Innovation – Are U.S. CIOs Too Afraid of New Technology?

Chinese and European companies are driving higher productivity and earnings growth than their U.S. counterparts because they’re more aggressively deploying new technologies like Web services that automate business processes, according to a new survey from Accenture. American companies are too reluctant to invest in new technology, Accenture concludes.

“U.S. companies have the oldest systems among the global community and use most of their new investments to fortify them,” says Bob Suh, an Accenture managing director and author of the survey. (CIO’s own research confirms that CIOs spend a disproportionate amount on legacy systems.) “Maintaining legacy systems is a vicious cycle that consumes ever more capital, time and attention and prevents American companies from driving more investment into technologies that impact customers,” Suh says.

According to the survey of almost 500 IT executives, only 6 percent of American CIOs want to take a leading role in adopting new technologies, compared with 19 percent of Chinese CIOs. Seventy percent of Chinese firms are committing a major part of their businesses to Web services, compared with just 42 percent of U.S. firms.

Maintaining legacy systems is a bad strategy long term when your rivals have more flexibility, Suh says.

But American CIOs aren’t taking Accenture’s bait. Because they’ve oversold the business benefits of everything from ERP to outsourcing, many remain loath to begin trumpeting new technology. “The last thing I want to do is sell new technologies to my board,” says Mike Anderson, VP and CIO of beauty products manufacturer Cosmetic Essence.

They’re also not convinced that newer is necessarily better. “We can develop very innovative solutions to challenges we face in the business by finding ways to integrate and reuse databases and systems we’ve developed in the past,” says Mark Settle, CIO of Arrow Electronics.