1. Webinar Building And Managing A Portfolio Of Innovation Chip Gliedman, Vice President, Principal Analyst September 6, 2012. Call in at 10:55 a.m. Eastern time

2. © 2012 Forrester Research, Inc. Reproduction Prohibited Agenda BT forces increased emphasis on innovation. Use social technologies to drive ideation processes. Find the “heat” in each idea. Build and manage innovations as a portfolio. 2

3. © 2012 Forrester Research, Inc. Reproduction Prohibited 20152012 You will triple your time spent on innovation as BT grows in your organization Source: July 18, 2011, “The Empowered BT CIO” Forrester report 3

4. © 2012 Forrester Research, Inc. Reproduction Prohibited4 Sustained innovation bridges the gap between ongoing and disruptive changes Source: August 23, 2012, “Thrive With Sustained Innovation In The Empowered BT Era” Forrester report Products/services Processes/operations Markets/business models Organization/governance Radical innovation Game-changing Nonstandard High risk Unanticipated Strategic Large scale Ongoing improvement Standardized Low risk Incremental Operational or mandatory

5. © 2012 Forrester Research, Inc. Reproduction Prohibited Products/services Processes/operations Markets/business models Organization/governance Source: August 23, 2012, “Thrive With Sustained Innovation In The Empowered BT Era” Forrester repo 5 Sustained innovation bridges the gap between ongoing and disruptive changes (cont.) Sustained innovation Supported by management Ongoing — not episodic Distinct governance and funding Different success (and failure) metrics

6. © 2012 Forrester Research, Inc. Reproduction Prohibited6 Sustained innovation is different and requires different systems and processes Source: August 23, 2012, “Fuel Business Growth Via The BT Innovation Portfolio” Forrester report

7. © 2012 Forrester Research, Inc. Reproduction Prohibited 1.Ideas! 2.Processes to filter and vet the ideas. 3.A portfolio view of your innovation prototypes. 4.A culture that fosters innovation. 5.Governance and control processes for innovation. 7 To sustain innovation, you need:

8. © 2012 Forrester Research, Inc. Reproduction Prohibited8 Innovation process capability map Source: August 23, 2012, “Sustained Innovation Propels The Business Engine” Forrester report

9. © 2012 Forrester Research, Inc. Reproduction Prohibited Agenda 9 BT forces increased emphasis on innovation. Use social technologies to drive ideation processes. Find the “heat” in each idea. Build and manage innovations as a portfolio.

10. © 2012 Forrester Research, Inc. Reproduction Prohibited10 Complex ecosystem fuels innovation Source: August 23, 2012, “Sustained Innovation Propels The Business Engine” Forrester report

11. © 2012 Forrester Research, Inc. Reproduction Prohibited11 Social technologies and engagement speed the entire innovation process Source: July 13, 2012, “Move From Ideation To Innovation” Forrester report

12. © 2012 Forrester Research, Inc. Reproduction Prohibited12 Successful companies can point to a repeatable process

13. © 2012 Forrester Research, Inc. Reproduction Prohibited13 Starbucks engages customers in ideation through mystarbucksidea.com

14. © 2012 Forrester Research, Inc. Reproduction Prohibited14 P&G includes suppliers, laboratories, and customers in its ideation process

15. © 2012 Forrester Research, Inc. Reproduction Prohibited15 Social engagement is not restricted to the private sector

16. © 2012 Forrester Research, Inc. Reproduction Prohibited Agenda 16 BT forces increased emphasis on innovation. Use social technologies to drive ideation processes. Find the “heat” in each idea. Build and manage innovations as a portfolio.

17. © 2012 Forrester Research, Inc. Reproduction Prohibited17 Find the “heat” in your ideas Source: August 23, 2012, “The Forrester Innovation Heat Index: Turn Good Ideas Into Real Innovations Faster” Forrester report

18. © 2012 Forrester Research, Inc. Reproduction Prohibited Forrester heat index based upon 13 criteria Valuable Aligned Acceptable Feasible Guardrail values Enduring Product innovation Process innovation Organization innovation Market innovation Business impact Financial Human Technical Risks Environmental factors 18

19. © 2012 Forrester Research, Inc. Reproduction Prohibited This idea promises to bring real value to the company in some clear and measurable way. 19 Guardrail measure sets the bounds for ideas GUARDRAIL VALUES: Valuable Aligned Acceptable Feasible Enduring This idea is well aligned with our current and future business strategy. This idea will be acceptable to all the internal and external stakeholders who will be affected. Given the financial and human resources required, we can fund and develop this idea appropriately. This idea promises to provide the company with long-term and sustainable values such as competitive differentiation and major improvements in customer satisfaction.

20. © 2012 Forrester Research, Inc. Reproduction Prohibited20 Business impact points to portfolio area BUSINESS IMAPACT VALUES: Product innovation Process innovation Organization innovation Market innovation This idea either improves an existing product or service in a significant way or creates a new product or service that our customers will value. This idea changes or improves an existing process or creates a new, more efficient process. The idea materially changes the roles and responsibilities of employees for greater efficiency or higher productivity. This idea will change the competitive landscape and our position in the market, improve perception of brand value, or enhance customer interaction.

21. © 2012 Forrester Research, Inc. Reproduction Prohibited Financial Human Technical Risks Environmental factors outline risks and requirements for success 21 ENVIRONMENTAL FACTORS: How would you characterize the financial investments that will be needed to develop this idea appropriately? How would you characterize the amount of time and effort that will be needed to develop this idea appropriately? How would you characterize the technical investments or IT resources that will be needed to develop this idea appropriately? What are the critical risk factors, and how might they be mitigated?

22. © 2012 Forrester Research, Inc. Reproduction Prohibited Agenda 22 BT forces increased emphasis on innovation. Use social technologies to drive ideation processes. Find the “heat” in each idea. Build and manage innovations as a portfolio.

23. © 2012 Forrester Research, Inc. Reproduction Prohibited23 Insure your portfolio contains innovative projects Source: May 11, 2010, “Visualizing The IT Portfolio With The Forrester Technology Investment Matrix” Forrester report

24. © 2012 Forrester Research, Inc. Reproduction Prohibited24 Build for the future in your portfolio Source: May 11, 2010, “Visualizing The IT Portfolio With The Forrester Technology Investment Matrix” Forrester report

25. © 2012 Forrester Research, Inc. Reproduction Prohibited25 Spread your innovation portfolio across impact areas Source: August 23, 2012, “Fuel Business Growth Via The BT Innovation Portfolio” Forrester report

26. © 2012 Forrester Research, Inc. Reproduction Prohibited26 PARC uses “newness” of technology and market to segment investment Source: August 23, 2012, “Fuel Business Growth Via The BT Innovation Portfolio” Forrester report

27. © 2012 Forrester Research, Inc. Reproduction Prohibited27 The “Three Horizons Model” ensures a flow of innovations into the future Source: August 23, 2012, “Fuel Business Growth Via The BT Innovation Portfolio” Forrester report

28. © 2012 Forrester Research, Inc. Reproduction Prohibited Don’t think of it as an IT innovation portfolio; it’s a set of innovations that can drive business value. While you can concentrate efforts periodically, your innovation process needs to be defined and in operation constantly. Exploit your entire ecosystem to gather ideas, vet them, prototype and test them, and commercialize them. Manage the innovation portfolio separate from the operational portfolio: Governance Funding KPIs Communications 28 Key takeaways to make your innovation process sustainable:

29. Thank you Chip Gliedman +1 617.613.8503 cgliedman@forrester.com