Monday, October 09, 2006

The cost of innovation

Seb Schmoller has posted an interesting comment on private provision of infrastructure for schools. His point at the end of the post about (what I would call) the cost of innovation in the ICT or learning infrastructure I think is very valid in a corporate environment too. Too often this is seen as a static IT cost rather than a dynamic environment which needs to be evolved and allow innovation. Recent interest in blogs and wikis as learning tools is a good example. Most of these projects have to be done outside the gaze of IT or formal budgets. The danger is that the budget for infrastructure, just like the training centres of old, is a reflection of learning past rather than learning future.


davidq said...

David, you're quite right about static budgets but equally the suppliers are very often guilty of forcing their clients, whether learning or commercial institutions, to come back to them for the slightest change (normally accompanied by the sucking of breath through the teeth and an 'it'll cost you' look). With not too much foresight, it is possible for us (suppliers) to provide systems that can be updated without recourse to our resources every time. It may not even change the up-front cost of the system so the long-term cost of ownership will benefit.

I'm not sure that the company mentioned in Seb's point has this ethos although, of course, I may be wrong.

David Wilson said...

David, partly (or mainly) this is a problem of the basis of the original procurement of course. Interestingly, within the corporate learning technology market we are seeing a big shift in interest in "software as a service" models (or on-demand or ASP), which maybe now represents a around a quarter of enterprise business, and probably a greater proportion in the mid-market. By paying a recurring annual cost for the whole service, these companies get the costs of enhancement built-in, as well as support and maintenance of their platform. They all just get upgraded at the same time when the core service is updated. For an organisation that doesn't need to microcontrol their software platform (and most really don't despite what their IT people might tell them), this is a far easier model to manage, and from the vendor's perspective they have a higher recurring revenue stream (although less cash upfront). Expect to see the acceptance of this grow further over time, and although it doesn't address innovation outside the core platform it may point the way.