While it appears to be true, the reasons are less related to the economy than one might think.
I can imagine how leaden it must sound to CIOs when journalists, analysts, and vendors bang the gong about not letting the economic slowdown impact their ability to innovate. They, not we, control the purse strings and are the ones under pressure from their business colleagues to cut costs and to account for every dime that happens to be left over. It's the way of the "pundits" to keep the faith during troubling times, to push innovation and business growth, and to advise keeping the stiff upper lip in the face of adversity. However, for many CIOs, the gulf between these recommendations and reality can be very wide, indeed.
So, when I asked about a dozen CIOs recently whether they thought their colleagues were becoming more risk averse -- to confirm or refute what anecdotally I'd been observing the past several months -- I was expecting a spectrum of responses that essentially confirmed the hunker-down mentality. A validation not necessarily of their own strategies, but of the CIO mind-set in general. What I learned is twofold: 1) these CIOs confirmed that the majority of their colleagues are growing more risk averse, and 2) the reasons are less related to the economy than one might think.
That is, the growing aversion many CIOs seem to have to deploying newer technologies isn't necessarily related to a reduction in resources but rather to a broader concern for betting on unproven concepts. These technologies include the usual suspects -- social networking platforms like Twitter and Facebook -- but also concepts like cloud computing, virtualization, videoconferencing, and unified communications.
My conversations started with Kamal Bherwani, CIO for Health and Human Services for the City of New York, who has developed his own reputation for embracing leading-edge technologies and concepts. Bherwani says he's seeing a separation of CIO camps: There are the "cost-center" CIOs and the "ROI" CIOs. The former and larger group are growing more risk averse in adopting anything more than the most standard technologies, and the latter -- a much smaller contingent -- are, he says, "not letting this crisis go to waste."
If you are a CIO who is a leader of change, he believes, and the CEO and other business-unit leaders see you as such, then you'll focus on the return on the investment of cloud computing, social networking, and other concepts. "You have to be able to articulate the impact of the technological changes to the business that you are in, today and into the future," regardless of economic conditions, he says. In fact, that should be done with a rigorous process that can assess the risk of not getting a return on the investment -- and, one would presume, having the skill to be able to convince the business that it's worth such a risk. Once the business colleagues see the facts, even if some of the model is speculative, they will "take the right risks" and hopefully "get the right returns," Bherwani says. Even in these times, he says, cost should not be an issue, as long as there is accountability for the end result. Radical thinking, indeed, and one that requires a hefty dose of risk tolerance.
JP Rangaswami, managing director for innovation and strategy at BT (incidentally, that's the new "CIO" title at BT -- innovation, eh?) is someone who's proven to be anything other than risk averse with cutting-edge technologies. Rangaswami focuses on cloud computing as an example of technology where risk tolerance/aversion has divided CIOs into three groups: 1) those who are adopting it but haven't fully embraced all its benefits, such as multitenancy and unit-cost charging; 2) those who reject cloud computing but still use it, perhaps unwittingly; and 3) those restricted from deploying cloud computing because of geographic or regulatory reasons. It's the middle group that Rangaswami says "worry me the most." They find all sorts of ways to dismiss an innovation like cloud computing, but still allow employees to use BlackBerrys to sync their e-mail and other data in the cloud. In a way, that's taking the risk without acknowledging it, I guess!
Avnet CIO Steve Phillips says that although he doesn't see an overall shift in attitudes toward risk, he does acknowledge that his company continues to invest in projects with a hard return on investment (such as virtualization and mobile devices). On technologies where the ROI is less certain (such as some newer social media tools), Avnet takes a more cautious approach, pending validation of the technology or the marketplace. "Our approach here is to begin with small pilot projects that can be scaled up quickly if the initial results warrant," Phillips says. Of course, few companies dive headlong into any technology investment without careful evaluation, regardless of the economy.
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