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A six-step framework, entitled the 'Innovation Ladder', has been developed by Warwick Business School to help global businesses achieve return on innovation (ROI) from outsourcing partnerships and will also help chief information officers (CIOs) and chief financial officers (CFOs) link innovation more closely to bottom-line growth.

"Outsourcing is a strategic asset. If specific knowledge and innovative solutions are already available with an outsourcing partner, it is very efficient to access that expertise rather than create it within one's company. Outsourcing gives us access to the latest insights, flexibility in resourcing, faster delivery and crucially, innovation," says Corné Mulders, CIO, ABN Amro.

"The past few years we have experienced these advantages in the flawless integration programmes and in the product development processes for mobile banking."

The Innovation Ladder's six key steps include:

1. Strategise innovation
2. Design measurement instruments
3. Assess the vendor's innovative capability
4. Design a contract for innovation
5. Build relationships
6. Measure innovation

A report published by Warwick Business School and Cognizant reveals that client firms expect outsourcing partners to deliver innovation that has an impact on the firms' operational and strategic performance targets.

Previous Warwick Business School research, also commissioned by Cognizant, has shown that over two-thirds fail to measure ROI from partner engagements, despite the majority believing innovation has a direct impact on financial success.

Over half of respondents (64%) indicated they were increasing their outsourcing spend, making it vital to ensure a methodology is in place to manage and measure both incremental and radical innovation.

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