Find the Real Value in Your Existing IT Investments

Number one on CIOs’ to-do lists these days: Help get company out of the doldrums! The past year has been focused on squeezing out costs?by rationalizing the infrastructure and putting the screws to vendors (one CIO I know claims to have saved $50 million this way)?and seeking quick wins through low-cost, quick-return investments (for examples, see “Overachiever,” Page 68).

That was the easy part. The real work now is to find the value add in existing investments?to make them fully deliver on their promise. That requires additional investment?a nonstarter in 2002. Fortunately, a lot of this investment will come in the way of fine-tuning what’s already been installed.

W. Brian Arthur, an economist working out of the Santa Fe Institute, compares the current state of IT to the early days of the automobile’s development. As a base technology, cars didn’t gain widespread acceptance when they first rolled off the assembly line in the early 1900s. It wasn’t until they were enhanced for greater reliability, comfort and safety, and the infrastructure of highways, bridges and gas stations was in place decades later that they became a regular part of the American landscape. Arthur calls these supporting systems “arrangement of use” technologies. For cars, these were the electronic ignition, reliable brakes, headlights, windshield wipers. For IT, think about bandwidth, security, integration tools and any technologies that will make the technology experience easier and more reliable.

The faster CIOs can optimize their technology infrastructures for high-impact business activities, the quicker they’ll start the upward climb. The trouble is, executives (business and IT) are seriously risk-averse these days. There’s a tendency to 1. stick with the low-risk quick wins and 2. for anything new, wait for the big, established vendors to develop solutions. Remember the expression, “No one ever got fired for buying IBM”? CIOs are invoking it again.

Two things must happen for us to jump-start this build-out of supporting systems. First, the big vendors have to make their technology work better. American Airlines CIO Monte Ford convened his top dozen providers and told them that if they worked with him to innovate and simplify the company’s technology systems (even if it meant reducing their revenue streams), they’d be rewarded; if they didn’t, they’d be out (see “Can American Keep Flying?” by Senior Editor Todd Datz on Page 56).

Second, CIOs must overcome their fear of dealing with new companies. Many of these “arrangement of use” technologies are by definition narrowly focused niche applications. Small companies with low overhead and more focused attention may be able to come up with solutions more quickly and at lower cost than the heavyweights, however dependable and reliable the latter might be. And while risk might be statistically higher for new companies, there are enough examples of big companies in trouble these days that it’s foolish to equate size with stability and staying power.