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"[CIOs] need to be aware of the hype-cycle effect--that they might get pulled into running after the current big thing because of market pressure and the sense that 'everyone's doing it,'" says Gartner's Fenn. "Right now, we are seeing that effect with cloud computing. Last year it was social networks; before that it was Second Life and virtual worlds."
Instead, Fenn says, CIOs should establish a process for evaluating new technologies that helps them become "selectively aggressive"--in other words, deploying technologies only when there's a notable business gain.
At IT consultancy Keane, new software purchases must go through an application portfolio rationalization process, a methodology designed to help enterprises optimize their application portfolios.
Keane applied the rationalization process to its recent migration from using a PeopleSoft ERP system to a combination of PeopleSoft and open-source software to get essential business information out to users.
About one year ago, Keane implemented two open-source tools--Alfresco's enterprise content management application and Basecamp's Web-based project collaboration tool--to improve information and document sharing throughout the organization.
There are no upfront licensing fees, although Keane pays monthly fees for support. "It's astoundingly cheaper than enterprise licensed tools," says Imran Sayeed, the firm's senior vice president of global application development and management. "It's such a compelling reason to use open source."
At first there was hesitation about the technology's scalability, he says, but the promised economic benefits helped executives overcome those concerns.
Despite the low cost, Sayeed's team had to show a strong business case--just as it did when it deployed the Elgg open-source networking tool, which provides a Facebook-like environment for the enterprise. "A challenge for global firms is to make sure people feel connected back to the firm and are part of things," he says.
Having the social networking tool enables users to share information and participate in online forums and in chat rooms with other employees. Within a month of the launch, about 2,000 people were using the tool, Sayeed says. He says a key part of the business case was demonstrating that without having a tool like this, Keane risked alienating employees who were feeling disconnected from the company.
There was real concern about retaining people who have highly specialized skills, and the alternative to social networking would be to pay high travel expenses to have employees come to the home office, or have dedicated teams of executives travel to remote facilities to visit those employees on a regular basis. The cost avoidance was part of the business case, Sayeed says.
Making the right call on new technology purchases requires CIOs to be business visionaries, Sayeed says. "In today's market," he adds, "if CIOs want to champion the use of an emerging technology, they have to have a very clear understanding of how it can help the corporation get into new markets and meet challenges."