Is Business Innovation Lost in Your Information and Communications Technology

Do you know how much of your Information and Communications Technology (ICT) expenditures go toward business innovation and new initiatives? According to Cordys, on average, out of the 4.5 percent of all revenues large companies dedicate to ICT expenditures, only 1.4 percent goes towards business innovation and new initiatives.

The other 3.1 percent is spent on MOOSE, an acronym coined by Forrester (News - Alert) meaning Maintain the Organization, Operation, Systems and Equipment. In other words, billions of whatever currency is used is doing nothing to produce business productivity improvement or transformation. It’s basically used to “keep the lights on.”

Companies also routinely waste scads of time deploying ICT projects using traditional approaches, Cordys says. Citing research from Forrester, it says “the average length of ICT projects in large companies is around 22 months and … these projects are missing the deadlines at a rate of 49 percent and tend to be 22 percent longer to deploy and 17 percent more expensive than budgeted.”

There is an alternative to spending embarrassingly large sums of money on ICT deployments that don’t deliver any incremental improvement on the way a company is run, Cordys says. A “better way,” it suggests, is usage of a platform as a service.

Cordys, business process management (BPM) software leader, aims to help companies improve their business operations.

To move away from models that were built to rely on MOOSE and on existing architecture choices, which can be blamed for wasteful spending, requires a new approach. To transform the traditional approach to one that has a much higher effectiveness ratio, Cordys has developed a six-step blueprint.

The first step is to develop new initiatives on a business process operations (BPO) platform. This should be done above the existing technology base with three months as the maximum project length.

The second step is to freeze all developments on traditional platforms, reducing the maintenance of existing software to the minimum.

Third, Cordys says to lean hardest on the most knowledgeable people in the company who understand how to produce the solution.

The fourth step is to continue to make business innovations on the same platform with three-month “time-boxed” projects.

Step five is to freeze traditional applications and outsource them as a service to BPOs. As long as no new functionality is added, BPOs can run the applications with a cost- reduction commitment.

The final step is to move the innovations to become a continuous way for the organization to deliver ROI. Projects then can have a payback period of three months and the remaining part of six months as accretive to the business returns, Cordys says.

The company concludes that with this model, effectiveness is increased by 500 percent.