Siloed Usage of New Technologies Thwarts Innovation

"The conventional IT stack wasn’t built for today’s world of analytics, sensors, mobile computing, AI, the internet of things, and billions of devi...
David McCannOctober 7, 2019
Siloed Usage of New Technologies Thwarts Innovation

Silos have long been a common bane for companies. That remains true today — even when it comes to deploying technologies enabling innovation that could provide significant added value if they were scaled across the enterprise instead of merely being used in pockets.

It creates what Accenture calls the “innovation achievement gap,” or the difference between potential and realized value from technology investments.

“For executives who are under relentless pressure to change and grow, it’s frustrating to make these investments and still fall behind competitors,” the consulting firm wrote in a new report on scaling innovation.

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Accenture posed the question: “Why is it that technology is everywhere today, but value is not?”

The answer: “Value is difficult to capture in part because of the enormous challenge of innovating with legacy systems. The conventional ‘IT stack’ — spanning software applications, data, hardware, telecommunications, and data centers — wasn’t built for today’s cloud-oriented world of analytics, sensors, mobile computing, artificial intelligence, the Internet of Things, and billions and billions of devices.”

Accenture collected data from more than C-level executives (50% IT firms, 50% non-IT) at 8,356 companies across three categories: (1) the adoption of key technologies; (2) the penetration of technologies adopted; and (3) organization and culture.

After scoring the companies in these areas, Accenture called those in the top 10% “Leaders” and those in the bottom 25% “Laggards.” The difference between them shows up at the top line: the consulting firm calculated that in 2018 Laggards lost out on 15% of the revenue they potentially would have reaped as a Leader.

And with the ever-accelerating pace of new technology adoption, the gap could widen in astonishing fashion. But 2023, Accenture claimed, Laggards could miss out on as much as 46% of their annual revenue.

According to the report, Leaders don’t just adopt point technology solutions; they create systems, facilitated by adopting new technologies earlier and sequencing implementations in optimal ways.

For example, 98% of Leaders have adopted AI — but only after setting up complementary technologies such as data lakes (repositories of data stored in raw format) and on-demand cloud services.

Among Laggards, only 42% have adopted AI. They tend to follow fads and put point solutions in place without a vision for how technologies will complement one another or a plan for cultivating enterprise systems, according to Accenture.

“For example,” the report said, “a major apparel manufacturer developed a wearable device to help users track their exercise but failed to generate  meaning insights from the data collected. That would have required building a machine learning-based analytics platform that could harness the data to provide real-time predictive analytics that customers could use.”

Moreover, Leaders target three times more business processes with newly adopted technologies than do Laggards, according to Accenture. “As a result, their systems allow for a seamless flow of product and service innovation from one process to another” — in other words, they create a “boundary-less system.”

The absence of boundaries is one of three characteristics of what Accenture calls “future systems.” Such systems also are adaptable: they learn, improve, and scale by themselves, eliminating the friction that hinders business growth and helping humans make better decisions much faster.

“Key markers of adaptable organizations include enterprise-wide use of automation and AI, a continuous data supply chain in the cloud to power AI in the enterprise, and a stable but modular, flexible, decoupled, and constantly evolving architecture,” Accenture wrote.

Third, future systems are “radically human,” the report said. “They talk, listen, see, and understand.”

Radically human companies empower people to break down organizational barriers, Accenture noted, pointing out that 91% of Leaders “are extremely effective at working with cross-department teams that combine IT and business to create customer-centric solutions.” By comparison, only 41% of Laggards have such capability.

“Companies that can think in terms of systems, as opposed to point solutions, stand to outpace others in terms of both revenue and margin growth,” Accenture concluded. “It starts with envisioning their own version of boundary-less, adaptable, and radically human future systems.”