A recent post on BusinessWeek explored an “emerging” concept in Western-style innovation management -- one that has deep roots in India - called Jugaad. The article mentions a meeting led by my former colleague (and still friend) Navi Radjou, and notes that jugaad is “an improvisational style of innovation that’s driven by scarce resources and attention to a customer’s immediate needs.”
Explore the term “jugaad” and you will find a range of enthusiasts and detractors. Many - particularly those more intimately familiar with the terminology -- argue that jugaad is not, by its very definition, a robust innovation solution to complex business problems. Rather, its just another way of saying “get it done whatever it takes” – meaning that innovation is done in an inexpensive manner, “on the fly”. In this context, it seems like a tough way for a multi-billion dollar company to build an innovation practice.
Take a look at Forrester’s recent Enterprise IT Services Survey and you will find a data point that highlights an interesting challenge in the IT services marketplace. When we asked North American and European IT services clients about their biggest challenges with existing IT services and outsourcing relationships, 52% said that “cost savings are lower than expected and 40% said “inconsistent or poor quality service”. No real surprises here: given the large number of companies that partner with service providers in an explicit effort to lower costs, many IT professionals simply underestimate the time and resources it takes to define and manage these relationships.
But look at the #3 and #4 responses, and the data gets more interesting. 33% of respondents said that their biggest challenges were “lack of innovation and or/continuous service-level improvements” and 35% cited “inability of vendor/contract to respond rapidly to changing business needs”. Don’t the first two responses, in some ways, conflict with the latter two?
These data point to a complaint Forrester hears all the time from professionals within the technology industry: they know that their clients want a proactive business partner – one who can help the client drive innovation and business results – but they don’t know how to charge for innovation in a way that clients will be willing to pay for it. Clients say they want greater level of business innovation from their IT service providers, but prioritize cost-reductions – which are more easily measured and which justify the investment in the IT services relationship.
Ask any business professional whether, as they look to 2010, they care more about cutting internal costs or whether they care more about driving new business-focused innovations, and you’re likely to get the response “yes…to both”. In the wake of the 2009 recession, companies are struggling with these sometimes conflicting objectives – on one hand they know that cost cutting and operating efficiently is a mandate. On the other, they must develop new technology –enabled product, service, and business model innovations or they risk falling behind.
For vendors in the B2B technology marketplace, this means balancing the need to communicate the cost-effectiveness of your product or service with messages that stress the business value you provide. I believe that far too many vendors think that only the lowest-cost provider can succeed right now, when proving strategic business value is still a critical priority for all professionals - particularly IT professionals.
For a company that gets it, look to GlobalLogic, the offshore product development firm. Their Vice President Milind Patwardhan recently told me “cutting costs for clients is the ‘table stakes’ right now. The best technology companies focus on reducing costs, but also seek to partner with clients to enable business results.” While many vendors talk this talk, one of their client references confirmed the value: He told me that GlobalLogic worked with business executives on strategic planning, was willing to take on risks in order to strengthen the relationship, and proactively looked for ways to create innovation.
Everyone seems to understand that social computing is a hot technology these days, and at Forrester we get plenty of questions from companies trying to understand how they can access the power and benefits of social computing into their own companies.
But before companies consider which technology platforms they should use, they should be carefully considering for what business purpose they need social computing tools. In my view, technology is a powerful lever in solving business problems, but it is not a solution in itself. For example, I know a lot of people who spend a lot of time on Facebook, but I can’t see much business value in it (unless looking up former high school classmates counts as business development). The same is true for far too many (but not all) of the social technology tools hitting the market today. <
This is where innovation management tools come in. While many community platforms are great at providing technology for internal collaboration, the best innovation management companies are taking the power of technology one step further - they are using social technologies, to help companies generate a response to specific business problems.
As a high school student I had to go through a Philosophy class, even though my curriculum was in sciences. Zeno's paradox, or the negation of movement, was one of the subjects of that class through which I suffered enormously. Years later, my daughter came back one day with some math homework: the subject was to explain why Zeno's paradox was wrong. And I suffered through it again. This familiarity with Zeno, which I really could have done without, lead me to apply it to IT and what I consider to be the ball and chain that slows IT progress. In Zeno's paradox a runner (Achilles) cannot catch a turtle which started a race earlier than him because each time the runner reaches the point where the turtle was, the turtle has of course moved forward. Repeating this reasoning leads to the conclusion that the interval will become very small, but that the runner will never catch the turtle. What's wrong with the reasoning is that it explains a continuous movement variation through a set of discrete events. But this is what we do in IT: we have a continuous progress of IT technology, hardware and software, and IT projects which are discrete events. When we decide to start an IT project, all hardware and software components are frozen for the duration, while technology continue to progress.
I have just come back from our own Business Technology Forum
in Chicago where my colleagues presented about the concept of “lean production”
to an audience of application development and business process professionals:
how the IT industry, including enterprise IT, must now finally address and
improve its R&D and production processes, just as other industries have
Compuware announces this morning their intention to purchase Gomez, one of the two major forces in web application monitoring services (the other one being Keynote). This is a very interesting and potentially game changing move in both the end user experience monitoring and the application performance management (APM) markets.
On Monday morning Xerox announced the
planned acquisition of ACS for approximately $6.4 billion. The acquisition will
be a big move for Xerox’s Ursula Burns, who just recently took over as CEO, and
it is indeed a “game-changer” for Xerox. Long known as a manufacturer of office
products such as copiers, Xerox has exhibited strong growth from its Global
Services business unit in recent years even as other parts of the organization
faced increasing levels of commoditization.This acquisition shows that Xerox is now dedicated to a services-driven transformation
of its business.
ACS is a $6.3B IT services company provider
of business process outsourcing (BPO), though it also offers system integration
and IT infrastructure outsourcing (BPO services represent 79% of the company’s
business). The company has exhibited decent
top-line growth in the last two fiscal years (5.9% and 6.7%, respectively), though
its BPO services performed better (7.4% in 2009, 10.9% in 2008). Xerox will no
doubt benefit from ACSs focus on two hot markets right now: healthcare and
Three quarters into 2009, and it seems that the market share of the four megavendors in IT management software (BMC, CA, HP and IBM) has again seriously eroded against their smaller competitors. The global ITMS market itself did not shrink: smaller vendors are reporting better results than forecast.
One major reason for this turn of events is that enterprises are struggling with smaller or flat IT budgets, and are therefore looking for a bigger bang for their buck, both in terms of CAPEX and OPEX: deals are smaller, more tactical in nature and tend to favor point solutions again.
But why is it that the larger ITMS vendors cannot compete with the smaller ones in tactical solutions?