Many who work in IT have heard variations of these statements from well-meaning senior colleagues. And given how much technology underpins so many trends, as well as the increasing pace of innovation, IT leaders can expect to hear more of them and feel pressure to act on them.
Sometimes it makes a lot of sense to act quickly on a trend. Innovation, after all, is a hallmark of successful companies. But not all trends are created equal. The annals of many IT organizations are littered with bold initiatives in trends that created a lot of excitement but not much value. Moving quickly to chase a trend often bogs an organization down, leads to wasted spend, and takes attention away from important priorities.
For this reason, the ability to evaluate trends quickly and communicate their relevance to the business is becoming a critical capability for the modern CIO. In practice, it is rarely as simple as saying “yes” or “no” to investment in a particular trend. Trends are unpredictable, change with time, and their relevance to a given business often waxes or wanes. Instead, CIOs need a clear set of parameters to rely on both for evaluating trends and for determining which posture to take for engagement with them: first mover, fast follower, slow adopter, or sometimes non-partaker.
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The four guides for determining a trend’s relevance
We researched trends of the past to find patterns that can help us better understand how to evaluate them in terms of their relevance to a business. There are many reasons why attempts to turn a promising trend into a profitable one for any given business may fail—insufficient talent or leadership nonalignment come to mind. But we have also found that trends that add value have inherent attributes that make them particularly valuable to any business. We’ve boiled them down to the following four:
Disruptive business value: The trend can result in measurable value to the business.
Independence: The trend allows the organization to work in smaller, more independent units.
Connectivity: The trend reduces friction in the organization’s connectivity.
Extensibility: The trend can broadly shape and improve the organization’s technology and management practices.
You don’t necessarily need a green light across each of these four parameters to make investment in a trend worthwhile. But if one of them comes up red or yellow, it’s worth taking a closer look before making a significant commitment. And while trends often initially aim to address just one of these areas, their relevance and impact rise dramatically when they can be applied coherently to all four.
It’s worth emphasizing that this evaluation isn’t a simple checklist. It requires rigor in the analysis, a willingness to review the analysis on its merits (without being influenced by how it might serve a narrow but favored “pet” project”), and creativity—some trends aren’t particularly meaningful on their own, but in combination (virtualization and cloud, for example) can have greater potential.
1. Disruptive business value
Almost any trend or development has the potential to improve something in an organization. The question is whether that improvement is worth what it costs. It’s important to understand the trade-offs. You may save money or generate value in one area by adopting a certain trend, but will it cost you in another?
The most important points to determine are whether the value is to IT alone or to the business overall, whether that value is merely incremental or significant, and whether success is clearly measurable in KPIs. If a trend improves an IT process but can’t be directly linked to a business advantage, then it’s probably not worth a significant investment. For example, much of the benefit of cloud computing comes not from improvements to IT productivity but from how it accelerates and enables business processes and innovation.
The value of some trends will depend on the sector where they are applied. Blockchain’s value potential, for example, has differed from industry to industry. While in some areas of financial services, such as cryptocurrency and collateral management, blockchain has the potential to create a lot of value, in other industries, such as consumer packaged goods, the value potential is less clear.
Key questions
Does this trend provide disruptive business value? If the value is incremental or isolated to some operational improvement in IT, then the trend isn’t really worth a “big bet.”
How will you measure value capture? Every initiative has metrics, but they are often hazy or do not clearly reflect business value. Be disciplined in developing measurable objectives and key results (OKRs), and determine which KPIs contribute to them. This clarity is critical during implementation to see whether what you’re working on is delivering value and why or why not.
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2. Independence
One of the tech executive’s key challenges is that IT often has too many interdependencies, which leads to technical debt and administrative processes such as alignment meetings and process coordination—for example, when changes to the billing system depend on numerous other systems and development teams, meetings and delays are inevitable consequences.
The concept of “modularity” has been in vogue for almost two decades now, but the enthusiasm for it has generally not been matched in its implementation. APIs have certainly helped, but they don’t address the important organizational changes that also need to happen to reduce dependencies. That’s where moving toward a product and platform operating model—where independent teams work on user-facing products while platform teams build capabilities to support them—can have significant impact. Assessing how a trend can be profitably adopted and supported by either product or platform teams should be a critical criterion for evaluating its potential.
Many of us are familiar with the big trend some 10 to 15 years ago toward large-scale outsourcing of IT to an external system provider. The rationale was that external providers would reduce IT’s overall cost. For some industries with low margins, large-scale outsourcing deals were at least partially successful. But the system dependencies didn’t change. So, as the need for speed and flexibility in technology grew, the savings from outsourcing were increasingly outweighed by the system dependencies that remained in place and slowed the pace of development. With modern software as a service (SaaS), on the other hand, only a specific, relatively independent, and clearly contained functionality is outsourced to a vendor, making this approach much more scalable.
Key questions
Does this trend allow me to make my teams more independent—for example, by automating communication at interfaces or reducing the need for coordination and up-front planning?
To what degree will this trend enable a more modular IT estate? Look for specific benefits, like a trend’s ability to separate different applications from each other or abstract layers of the technology stack.
How many parts of the IT estate are needed to make this trend run well? The greater the
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