Strong evidence that at an economy-wide level, innovation and more specifically business investment in technology results in higher productivity over the long term.
Additionally, a recent government report found that innovation-active businesses are 40 per cent more likely to increase income and profitability, twice as likely to export, and two-to-three times more likely to report increased productivity, employment and training1.
Despite so much proof that innovation sits at the core of any successful, growing business, a recent study of IT Managers in mid-large enterprises across Australia conducted by Vocus Communications reveals that many Australian businesses are yet to fully prepare for their organisation’s future digital demands. And, less than half (49%) of Australian businesses define themselves as ‘innovation-active’2 (i.e. those that undertake innovation to improve business performance).
With mid-sized businesses facing increased market pressure to remain competitive and keep growing their market shares, the business case for adopting an innovation agenda is stronger than ever before. So what is holding Australian businesses back from completely committing to innovation as an enabler of growth?
Business executives out of sync with IT teams to deliver innovation
Senior IT professionals, who are one of the key pillars enabling and supporting Australia’s innovation efforts, are facing an identity crisis.
Vocus’ study reveals that almost half (43%) of senior IT managers’ time is spent on operational activity, and just a quarter (25%) is spent on innovation. Even more worryingly, just two percent of IT managers report they are involved in business-related, non-pure IT projects.
Interestingly, the lack of involvement from IT teams in driving the innovation agenda mirrors executives’ view of the IT function. Only 17% of IT managers surveyed said that the C-suite in their organisation is seeing IT as strategic and only one-in-10 executives consider innovation as part of the role of senior technology professionals, with almost half (48%) of executives perceiving IT management as an operational function.
The perception of IT managers by business executives – and their role at the decision-making table –indicates a disconnect between business innovation and technology decisions. Supporting innovation efforts by ad hoc technology investments isn’t efficient. Senior IT managers need to be involved in innovation conversations earlier, so the appropriate strategic technology investments can be made with a longer term view, rather than a game of catch-up.
The challenge for mid-sized businesses is ensuring the C-Suite and IT management work together to bring the right technological input to the table and drive a common innovation agenda across the organisation.
The Vocus research indicated the majority (95%) of senior IT professionals believe high-speed fibre networks are the foundation to improve their businesses’ capability and productivity.
Matching strategy to the delivery
At a recent digital adoption technology conference in Melbourne IT chiefs from several leading organisations gathered to discuss the fundamentals of innovation in successful businesses. While referencing the growing pace of change across the digital landscape, it became increasingly apparent that businesses must view technological transformation as a continuous lifecycle of improvement.
While technology-driven solutions and digital integration offer operational efficiencies, executives and IT leaders need to come to a common vision and strategy on the innovations that will be needed to do business tomorrow.
In a world where digital connectivity, big data and agile systems are king, making the right structural IT investments is paramount to delivering products and services that meet today customers’ expectations.
The Vocus research indicated the majority (95%) of senior IT professionals believe high-speed fibre networks are the foundation to improve their businesses’ capability and productivity. However, almost all (88%) IT managers report barriers within their business to improving their network connectivity, with an astonishing four out of 10 (41%) reporting a lack of perceived need by management to upgrade to a network capable of building a business for the future.
Networking capabilities within Australian businesses offer a suite of improvements to IT operations, including improved scalability, security and preparedness to meet the performance and security demands from growing trends such as the Internet of Things (IoT). With IoT forecast to deliver $120 billion in annual economic activity over the next seven years3 – and redefine the digital experience – IT chiefs who do the work upfront and engage through their business will be best placed to reap the benefits.
With technology constantly evolving and infiltrating all parts of the business, identifying areas where investments should be prioritised is challenging. One thing is sure – the gap between innovation-active and innovative-passive businesses will only continue to grow, with the latter risking irrelevancy tomorrow if they are missing today the benefits the digital economy delivers.
With limited budgets (and time), C-Suite and IT leaders must work together to make the right technology decisions now to improve operational efficiency and profitability, while opening the doors to tomorrow’s innovations.
Related Articles in this Series
Read more articles in our series on the State of Transformation
Department of Industry, Innovation and Science: Office of the Chief Economist, Australian Innovation System Report 2016
Australian Bureau of Statistics, Business Use of Information Technology and Innovation in Australian Businesses (June 2017)