Business Alignment: Risk-Taking (Still) Encouraged

Don’t sacrifice innovation, high returns and long-term strategy by playing too conservative a hand. CIOs face many a danger if they focus too hard on cost-cutting and short-term payback.

“I wonder whether or not they’re thinking as strategically as they should be,” says John J. Davis, president of John J. Davis & Associates, a CIO recruitment company. And it’s hard to argue that innovation suffers as companies cut back on investing in higher-risk IT initiatives with long-term ROI.

John Hagel, a management consultant and author of Out of the Box, says that for the past couple of years, CIOs “are becoming much more risk-averse and more resistant to new technology. At the same time, line executives are becoming more risk-taking, particularly if it’s [about] near-term cost reduction opportunities.”

The example Hagel cites to support his thesis revolves around Web services. He has studied about 60 deployments of Web services and found the unexpected: Of those 60, at least two-thirds were under the CIOs’ radar screen.

Hagel says that business line managers, who need to cut costs themselves, fear that risk-averse CIOs might put the kibosh on their Web services requests. So to get more functionality from the systems they already have in place and connect more effectively with business partners, the business line managers are going it alone.

Such deployments present a host of lost opportunities for CIOs; but there are ways CIOs can get their groove back.

“Many of the nontechnology business leaders driving this are feeling very exposed. They know [Web services] is not very mature and that there are questions of security and scalability…so they know they are taking real risks here,” says Hagel. “It would behoove CIOs to become [greater] champions of this technology and collaborate with business colleagues to harness value.”

Also, CIOs could be very helpful in ensuring that line executives deploy the technology in the areas that would have the highest impact for the enterprise. Finally, by proactively working with line execs, CIOs could ensure themselves a shot at developing an architecture plan that takes Web services apps into account.