by Mary K. Pratt

10 impediments to IT innovation

Sep 13, 202110 mins
Digital TransformationInnovationIT Leadership

From inefficient IT operations to an inability to upskill at pace, innovation is often undercut by ingrained organizational issues that IT leaders must change.

Innovation is a CIO imperative, with a majority of IT leaders saying they’ve become the primary champions of digital transformation within their organizations.

There are, however, many impediments that could stymie CIOs and their IT teams from delivering on that expectation for innovation. The challenges of managing day-to-day operations, enabling cross-functional teams, and moving great ideas from lab to operations are just a few.

Each enterprise will face its own set of roadblocks, but here a half-dozen experienced IT innovators share what they see as common obstacles to innovation — and advice on how to overcome them:

Inefficient IT operations

The continued presence of legacy technology, technical debt, and outdated processes remains one of the top impediments to IT innovation, as CIOs have to divert money and staff to managing and maintaining inefficient infrastructure.

“It’s unrealistic to think that companies will shut down all their legacy — whether it’s tech legacy, legacy skills, or legacy processes — but if you have significant amounts of any or all of these, there’s a ceiling on innovation you’re going to hit quickly,” says Peter A. High, president of advisory firm Metis Strategy, and author of Getting to Nimble: How to Transform Your Company into a Digital Leader.

CIOs agree. According to its May 2021 report Managing Tech Transformations, management consulting firm McKinsey & Co. noted that 87% of surveyed leaders listed the “complexity of existing infrastructure” as a key impediment to implementing next-generation services. “As a result,” the report stated, “CIOs are looking for their IT providers’ help in simplifying and streamlining the legacy environment. This will enable digital transformation by freeing up resources and funding that are currently engaged in keeping the lights on.”

Insufficient and ineffective collaboration

For years, CIOs have been advised to build partnerships with their executive peers, but High says many have neglected to enable a high level of collaboration between IT staff and their counterparts throughout the organization.

“IT needs to be the center of the ecosystem because technology is so central to all innovation today, but if there’s no solid way for IT to collaborate [with other departments], it will impede innovation,” High says.

Innovation experts recommend that CIOs adopt agile development practices, foster a product mindset, and create innovation Centers of Excellence to foster more partnerships throughout the enterprise.

“True innovation doesn’t happen with a technology team in isolation or a business team in isolation. True success happens when we can team up both forward-thinking businesspeople and IT people and get them to work together,” adds Jeff McCarter, CIO of Northern Trust Asset Servicing.

McCarter says he has dedicated innovation teams, including a digital asset innovation team, which brings together IT and business-side workers, to focus on developing and testing out new ideas.

“It takes the right people and the right structure so they can attack a business problem that might have [otherwise] been siloed,” he adds. “Then the team can focus on the problems, emerging technologies and develop the mindset to innovate.”

No structure to support innovation

Connecting workers throughout the organization is a start, but experienced leaders say a lack of structure for reviewing and approving proposals could lead to the creation of cool novelty items that don’t serve any real purpose for the enterprise itself.

To avoid that outcome, experts say innovation teams need avenues to vet and prioritize ideas for their potential as well as to prove that their ideas work and could actually deliver returns.

To do that, McCarter has his teams demonstrate that their ideas will work through a proof of concept and a proof of value. “We’re not just giving them a bunch of money. We do give them some leeway, but they do have to show the value of their ideas,” he adds.

That strategy pays off. For example, McCarter in 2019 set up an innovation team comprised of both IT and business-side workers and tasked it with devising innovative ways for the company to use digital ledger technologies. The next year, in 2020, Northern Trust in collaboration with BondEvalue announced it had completed the first trade of a fractionalized blockchain-based bond.

No customer connections

“Not long ago if you asked a CIO, ‘Who is your chief customer?’ they’d say their colleagues. But that’s a declaration of a distance between the work that IT is doing and the ultimate value that the company provides,” High says. “That means IT is still an efficiency idea, and not on the revenue side of the equation, because the real customer is the people buying your company’s products or services.”

But CIOs and their staff typically have little to no direct contact with their organization’s actual customers, meaning they’re left to hear from other departments what customers want and value.

High recommends that CIOs work to “gain access to meetings with customers, to hear directly from them what they want and desire.”

An outdated view of CIO success

Experienced IT innovators and innovation consultants agree that CIOs who want to innovate must first prove they can run their day-to-day operations flawlessly. But some CIOs focus so much energy on building a well-oiled IT machine that they fail to devote enough attention to building up innovation capabilities within themselves and their teams.

