Innovation @ Infosys Limited - Case study

Innovation is a vital component for business strategy and in order to stay ahead, companies should increase the speed of innovation, be focused on the customer experience, understand their behavior, and co-create with customers and partners. Infosys believed in this and Innovation at Infosys is built on the intellectual capital of employees and the processes to rigorously train employees for innovation. Infosys took that idea (from GE) and created the world’s largest employee training facility. Infosys believes innovations is important for future growth and differentiate from the competition. Products, platforms and new engagement models are part of innovation strategy in Infosys. Innovation is not a new focus for Infosys as it had been focusing on innovation since 1999 when it set up SETLabs (Software Engineering and Technology Labs). Infosys invites some of its top producers under the age of 30 each year to its senior management council meetings. The young employees are invited to share their ideas with senior managers.

Innovation Strategy 2011 – Infosys 3.0

As part of its strategic initiative “Infosys 3.0”, Infosys is expecting to achieve 1/3rd of the revenues from Innovation which currently accounts for 7.3% of revenue. In order to achieve this innovation target revenue Infosys is taking an inorganic route to strengthen its product portfolio along with its in house R&D. Infosys is planning to appoint a business innovation head for each of its four verticals (Financial services & Insurance, Manufacturing, Energy, Utilities, communication and services and Retail, CPG, Logistics and Life sciences) to identify product opportunities within the sectors and build business plans. The Business Innovation group is focusing on non linear revenues which are attempts to de-link the revenue growth from people growth. The four innovation heads would have a dual reporting structure: they would be accountable to their respective vertical heads as well as Business Head of Innovations. Once Innovation heads identify ideas respective verticals will fund the development of the products. It will be a federated structure. A central innovation group will help engineer a product while product management and sales can be decentralized.

Co-Creation since 2005

Co-creation is the practice of developing systems, products, or services based upon innovative ideas from stakeholder experiences, that enhance strategic capital, increase returns, and expand market opportunities. The concept is based on the book published in 2004 “The Future of Competition: Co-Creating Unique Value with Customers" by Prof Venkat Ramaswamy and management guru the late C K Prahalad. Customer experience is central to enterprise value creation, innovation, strategy and executive leadership and such changes in society and businesses necessitated co-creation, the authors argued. The types of co-creation can be viewed in terms of two basic dimensions: Who are the stakeholders and what is the engagement area of co-creation? The stakeholders include customers, employees, partners, suppliers, investors, regulators, volunteers, citizens, and others. Co-creation opens up any management process and includes innovation management, which includes process innovation, product innovation, and business innovation.

Infosys' SETLabs incubated the Innovation Lab in collaboration with Prof. Venkat Ramaswamy in 2005 as part of its research and innovation capability. Since then Infosys had been working with its partners and clients in several forms of Innovation Co-creation such as joint research, joint innovation centers, joint Intellectual Property (IP) licensing, joint product development and early adaptor programs. The Infosys Innovation Lab has built several capabilities to enable the practice of Innovation Co-creation by enterprises, which include processes, platforms, engagement models, networks, etc. Also critical are the tools that foster dialogic, transparent, accessible, and reflexive interactions are essential to co-creation.  Successful co-Creation cases highlighted on Infosys website are

1. Infosys and BT have collaborated involving researchers conducting joint R&D and prototyping. It has led to the creation of new IP that Infosys and BT jointly take to the market.
2. Nomura Securities derived 150 times application performance improvement. The performance of the interest rate risk analysis application was amplified by more than 15,000 per cent using the Infosys HiPC solution IP.
3. Infosys has co-created with ACDI/VOCA a solution to connect Indian farmers to the global retail supply. It also provided to the organized retail sector access to a reliable small-holder production base and decreased market-to-farm losses, which were estimated at 30-40 per cent on certain products.

Infosys SETLabs since 1999

SETLabs are internally divided as Strategic Business Units called Centers of Excellence (CoEs). SETLabs has developed several process frameworks, methodologies, service platforms, etc. Initial COEs are The Convergence CoE that pursues multiple R&D projects in pervasive computing, Grid Computing CoE’s vision is to create an adaptive services grid through service-oriented architectural constructs and platform, Service oriented Architecture CoE pursues multiple projects on a variety of practical topics related to SOA, The Data Warehouse and Business Intelligence CoE distills information from projects executed, identifies technology trends and provides thought leadership, J2EE CoE helps enterprises realize benefits of leveraging J2EE technology and Microsoft Technology Center aids in adoption of Microsoft technologies within Infosys and by its customers. Added lately is Cloud Computing CoE to enable Infosys' enterprise customers achieve operational excellence by leveraging cloud computing platforms.

The 600-member technology and domain-focused team has developed products like ELIXIR: Middleware for Wireless Sensor Networks, NIMBUS: Context- Aware Pervasive Computing, MANTRA: A software maintenance platform and MConnect: A middleware to create mobile applications faster. The firm had developed Flypp, a mobile applications platform and iEngage, which is powering social media marketing and employee engagement for five global 500 companies, ShoppingTrip360 service transforms in-store shopping by enabling collaboration between shoppers, retailers and CPG companies in real-time, etc. SETLabs enables Infosys to work with standards bodies on future technologies, share best practices and maintain peer relationships with academic bodies, industry forums, conferences, and journals.

Infosys Innovation Success

Innovation initiatives in Infosys not only created products and services but also gained reputation for the company as one of the most innovative company. Infosys constantly figured in the Innovative companies lists compiled by various sources. Recently in August, company has been ranked #15 in Forbes List of The World’s Most Innovative Companies. The list was based on “innovation premium,” a metric of stock market valuation by investors in anticipation of sustainable innovation. “It is defined as the proportion of a company’s market value that cannot be accounted for from cash flows of its current products in its current markets.”

The company's new management under K V Kamath and S D Shibulal is planning to set up a separate company focused on IT products, platforms and intellectual property-driven solutions. Employees at Infosys who are already involved on the innovation side, which includes products and platforms, would move to this new firm. The other option is to make an acquisition of an existing company that is involved in areas where Infosys is looking to innovate. Infosys has been emphasizing business innovation as a strategy and through innovation it is planning to drive business transformation of its clients.

Discussion Points:

1. Will the overall Innovation strategy of Infosys drive business growth?
2. Will the strategy to set up separate company for IT products, platforms and intellectual property-driven solutions work? What are the risks involved?
3. What will be the impact of business innovation on the company and outsourcing industry as a whole?
4. What are the challenges for management for fostering innovation in the organization? People, Process, Infrastructure, and Financial related challenges.