Every day, CIOs and other tech executives must face an array of daunting decisions, from how they allocate resources to how to prepare for shifts in the technology landscape.
How do you prioritize projects? Is it really more efficient to outsource some of your development? Should you promote from within or seek more experienced talent outside? Does it make sense to acquire that company and its technology, despite your reservations about its corporate culture? And once you acquire them, which of your employees will be deemed redundant and get the axe?
There are no easy answers to any of these questions. However, not making these decisions can be far worse — and even fatal to the future of your organization.
The following eight decisions are some of the toughest you’ll ever face. But that’s why they pay you the big bucks, right?
1. Which projects to prioritize
Deciding which projects to pursue and which to put on hold is really job No. 1. But those decisions hinge on priorities established by top management, which is not always as well informed as it could be.
“Prioritizing inititives to deliver the highest return on value is one of the hardest aspects of my job,” says Rani Johnson, CIO for SolarWinds, makers of IT management software. “We constantly have to realign with changing business needs, which often means picking winners and losers. That leaves some of our internal stakeholders unhappy because we don’t have the resources to support their projects. “
But for your pet projects to become a priority — and get funded — the C-suite needs to know about them. Early in her career, Johnson says she didn’t understand this.
“As an inexperienced manager, I didn’t understand and embrace the value of communicating my team’s contributions to the business,” she says. “As a result, decision makers in our company were unable to see our business value proposition for the company. Our executive staff had no idea what my team did. This led to other teams getting an increase in resources while we faced budget constraints.”
Johnson says the hardest decisions she’s had to implement are the ones she disagreed with, but business leaders saw things differently.
“If the executive leadership team isn’t made aware of how IT is improving the business, you can get ignored,” she says. “I now make it a priority to communicate the efforts my team is undertaking and explicitly call out how IT is creating business value.”
2. Whether to outsource
At some point, nearly every growing company needs a little help. Instead of staffing up, many turn to third parties. But when and how to outsource is not as simple as it looks, notes Julie Forsythe, vice president of technology for Igloo Software, a digital workspace provider.
“A few years ago we found ourselves needing some additional hands on keyboards,” she says. “Our approach was to leverage outsourcing team members and embed them within our dev team.”
Igloo’s developers were opposed to the idea, but Forsythe went ahead anyway. Turns out her team was right. The amount of code the outsourcers churned out created bottlenecks in the review process. And because the outsourcing team was located in different geographies, managing outside personnel and remote connectivity was a challenge.
The experiment lasted about six months. It worked in some small pockets, says Forsythe, but not across the board.
“We were struggling to integrate a team of outsourcers to be part of our delivery processes from planning to production,” she says. “It was difficult to incorporate them in our day-to-day practices.”
But that experience did not sour Forsythe on outsourcing. The company works closely with a different firm to help develop widgets for Igloo’s workspaces. This works out much better, says Forsythe, because the final deliverable is smaller in scope, better defined, and independent of core product development.
“When we can encapsulate work and send it off to a development machine is where we have the most success,” she says.
20/20 hindsight: “I’ve worked at big companies and small companies, and I’ve seen outsourcing work and seen it fail,” she says. “It’s always challenging. But I’m not going to stop trying, because I think there is a time and place where outsourcing can work fabulously, even if my team tells me that it won’t.”
You want to reward employees who excel by advancing them within the organization. But sometimes they aren’t the best choice for a new role.
“When it comes to filling leadership positions, I generally prefer to promote from within the team instead of hiring from the outside,” says Derek Choy, CIO for Rainforest QA, an on-demand quality assurance solution. “It incentivizes team members to work towards their career objectives and helps with retention and morale.”
Choy recently had to put his approach to the test when a VP role became open and a senior director expressed interest in the position.
“This person was a great technical leader, had been promoted multiple times within the team, and was well respected by everyone,” he says. “However, the company was at a stage where an experienced VP with proven experience and execution track record could make a huge difference on some critical short-term goals.”
Though Choy knew his employee could eventually grow into the role, he went with the external candidate. Not unexpectedly, the senior director left the company shortly thereafter.
20/20 hindsight: “It was a very tough decision because I was torn between giving an opportunity to a strong internal candidate and doing what’s best for the company, at least in the short term,” he says. “But ultimately it worked out very well for the business.”
4. When to walk away from a deal
Acquiring a firm in your industry is a fast way to add services, talent, and revenue, but it doesn’t always work out well. Sometimes a good deal on paper can turn into a train wreck in practice, says Brian Klingbeil, executive vice president of technology and strategy for managed service provider Ensono.
Two years ago, Ensono was looking at acquiring a small startup whose technology filled some gaps in Ensono’s portfolio.
“The company we were looking at had excellent specific domain expertise on Amazon Web Services,” he says. “The services they offered were an exact match to the need we had, we used similar back-office tools so integration would be made easier, and they were in a geography that fit nicely with our people footprint.”
The stumbling block? A serious clash in corporate culture. After two months of due diligence, Klingbeil knew it wasn’t a good fit.
“They were just a little bit too out there for us,” he explains. “They had no real headquarters, the job structure wasn’t formal, and their CEO was pretty set in his ways. We had certain ideas how future execution should be done, and he had his own.”
While the technology was solid, Klingbeil thought the company was a bit too disorganized to scale. But when he decided to back out, he had to push back hard against the ‘deal momentum’ that had been generated.
“It was not a popular decision,” he admits. “After months of legwork, there’s a lot of pressure to do something. It’s hard to be the guy who raises his hand and says, ‘We shouldn’t do this.'”
