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Innovation vs. Standardization

        posted by , April 17, 2011

IT standardization can improve efficiency and quality. On the flip side — forcing one standard down everyone's throat can limit innovation.

Competitive Advantage

Innovation should be encouraged in core business areas that are likely to generate competitive advantage.

Example: An Investment Bank that encourages innovation of algorithmic trading systems

Common Services

In areas outside the business' core competencies standard solutions often make sense.

Example: Standardization of networking, computing platforms, ESB, ETL and other commoditized IT-services.

Large Organizations and Standardization

Large companies often have thousands of deployed software packages. Such businesses have:

- complex processes
- expensive licences for competing products that do the same thing
- duplicated data
- duplicated processing
- exposure to antiquated legacy systems
- a need to staff 1000s of IT skills

Large companies can unlock enormous value by standardizing processes and technologies.

Small Organizations and Innovation

Small businesses (especially start ups) need to innovate and grow — standards and governance processes need to be light weight.

Large Organizations and Innovation

Large companies should consider exempting strategic business units from cumbersome governance processes. In some cases, it makes sense to completely exempt business units with a demonstrated ability to drive new revenue.

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