Improving innovation capabilities with COBIT 5 --3 ways to do so

As a follower of the COBIT 5 series, you already know the new release of the COBIT standard helps IT organizations achieve greater financial transparency, customer satisfaction, operational excellence, and future orientation. Obviously, an important element of future orientation should be the innovation commissioned by IT to support its business customers. Clearly, this requires that IT organizations have their “eyes wide open” to trends in information technology and services. And as well, it requires an IT organization with the ability to deliver against innovation opportunities and ensure that the benefit from the innovation really solve business needs.

 

What is innovation?

First of all, if we’re going after innovation, let’s define it. According to COBIT 5 the innovation process is aimed at measuring the achievement of competitive advantage, business innovation, and improved operational effectiveness and efficiency. But I believe the COBIT 5 process needs to go a step further. 

 

Global consulting firm Booz & Company annually comes out with a list of 1000 global innovators. Trying to distinguish what matters when it comes to innovation, Booz calls out an enterprise’s system of capabilities: talent, knowledge, team structures, and tools and processes. To be innovative, you need to extend differentiation to your capabilities system. This way, according to Booz, the enterprise can “consistently and significantly outperform rivals, and IT can clearly and concretely measure the business impact of its innovation spend. Put simply, innovation should create or extend what Booz calls the enterprise “right to win”.

 

COBIT 5 goals for innovation

To improve the ability to innovate, COBIT 5 suggests IT organizations measure themselves against three process improvement goals. Let’s explore each along with their recommended metrics. 

 

1.                  Enterprise value is created through quantification and staging of the most appropriate advances and in technology, IT methods, and solutions. Clearly, this improvement goal argues for quantification of the return on investment (ROI) of projects and programs and comparison of the returns for potential projects against an internal rate of return (IRR) or “hurdle rate.”  It also argues effectively for appropriate staging of projects with a program. Clearly, relating projects to programs enables the right staging of activities to be established. Two metrics are used to measure success here: increase in market share or competitiveness due to innovations and enterprise stakeholder perceptions and feedback on IT innovation. If innovations become focused on the enterprise capabilities system, then market share and competitiveness are easy to judge and customer feedback will be positive.

2.                  Enterprise objectives are met with improved quality benefits and reduce cost as a result of identification and implementation of innovative solutions. This simply says that IT organizations need to get more predictable. The benefits of this are reduced delivery times and reduced development costs over time. Two metrics are recommended here: percent of implemented initiatives that realize their envisioned benefits and percent of implemented initiatives with clear linkage to enterprise objectives. The first goes right after benefit delivery while the second argues for better linkage to enterprise benefit statements.

3.                  Innovation is promoted and enabled and forms part of the enterprise culture. We have talked about process. This talks about people and enabling them to be innovative. Think about Amazon IT seizing the opportunity to build the first cloud business as example of what this process goal is about. Two metrics are recommended to measure success: inclusion of innovation or emerging technology-related objectives in performance goals for relevant staff and stakeholder feedback and surveys. The first involves incenting staff to be innovative and effectively look for opportunities to be so. The second says that you measure perception about IT innovation. Between these two you measure the people side of the equation.

 

So where should I start?

Once again, my suggestion is you start where the most immediate value can be driven. But if it were up to just me, I would start by quantifying the innovation opportunities and showing an involved balancing process with the business for their selection. What do you think? I would love to hear back from you.

 

Related links:

Blog post: 3 ways IT leaders can strengthen compliance and control

Blog post: Making COBIT 5 part of your IT strategy

Blog post: COBIT 5 guides IT leaders to better manage future orientation in their organizations

Blog post: 7 goals in COBIT 5 that will improve your operational excellence

Blog post: COBIT 5’s scorecard measures IT’s relationship with its customers

Blog post: COBIT 5 scorecard measures the quality of IT’s financial performance

COBIT 5

Solution page:  IT Performance Management

Twitter: @MylesSuer

Labels: Innovation
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About the Author
Mr. Suer is a senior manager for IT Performance Management. Prior to this role, Mr. Suer headed IT Performance Management Analytics Product ...
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