Ultimately Ensono did acquire a company whose culture jibed with its own. In that case though, the two firms partnered on a project first, to ensure it was a good fit before going all in.
20/20 hindsight: “We could have simply acquired them for the technology and forced them into our way of doing things, but we’ve seen that story play out before, and it never ends well,” he says. “You need to trust your gut and be brave.”
5. Who to keep and who to cut
Merging with another company inevitably leads to consolidation and some tough choices about which employees to retain. Sue Bergamo, CIO and CSO for Episerver, a cloud-based digital commerce platform, has been down this road several times in her career. It’s never easy.
“I’ve done M&As for companies that are successful and for those that aren’t doing so well, but at the end of the day you have to look at the staff, the work, and the technology and figure out if there’s duplication,” she says. “Are all the systems staying? Are they being consolidated or integrated? Where does the company want to go, and what kind of skills does it need to get there? It’s gut wrenching, because you know the impact you’re going to have on people’s livelihoods and their families.”
When possible, Bergamo says she tries to help IT employees find new areas of the company to work with or to learn a new skill. In some cases, though, people don’t want to change. That’s when they need to move on.
“I made a pact with myself early on that I would be as transparent as I could be,” she says. “At the end of the day, you have to do the right thing for both the company and the people, and treat them respectfully. You may not be able to give them a job, but you can help them network, or update their resumes, or act as a reference. You don’t have to be a jerk about it.”
20/20 hindsight: “The first thing you have to do is keep your emotions out of it,” she says. “If you let your emotions get in the way you’ll make the wrong decisions. Then always stick to the facts. Because you have to be able to look into the mirror every day and like what you see.”
6. When to kill a project
Killing a project or a potential product is never an easy decision, but it’s often a necessary one.
Last year Steve Stover, senior VP of product at IT solutions provider Samanage, was faced with a difficult choice: add potentially groundbreaking features to the company’s existing product line, or focus resources on more bread-and-butter improvements that would pay off more quickly.
“I had to decide whether to keep a project using voice technology, natural language processing, machine learning, and automated workflows,” he says. “It was a visionary and strategic feature that would take a long time to adopt, and there was a risk that the feature might be too far ahead of the curve for our customers.”
Deciding which projects to keep or kill depends on a mix of factors, including market conditions, competition, revenue potential, strategic competitive advantages, available resources, and customer feedback, Stover says. Because Samanage’s product line was already mature and the company had other ongoing innovation initiatives, Stover decided to shelve the project.
20/20 hindsight: “In hindsight it appears to have been a good decision, based on the payback we’ve gotten from other features, but only time will tell if we missed out on a future opportunity,” he says. “The good news is we have a very capable R&D team should we need to pick up the project again.”
7. Recalling a defective product
Even the best products don’t always work as intended — sometimes with potentially disastrous results. Just ask Samsung about its Galaxy Note 7 recall or Apple about its Macbook Pro battery snafus.
The problem isn’t limited to massive consumer electronics giants. Two years ago, Adaptive Sound Technologies Inc. (ASTI), a manufacturer of sleep sound machines, faced a similar crisis.
“A couple of years ago we found out that a third-party USB power adapter we were shipping with our most popular product had developed a manufacturing problem,” says CEO Sam Nicolino. “If someone hit it hard enough it could come apart and pose a safety risk. We had to decide whether to stop selling the product, pull our inventory from one of our resellers, and replace the units. This would mean we could not sell that product in that channel for perhaps two months and it would have a significant revenue impact on the company.”
Even though it was unlikely that more than 1 percent of its customers would encounter a problem, Nicolino elected to recall all the affected units.
“We decided that the safety of our customers was the most important thing,” he says. “Customer safety and corporate reputation are vital to any successful company. But I doubt most companies would have done it.”
20/20 hindsight: “Even though this was economically painful for us, I would make the same decision again,” he says. “I know I made the right call because I could sleep at night again.”
8. The choice not taken
Sometimes, the failure to make a critical decision at the right time can bring down a company. Case in point: Nokia in 2006.
At the time, the Finnish handset maker was the undisputed king of handsets. One out of two smartphones carried the Nokia brand. But the iPhone was right around the corner, and Nokia’s Symbian mobile OS was so badly outdated that it needed to be replaced.
Mik Kersten, CEO of Tasktop, a software development and delivery platform, was working directly with Nokia at the time.
“Nokia was our first large enterprise customer, so I spent a lot of time with them, including time on site,” he says. “I witnessed the technology leaders raising various forms of red flags, such as insanely long build times and mountains of architectural problems and technical debt. Yet the executives would not make the hard decision — that re-platforming was necessary in order to survive the launch of the iPhone, which they then knew was less than a year away. It was that indecision that I believe caused Nokia to fumble the future.”
Instead of making the difficult choice to abandon its flagship OS and start over, the company tried to make Symbian touchscreen-friendly. The implementation was poor and the move was too little and too late, as iOS and Android had already begun to dominate the smartphone market.
Everyone knows the rest of the story. By early 2013, Nokia’s market share had dwindled to just 3 percent. In September of that year its devices division was acquired by Microsoft for a fraction of its previous value.
20/20 hindsight: “In retrospect, I empathize with the business executives,” says Kersten. “They wanted to make the right decision, but didn’t understand the language of the technologists, and thus lacked a framework for deciding to re-platform. Thus Nokia died at the hands of indecision.”