How IBM bypasses bureaucratic purgatory; An in-house crowdfunding platform lets employees evaluate each other’s ideas — and fund them with IBM’s money

How IBM bypasses bureaucratic purgatory

By Anne Fisher, contributor December 4, 2013: 2:45 PM ET

An in-house crowdfunding platform lets employees evaluate each other’s ideas — and fund them with IBM’s money.

FORTUNE — Late last year, Ryan Hutton had what he thought was a bright idea. The IBM project manager thought it would be great to build a cloud-based web application that would give any IBM (IBM) employee access to real-time data about how his or her apps were being used within the company.“I wanted people to be able to measure the impact of the apps they had developed, including the ability to track who’s using them and how often,” Hutton says.

Until this year, Hutton would have followed the same path that would-be innovators take at many other big companies, submitting his proposal to a review board that would take months to give it a thumbs up or down and, if the project got approved, months more to fund and staff it. Instead, Hutton was able to bypass the bureaucracy and pitch his app, dubbed Tap-O-Meter, directly to its intended users — IBM’s employees around the world — via a new in-house crowdfunding platform called iFundIT.

“We modeled it on public crowdfunding platforms like Kickstarter and Indiegogo,” says Francoise LeGoues, head of IBM’s CIO Lab, who created the program. “The question we started with was, how do we make sure everyone with a great idea gets a chance to have it seen and heard? How do we make use of all the knowledge and creativity in the company?”

As with Kickstarter, IBM employees can get involved by submitting an idea, by critiquing it and suggesting improvements, or by investing in it. Submitters set a funding target to cover the cost of basic coding, architecture, and testing. They can also enlist teams of IBMers who volunteer their expertise to help develop projects that interest them. Employee backers support proposals they like by voting in $100 chunks (up to a maximum of $2,000 per employee) that come out of a $300,000 fund supplied by the CIO Lab.

“Once the total amount of support reaches $25,000, we fund the project and move forward with it,” says LeGoues. Since iFundIT launched last January, more than 1,000 IBM employees in 30 countries have participated in one way or another. Of the 160 proposals posted so far, 20 have reached their funding targets, which range from $10,000 to $30,000.

All of the projects are intended “to improve the way we do things internally,” says LeGoues. “They address a variety of issues, from making the supply chain more efficient, to better sales tools, to internal apps for different uses.”

It’s too soon to put a dollar figure on productivity gains from iFundIT projects, she adds: “The biggest impact so far has been cultural. People love it, because it makes their jobs more fun and gives them a chance to invent solutions for business problems that have been frustrating them.”

What has impressed Ryan Hutton most is iFundIT’s speed. His Tap-O-Meter took just one month to get the green light, backed by about 40 fans on six continents. He and a team of five volunteers are now building the app’s architecture.

“It’s great to see such fast results, and it’s kind of amazing to have this kind of impact so early in my career,” says Hutton, who is 24 and joined IBM three years ago, straight out of college. “That’s not really what you would expect from a huge multinational corporation. It’s very cool.”