In a previous article, Innovation in IT: Anticipation vs. Reaction, we discuss how cutting-edge IT departments are transforming themselves from support services into real solution providers by proactively scouting and evaluating emerging technology. For a concrete example, this article takes a look at the work done by Volvo, who revamped Volvo IT to do more with less.
Doing more with less
At the onset of the recession, both the Volvo Group and Volvo IT saw that while cutting IT costs was a necessity, so was innovation – simply doing less of the same thing was not going to be enough. Accordingly, the Tech Watch & Business Innovation function was created, serving as a global skill center for future IT areas. As explained in this article on Management Exchange, the Tech Watch portion of the program focuses on scouting and evaluating the feasibility and business value of new technology, while the Business Innovation portion primarily works with customers to develop prototypes. These two functions work together, with on one hand, Tech Watch providing a vision of the future and strategic direction, and on the other, Business Innovation providing tangible outcomes. This presentation by Volvo IT further explains the program:
The success of the program can be demonstrated both anecdotally, such as with the connected mechanic prototype, which went on to be tested by Volvo Trucks, and in hard numbers. According to the Management Exchange article, the Business Innovation prototypes have resulted in:
- 21% going directly into creating new business (products and services)
- 64% adding features to new products and/or services as well as adding to, altering and/or repositioning existing strategic roadmaps
- 15% not resulting in any further action, but of course resulting in knowledge gain
Reaping the benefits
The program brings a host of benefits aside from those successes gained directly through prototyping. With technology scouting, for example, organizations gain better visibility on emerging and potentially disruptive technology. A better understanding of what technology is already available enables organizations to optimize resources, determining whether to make, buy or lease a technology both faster and more confidently.
Additionally, the program opens the innovation process to include Volvo’s network of customers. Doing so gives organizations access not only to the expertise and inspiration of their clients, but also encourages stronger, better supplier-customer relationships through the increased interaction and deeper mutual understanding.
Finally, on a more practical level, a proactive IT department has a positive impact on budget optimization. While business units have the budget for a full-scale deployment, they need to know the benefits of the technology are guaranteed. The IT department, on the other hand, does not have the budget for such deployments, but may be able to fund a small, risky pilot to test new technology.
When IT departments are proactive in their scouting efforts, the organization is able to deploy new solutions faster, with greater confidence and more cost effectively. As with any endeavor, transforming the IT department brings some challenges, but as the experience of Volvo IT demonstrates, the benefits are certainly worth the effort.