In small businesses and organizations with either internal or outsourced IT services, there are three approaches or states of dealing with IT. In the first state, only basic IT service is done to maintain the status quo. The second state consists of looking at business processes and finding ways to make them more efficient or effective using information technology. The highest level state of IT management looks at the business and comes up opportunities to offer real competitive advantage through new ideas, new services, and new products.

Following the concept of the Capability Maturity Model (Wikipedia) for software development, I am going to give a label to each of these stages. In the simplest IT service state, things are very much in a Basic management state. If a printer breaks, it gets fixed. If someone needs an update made to the website, IT makes the change. In general if something is broken, it gets fixed, and that's about the only time something is done. When IT management is done to improve the operations of the business, the IT services are Optimizing the functioning of the organization to improve efficiency or sometimes to increase automation. When IT is able to be utilized at a higher level, it is able to see business opportunities and capitalize on them. At that point, IT becomes Innovating and can bring new possibilities and competitive advantage to the organization.

The tricky part that I've been thinking about recently has been how to differentiate and think in the Innovating phase rather than just the Optimizing phase. For most people, it is not difficult to see where the problems are that need to be fixed at the Basic point, and a lot of people can usually see what processes could stand to be improved to Optimize the organization's operations. Innovating in an organization is definitely the most difficult.

The real challenge between optimization and innovation is that the opportunities are much harder to identify. If you can optimize a process to make it work better so that the organization saves money, you've done a good thing. You can usually find out where the problems are just by listening to other people in your organization describe difficulties or problems they handle. When you get good at optimizing, you can quickly look around an organization and see the issues preventing the organization from operating as well as possible.

How do you make the step then to being able to innovate? In a way, innovation is an evolution of the ability to see problems and create solutions. Instead of just seeing problems, you have to be able to see opportunities. I think the key differentiating factor in seeing opportunities is understanding the business. Optimization requires an understanding of an organization, but there may be insights into the customers, the vendors, and the market that are beyond your knowledge.

Here are some samples of optimizations vs. innovations.

Optimization
Innovation

WiFi
Getting the ability to do networking anywhere. Wires are annoying, and there needed to be a way to eliminate them.
Bluetooth
Networking small devices together like printing pictures from your digital camera right after you take them without connecting anything.

E-Commerce
Letting customers order your products directly without requiring employee involvement saves a lot of money.
Customer Relationship Management
Cross-selling, offering discounts on similar items, maintaining contact with customers after the sale with new offerings or special deals.

Enterprise Search Engine
Being able to search all your organizations documents, emails, and more from one place is pretty powerful for gathering information together.
Integrated Enterprise Search
Being able to see related documents in the context of other documents. Showing the user Word documents related to the e-mail they are viewing.

You get the general idea. In other words, optimization is taking something that exists and making it more efficient while innovation means creating something new, often to create a competitive advantage.

So to really be able to innovate, whoever is managing IT needs to have the ability to view the organization as a whole, understand the customers, deal with the vendors, and know what's going on in the market. That's a pretty tall order, especially for organizations that do not traditionally have IT as part of its strategic plan. It's also a pretty tall order for IT professionals that are good at the technology but not good at the business. Good communication plays a big role in this as the IT management people keep communication going with members of the organization, customers, and vendors.

• What issues are customers facing that the organization might be able to address?
• What problems do vendors have when working with your organization?
• Is there anyone in the market who is known for being incredibly innovative or lacking in a particular area?

These are just a few important questions to ask to find opportunities for your organization. How IT people can get better at communicating in business and how to make IT strategic are topics I will discuss more in future articles.