Chief Information Officers will soon behave more like venture capitalists and less like their old selves, making bets and taking losses while racking up the occasional big win. What’s more, their bosses are going to like the new approach.
So says Deloitte’s Tech Trends 2014, an annual report that attempts to tease out the big trends in information management. Topping its list of developments is this notion of CIOs accepting higher risk than previously acceptable while managing a portfolio of projects with varying degrees of upside potential — and downside.
“CIOs who want to help drive business growth and innovation will likely need to develop new capabilities,” the report says. “Like venture capitalists, CIOs should actively manage their IT portfolio in a way that drives enterprise value.”
Likewise, the CIO will evaluate portfolio performance in “terms that business leaders understand,” such as value, risk and time horizon to reward. Combine those traits with agility and the ability to align talent with the portfolio, and the CIO can “reshape how they run the business of IT.”
The VC approach embodies a willingness to invest in many smaller, experimental projects, perhaps with much shorter timeframes than normally associated with IT. Some of the projects will be flops, but Deloitte points out the activity will show that IT is attempting to find new ways to serve customers and staff.
This “doing something” will help keep IT staff and the CIO employed and viewed as valuable players. The approach will replace yesterday’s long-delivery IT projects with shorter-term, more highly leveraged endeavors.
Of course, not every project will be an experiment, and portions of the IT portfolio won’t be new or fast-moving. Still, developing a VC’s perspective on investment, risk and time to results will help CIOs present their work in ways other C-level executives will understand.
Eliminating Hidden Costs
The report introduces the concept of “technical debt reversal,” or the recognition that legacy systems impose costs and can hinder an organization’s ability to adapt to changing business conditions. Understanding that debt can enable companies to ditch systems that have outlived their useful life and now impose a drag on the business.
Bottom line: The report reinforces those who say IT departments must evolve to match deep business understanding with an equally deep understanding of the technology used to reach business goals.