we identify opportunities to be more successful in the marketplace? Can we aff ord to be more aggressive? It’s about telling the story of the numbers. We can’t do much about the past, but we can certainly learn from the past, and we certainly can use that to understand what the future may be for us, and to capture the future that we want.”

FOLLOW THE MONEY: CHIEF FINANCIAL OFFICER

Arrow Electronics is a provider of products, services and solutions to industrial and com-mercial users of electronic components and enterprise computing solutions, including materials planning, new product design services, programming and assembly services, inventory management, reverse logistics, electronics asset disposition and a variety of online supply chain tools. Revenues were $21 billion in the most recent year.

A R R O W E L E C T R O N I C S5

Technology-driven innovation is reaching an important corner of the enterprise not typically known for innovation—fi nance executives.



ACROSS THE ENTERPRISE: CHIEF INNOVATION OFFICER

Pitney Bowes Inc. is a global provider of software, hardware and services to enable both physical and digital communications and to integrate those physical and digital communi-cations channels. The company off ers a range of equipment, supplies, software, services and solutions. Revenues in the most recent year were $3.9 billion.

At Pitney Bowes Inc., innovation is an enterprise-wide ini-tiative. Roger Pilc, chief innovation offi cer at Pitney Bowes, says his newly created position includes all the product de-velopment across all the business units: more than 1,000 engineers across many geographies, as well as a strategic technology and innovation center, and enterprise growth initiatives and technology alliances. Innovation is one of the key pillars of Pitney Bowes’s strategy, and innovation is the combination of business insights and technology-based invention, so he orchestrated the function to be multifaceted. “It crosses functions, and it crosses business units,” says Pilc. “It is a very holistic approach.”

Pilc recommends an “outside-in approach” to innova-tion: “Be very customer- and partner- and sales-centric in terms of the prioritization of innovation. An innovation is a combination of business, technology and invention.” Pilc also advocates having the appropriate management systems in place—the process “of identifying ideas, vali-dating them, prioritizing them, commercializing them and then rolling them out in great business scale.”

P I T N E Y B O W E S6

Innovation is one of the key pillars of Pitney Bowes’s strategy, and innovation is the combination of business insights and technology-based invention.


Technology, which is producing so much disruption and so much

opportunity, also serves as a key tool to facilitate innovation. And con-

tinual innovation at every level is now the crucial ingredient that allows

businesses to not merely survive but thrive.

CONCLUSION

ACKNOWLEDGMENTS Along with data provided in the survey, Forbes Insights spoke with senior executives at six leading corporations about their innovation strategies, along with the role of technology.

Forbes Insights and NetApp would like to thank the following individuals for their time and expertise:

Rickey Burks, Senior Vice President and Chief Technology and Innovation Offi cer, United Services Automobile Association (USAA)

Ed Goldman, Chief Technology Offi cer and General Manager of Strategy Architecture and Innova-tion, Intel Corporation’s IT Group

Abhi Ingle, Vice President of Ecosystem and Innovation, AT&T Inc.

David Kieselstein, Chief Executive Offi cer, Penton

Roger Pilc, Executive Vice President and Chief Innovation Offi cer, Pitney Bowes Inc.

Paul J. Reilly, Executive Vice President of Finance and Operations and Chief Financial Offi cer, Arrow Electronics, Inc.


ABOUT FORBES INSIGHTSForbes Insights is the strategic research and thought leadership practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management.

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