How IT Shops Should Attack New Investments

When it comes to investing in emerging technologies, corporate IT departments could–and many say should–be like those “alpha consumers” so many businesses target. Alpha consumers are up on the latest gadgets. They buy early. And they become make-or-break test cases for new products.

Sure, it’s a little more complicated for IT shops to act like yuppie spenders. The latter are competing with friends and colleagues to snag the coolest new toys around, while the former grapple with changing business needs, increasing competition, bleak economic forecasts and, perhaps most importantly, serious complexity in actually determining how new technologies will perform.

But when it comes to gaining a competitive advantage, the analogy is spot on. Despite that, businesses aren’t exactly buying in.

Corporate executives are the most receptive to new, untested tools if they show promise for cutting costs, according to CIO Insight‘s May research report on emerging technologies. Beyond that, measuring value is a tougher game. One technology may be cheaper than another to buy, install and maintain, but the overall return-on-investment math is tricky.

“Because innovation is so difficult to measure, it can lead companies to make the wrong decisions,” says Scott Anthony, president of innovation strategy firm Innosight. “You’ll take something that’s measurable over something that’s not, even if the thing that’s not measurable has much greater long-term impact.”

The risk-versus-reward argument is especially tough when applied to emerging technologies. Last year, when CIO Insight looked at emerging technology adoption, IT executives said their biggest problem involved coming up with clear estimates for benefits like cost reduction and process improvement. If the technology truly is new, they said, there isn’t a preponderance of case studies from which to base those projections. Without those results, CIOs are left in the lurch.

Add to that the differing objectives for investing in new tools. The vast majority of IT executives in our May survey listed process improvement–namely in speed, agility and flexibility–as their company’s top goal. But when asked which benefit was most likely to garner executive support, they pointed to cost reduction above all others. Other goals that ranked high in both areas included increasing productivity, boosting revenue, and creating new products and services.