Big corporations can be as innovative as startups

SINGAPORE--Large multinational corporations (MNCs) are inevitably preoccupied with ensuring operational and financial excellence, but they can still be as innovative as startups if they adopted the right mindset and corporate culture.

Innovation does not have to be "big bang inventions" to generate value, but unfortunately this is what innovation means to most companies today, said Trevor Bunker, senior vice president of global presales at CA Technologies.

"Innovation can be incremental and it can be anything, from improving an internal process to enhancing a customer service experience," Bunker said at event sidelines of the CA Expo here Tuesday.

Innovation is more commonly associated with startups than bigger companies because the former is not focused on ensuring financial returns or operational excellence, he noted. As a company matures and grows, its focus shifts from innovation to operations, the executive said.

He pointed to Apple as an example. In the early 1980s, the company was known for its innovation in products such as the IIe PC, but it became caught up in the operational side of the business and nearly bellied up. When founder Steve Jobs returned, 11 years after he was fired, he rekindled the spirit and culture of "innovation that wasn't bound by quarterly [financial] results", Bunker said.

Innovation has to be ongoing and not have a finite endpoint or be siloed in a company's R&D (research and development) office, he said. Innovation should be practised throughout the entire organization as part of the corporate culture, he emphasized.

Whether this means dedicating a low R&D investment like that of Facebook and Apple is unimportant as numbers are simply a formal representation and do not mean a company is less innovative, he said.

What matters is the company cultivates innovation in practice across all departments, from sales to IT to human resources, rather than simply conjure up new things in the backroom.

Redirect IT maintenance budget toward innovation
In general, most organizations spend 80 percent of their IT budgets on maintaining "business as usual" and 20 percent on projects aimed at business improvement, Bunker said. This 20 percent have become so precious most CIOs are unwilling to take a gamble on the projects to undertake, especially if they do not see an initiative as having justifiable and immediate returns on investment (ROI), he said.

The strategy to drive business innovation then should be to optimize IT that is used for maintenance--or the 80 percent of IT budgets--thereby freeing up more resources to accelerate the pace of innovation, for instance, by leveraging emerging trends such as mobile, social media and big data, he explained.

An IDC survey unveiled today at CA Expo found that businesses in Southeast Asia were allocating a higher portion of IT budgets toward innovation. Commissioned by CA, the study was conducted in July and surveyed 122 IT decision makers in Singapore, Malaysia, Indonesia and Thailand.

Considering the typical 80-20 percent budget principle, the results confirmed a mindset shift in terms of innovation investment, said Sandra Ng, group vice president of practice group at DC Asia-Pacific, who presented the findings. Furthermore, 75 percent of CIOs and CEOs saw themselves as enablers on innovation.

According to the survey, Singapore respondents said they allocated 37 percent of their budget to fund IT innovation this year, a notch lower than the Asean average of 38 percent.

In Singapore, due to the high mobile penetration in the country, mobile technology was the top trend prioritized in IT budgets, Ng said. Conversely, virtualization was the overall top trend for all respondents across the region.

In terms of the origin of funds, the majority of budgets in Singapore derived from new dollars dedicated to IT, compared to the regional finding where budgets were funded by cost savings generated from improvements in IT-related business processes, she noted.

Ng pointed to efforts by the Singapore government to promote IT as a business enabler with financial incentives as a reason for the difference.