How do you balance spending on innovation vs. core business needs?
Sort By:
Oldest
Strategic Partner - Product Engineering SAP in Software7 years ago
To me, there is no right answer here and experience certainly plays a role along with the kind of business you are in. I think what is important though is to consistently set aside a portion of your budget to invest in emerging technologies. This continuous experimentation has multiple benefits to the IT organization and the business:It sets up a culture that is always ready for change. Continuous exposure forces us to question status quo and this helps keep complacency at bay.Even if the experiment doesn’t have immediate value, it’s never a waste. Someone from the business inevitably asks about something they read or come across and experiments give us the depth to answer confidently and maintain the trust the business puts in us.CEO & Founder in Software6 years ago
Innovation is often misunderstood in an enterprise as investing in something completely different or unproven emerging technologies. The way I frame it is how can I use innovation to drive value for the enterprise, users or customers. So you can allocate innovation $$ in a couple of ways.1. Improving status quo: What is deficient in my status quo processes, systems, technology that is preventing us from getting the most value out of it. Invest in innovating within that paradigm that will drive value in the near future and builds credibility with the stakeholders.2. Disruption: This is taking a long-term view and understanding what can disrupt the status quo in the future. Allocating some time and $$ to this effort helps determine the benefits and cost of disruption in the future. This positions the IT organization as a visionary and a catalyst for driving change. If you don't do the #1 well, then spending on #2 will meet a lot of resistance. Spending on #2 should be done in small increments, definitive prototyping outcomes, and a discipline to move away from an investment if it's not feasible for the organization.For both points above, generate support from the stakeholders and bring them along on the journey with you.CIO in Real Estate6 years ago
My approach is Core first and whatever Innovation I can grow to handle I try for. Core needs are hard to ignore - and if you leave things undone there it can hurt IT’s credibility to innovate. On the other hand innovation often has a positive ROI which can enable projects to pay for themselves, or be funded by business units benefitting... A good book on this philosophy is World Class IT by Peter High.So I start with a budget of what is needed for the core (“lights on”) and then see how much above that I can stretch to. (How much overall growth in IT is palatable up-line, AND how much growth can my management team handle and still have a span of control?).It’s not going to be possible or wise to grow to handle every positive-ROI project on your docket, but if you have a steady pipeline of those projects, and can get sponsors for them, it’s likely possibly to grow a bit above your “lights-on” size to do some of them. Long-term, take stock each year of how many innovation projects you’re able to do vs what you have to defer, and evolve the overall department size to the sweet spot (growing or recruiting leaders etc). Track the ROI of that innovation to show your “net budget” and/or separate out the “lights on” as “budget” and treat innovation dollars as “investment”.VP of Global IT and Cybersecurity in Manufacturing6 years ago
Corr first, but always being innovative progressively as you move through upgrades, new development or system offering throughout the business. CIO in Transportation6 years ago
Innovation and core business goes hand-in-hand. There can’t be a fixed rule for spending on the two. I feel we have to keep a good balance between the two and each organization needs to define their own strategy. This is a classic example of “Who moved my cheese”. We can’t grow without innovation, the business has the risk of stagnation, and without a sustainable core innovation won’t exist. At the same time we must be careful in doing a proper cost benefit analysis.