“There is this group of CIOs who might be brilliant IT managers, who manage budget and time, and can run the machine. Then there’s the smaller group of CIOs who are able to manage change. They’re creative and empower their teams to ideate. They know how to partner with third parties. They’re willing to take risks and be courageous and try new things. And by communicating that and walking the walk, they inspire their people,” says Bernhard Schaffrik, principal analyst at the research firm Forrester.

No dedicated time to innovate

One in three technologists said they were burned out, according to the 2021 Technologist Sentiment Report released in June 2021 by Dice, an online tech career site.

That’s not just an issue for HR; it matters to CIOs, too, as stressed-out IT workers who are stretched thin have no time or energy to devote toward the creative thinking or skunkworks-style projects that lead to breakthroughs, says Joshua Perkins, field CTO for Ahead, a cloud solutions provider and digital consultancy.

“The gravity of day to day is the single largest impediment of doing anything innovative in IT. We have overworked teams that are being stressed trying to keep the lights on,” Perkins says, adding that many IT leaders talk about allowing time for innovation but rarely actually do.

CIOs report as much: An online survey of healthcare IT leaders about their 2021 priorities listed thinly stretched IT departments as one of the biggest barriers to advancing their agendas.

Rom Kosla, executive vice president of IT and CIO at Retail Business Services, the services company of Ahold Delhaize USA, has dedicated teams within his organization to ensure that innovation doesn’t get lost in the bustle of day-to-day IT operations. One such team is called the Propulsion Lab, which is staffed with experienced engineers and architects who work alongside college interns to innovate around technology trends.

Kosla says committing staff time to innovation delivers results. He notes, as an example, that by giving his workers the time they needed to figure out how best to make electronic shelf labels work, how to power them and ensure the data is always accurate enabled the company to move the innovation more quickly into pilot mode.

The inability to scale innovations

The inability to move an idea from proof of concept to operational at an enterprise scale remains one of the biggest impediments to innovation even today, according to Walid Negm, chief research and innovation officer at Capgemini Engineering.

He says too many organizations fail to develop an apparatus that can readily bring security, governance, integration, and other resources to innovations that have proven themselves in testing and are ready to move to broader use.

As a result, these ideas either die or get pared back as they’re operationalized; both scenarios diminish the value that the innovations could have delivered, Negm says.

On the other hand, Negm has seen some CIOs create structures that help innovation teams move their projects forward. Those structures include architecture review committees that determine the technologies needed to support the project as it grows and business incubators that help teams build a business case aimed at securing the resources required to advance the ideas to the next level.

Kosla, the RBS CIO, has built a system to ensure innovative ideas can be operationalized. He tasks his innovation groups with building a minimum viable product, at which point they hand it over to the team responsible for determining how best to scale up innovations. He says this approach allows each group to developed the specialized skills needed for success on both fronts — ideating on the one hand, scaling on the other. “It allows for a differentiated thinking skill,” he explains.

Failure to upskill at the pace of technology advancements

Perkins sees another related impediment to innovation within IT: getting staff adequately trained quickly enough to keep pace with the rapid advancements in technology.

“The teams understand the potential of the technology, but it’s hard for them to rapidly adopt and adapt the technology for their companies,” Perkins says, stressing that “just because someone is technically competent in one thing doesn’t mean they’re immediately malleable to the next three great things in technology.”

Perkins and others say CIOs must give their workers time to get needed training and create learning opportunities for staff as part of their regular jobs.

No way to connect talent

Innovation requires a range of skill sets, with each new idea likely requiring its own unique mix of specialists to develop it, yet Negm says many project leaders struggle to identify the right people with the right skills for each endeavor.

Similarly, he has seen junior-level workers come up with great ideas only to be stymied in their efforts to advance their proposals because they lack connections to the senior staffers who could advocate for resources needed to develop and test their projects.

“Companies have people pages but not always a way to bring specialists together. You need some sort of mechanism to keep track of people who are interested [in working on innovation],” Negm says, noting that enterprise leaders could do a better job leveraging available collaboration tools to help connect internal innovators to other experts and advocates within their companies.

Pressure to deliver value (too) quickly

Short-term thinking is another impediment to innovation, according to Negm.

He says it’s easy for enterprise leaders to seek successes to present at monthly reviews or to boost quarterly figures, but that focus could shortchange innovation efforts by pushing for incremental gains rather than supporting the truly transformative initiatives that often take months and even years to play out.

“I believe in continuous integration and continuous delivery to get [new elements] out there and validated, but innovation may need more breathing room,” he says.