H&R Block : Using open source to reduce barriers to innovation

Marc West, CIO of H&R Block, showed the way forward with open source at this week’s Open Source Business Conference.

His presentation focused on the use Block is making of open source software — which is pretty extensive, although, as he took pains to point out, is definitely not exclusive. His theme was that the role of a CIO is to deliver business value and he or she needs to select the right tools to do so, rather than getting caught up in what West terms “Bright Shiny Objects” (extremely intriguing technologies that do not actually help meet the mission of the business).

Block is extending its traditional business practices to make it easy (and easier) for people to use its services even if the traditional service offerings don’t meet their needs. One might almost say that Block is starting to morph in Web 2.0 ways.

For example, Block has delivered a new system called Organizit! (evidently they were inspired by the exclamation point in Yahoo’s name). Organizit! is a free service designed to help individuals organize their financial records in preparation for doing their taxes — and you can use it at no cost; however, it also makes it easy to begin interacting with a Block tax professional should you decide to look for professional help.

This is really smart, as it provides a low-cost way for Block to obtain business leads, and makes it easy for people to experience Block without needing to take the major step of coming into an office, which some might find intimidating.

Naturally, since this information was presented at an open source conference, Organizit! is built on open source.

What’s important about Organizit! isn’t that it’s built with open source — at least that isn’t what’s most important.

More important, to my mind, is that Organizit! was built and launched in 10 weeks — and open source made that aggressive timeframe possible.

Because they were using open source, they were able to start building and experimenting immediately. If they had decided to use proprietary software, the first steps would have been creating a business case, estimating costs, gettting budget, ordering software, etc., etc. In other words, using open source accelerated their project significantly because they were able to start building immediately.

Furthermore, with an innovative offering like Organizit!, getting to a prototype

is often critical, because, unlike an incremental improvement to an existing system, which is easy for people to understand, an innovation is often hard to comprehend without really seeing it. In other words, using open source allowed Block to quickly go from conception to demonstration; the latter is critical to generating organizational commitment to new offerings.

Something that West did not address explicitly, but implied (and I later confirmed talking to another Block attendee at the conference) is that using open source to support innovation helps in another way relating to budget flows.

Using proprietary software requires significant investment early in a project: obtaining the software resources for the project requires that budget be committed and spent — before the innovation has proven itself.

By using open source for the project, little investment is required early on, which aids in being able to try out the innovation and determine whether it has real potential. One might say that using open source reduces organizational barriers to innovation.

West was pretty frank about one of the significant challenges for an organization seeking to use open source — the need to have a strong skill set within the employee base. He noted that his search for talent is a challenge. To my mind, this is one of the significant issues for open source in the long run. Well after the “business value” argument is dead and buried by innovation like that represented by Organizit!, the question of upgrading skills to support open source use will remain. However, I don’t believe IT organizations have a choice — the “we just implement packaged software” initiative will eventually be recognized for what it really is: a recipe for keeping back with the Jones, stuck in the middle of the pack with the rest of the middling performers. This is not a recipe for success in the global economy, it’s a recipe for being acquited by a private equity firm and sold for scrap.

I was really impressed by what H&R Block has done with open source and how they’ve used it to support their innovative offerings. They’re a beacon for others to follow.