IT Investment: A Risky Business

By Larry Bonfante

What is the risk/reward proposition of leveraging cloud computing and other "everything-as-a-service" models? Cloud computing and software as a service (SaaS) are relatively new approaches to delivering technology services, and there remains work to be done. Taking issues of data security, privacy and compliance into consideration is critical. However, using these considerations as excuses not to leverage these exciting new capabilities is a mistake.

Many CIOs take a command-and-control view of IT leadership. They consider budgets and headcount as ways to validate their importance in the organizations. The larger their budget and headcount, the bigger their bravado. This is a dangerous mindset. My goal as CIO is to deliver operational excellence at the lowest possible cost so that we, as a business, can invest these savings into things that drive business value. One of those things is technology innovation.

I've heard many CIOs complain that they don't have enough seed money to fund the innovation engine. Yet, by lowering the cost of the utility portion of running IT, we have been able to take much of those savings and reinvest those dollars into capital projects that drive innovation. Along the way, we've improved the technology experience and
capabilities for our internal clients, as well as for our external consumers.

While many organizations are running an operations-to-innovation ratio of 80:20, we at the U.S. Tennis Association have actually tipped the scales in the other direction. We are starting to invest more dollars in innovative new projects and capabilities than we spend each year on keeping the lights on.

Don't get me wrong: Keeping the lights on is definitely Job No. 1. However, we have found ways to leverage cloud computing for non-consumer-facing solutions, which has significantly lowered the cost of hosting these solutions. For example, we have migrated to a SaaS email model, which has lowered the operating cost of delivering this service, while eradicating the constant need for capital investments to increase email storage and upgrade software versions. Over the past few years that they have been in place, our service metrics have actually improved.

Certainly we are always concerned about security and reliability. But I have a hard time believing that a midsize company can do a better job of hosting than Amazon can, in spite of their recent outage. Sure, organizations in certain industries can't afford to risk this level of data access. But do most of us really think we can maintain these services more reliably, securely and cost-effectively than the largest providers?

If you wonder why you're not engaging in strategic, board-level conversations, think about how much of your time you spend on the utility side of your responsibilities. "Risky business," indeed!

About the author

Larry Bonfante is CIO at the United States Tennis Association and founder of CIO Bench Coach, LLC, an executive coaching practice for IT executives. He is also author of Lessons in IT Transformation, published by John Wiley & Sons. He can be reached at Larry@CIOBenchCoach.com

This article was originally published on 09-01-2011