By Tyler Constable, Avantra
Innovation is at the heart of taking risks for enterprises today. However, taking risks to foster greater innovation is not enough, and it is equally critical to eliminate unnecessary risks that can distract the business from its growth journey.
The digital transformation which we are all experiencing is altering the concept of the commercial rules. All the rules you would traditionally apply to software are now applicable to other products as well.
For instance, the apps available in the app store are classified as outdated if not updated for a year or two. While in the B2B market the software product cycles may be longer, you cannot sell a year-old software if you cannot provide a vision for the upcoming years. The long-term view does not come from offering maintenance alone. The expectation from customers is that the product they buy today will improve over time. Otherwise, it will be a liability and perceived as being phased out.
In a digitally transformed enterprise, innovation is also necessary because it provides value. On a very granular level, avoiding risk will not work because solutions that avoid risk are never new, meaning that the risk-averse will constantly be attempting to implement the same problem-solving solutions, and getting nowhere. Taking risks is inherent to the culture required to be an innovative enterprise.
Mitigating Risk With The Cloud And SAP Automation
Fortunately, the risk in technology adoption and trial is much less than ever before. For instance, cloud adoption is just a few clicks away. Public clouds provide access to vast amounts of computing resources and storage volume. In addition, it offers unprecedented access to sophisticated services that were out of reach for almost any enterprise a couple of years ago.
The resources required to experiment with AI-based solutions, for example, would have required tremendous up-front investments into hardware and software, and increased work for IT departments to set up. Unless there were some guarantees on investment, this would have been considered a massive risk.
Public cloud providers decrease this risk drastically because all these resources are available on a pay-per-use basis. Experimenting with the arsenal of functions that modern IT provides has become more frictionless and less expensive. If something does not work as expected, the user has only spent time and minimal usage costs. The risk of up-front investment has, therefore, basically disappeared.
Likewise, SAP software is now considered a fundamental part of many enterprises’ IT landscapes. It almost acts like a nervous system for IT, helping make informed decisions and minimizing the risk severity through a robust new-age platform.
SAP itself is an innovative enterprise to enable intelligent enterprise for their customers. They release transformative solutions that every SAP customer needs to implement over the next couple of years – essentially, SAP is co-innovating with their customers.
Given the need to innovate for advancing the digital transformation journey, SAP is a critical part of this change. However, the SAP landscapes require a lot of skilled experts just to be operated, let alone to drive transformation, or deliver innovation. At the same time, the number of these skilled SAP experts is limited, as there is not enough talent on the market to waste the wealth of knowledge those experts possess purely on menial observation tasks.
Understanding People, Process, And Technology Issues
The ‘always on’ environment is pushing the customer-facing companies to constantly find new ways to meet market demands. A common mistake many such companies make is to implement software without addressing people, process, or technology issues, which can fail both projects and businesses.
It is vital to understand people’s personalities, to see if they are innovators, and help bring the right mix of people together to form a team. People issues create friction, and friction will slow processes down. A properly balanced team tends to develop fewer people issues or manages to solve them more quickly.
Process and organizational issues are also of great importance. Can market demands be met within the existing processes and organizational structures, or would it be beneficial to run a dedicated innovation team? In cloud computing too, how frustrating would it be to have all the immense computing power and services at your fingertips, only to wait weeks for approval to enter credit card data?
On the other hand, careful plans need to be in place for some process issues that cannot be managed with shortcuts. Safety and security processes are likely to be mandatory, even for a quick-moving innovations team.
Overall, people and process issues might be easier to identify beforehand and to plan possible mitigations. Technology issues are perhaps more likely to hit you unexpectedly. The sooner this is understood, the easier it becomes to resolve the same.
Small Steps On The Journey Towards Innovation
Given the task at hand, purists may argue that taking small steps and making improvements incrementally is not sufficient because it does not lead to innovation. It is not a helpful discussion because the focus should be on creating value, and every approach to get there will have advantages and disadvantages.
Compare the ‘small steps’ approach to the way software developers work. When they are writing code, they periodically commit their changes to a version control system. If they were to make changes, and those changes were to fail, it is easy to revert to the last known good state.
Failure is a crucial part of innovation because it is where we learn from our mistakes. Taking small steps allows people to identify failures early, return to the last known good state, and try something different. And all of this while incorporating learnings from the past projects. Again, it is another method of reducing risk.
On the downside, it is possible to miss an opportunity to come up with an even better solution that could provide more value. Sometimes invoking fundamental change is required to create truly innovative solutions. That is why it is so important to determine the risk appetite of the enterprise.
While taking risks is not within everyone’s comfort zone, embracing risk does not mean you blindly try new things with unpredictable outcomes. Modern enterprises understand innovation as a managed system, with risk management being part of it. Risk can be assessed and understood, which leads to acceptance or mitigation.
It is time business learns to embrace risk-taking, to strive toward great innovation.
About The Author
Tyler Constable is Director of Sales Engineering at Avantra.