Breaking IT's seven-year innovation drought

A lack of disruptive technology caused enterprise IT spending to stall between 2002 and 2009. That trend is now reversing, with new technologies disrupting traditional businesses models and forcing investment.

In the Bible, Joseph’s interpretation of Pharoah’s dream predicted that Egypt would see seven years of fat, good harvests and plentiful food followed by seven years of lean times, poor harvests and starvation.  The prediction encouraged Pharaoh to save in good times to compensate for bad times.

The exact opposite has happened to IT.

IT is coming out of an innovation desert.  IT has had more than seven years of lean finishing almost a decade in which cost cutting, outsourcing, and cloud dominated technology innovation.

By seven years of lean, I mean the relative absence of IT based emerging technology innovations particularly in the period between 2002 and 2009.  During that time cost cutting, outsourcing and cloud dominated the IT discussions.  Taking cost out was the focus of these and other IT technologies like VoIP, Security, virtualisation, etc.  It was a decade with few new ideas or IT related innovations.

The journey drained much of IT’s innovation capacity and capability.  It is one of the main reasons why CIOs find themselves challenged by the requirements to innovative with digital technology – to build a digital edge .  For many, two recessions and a global financial crisis have bombed IT back into the data processing age.

IT has endured seven years of lean without the luxury of drawing on savings from prior years of plenty.  To some degree the opposite has occurred as IT budgets dedicated to operations increased to an average of around 70 per cent in support of legacy operations that grew out of the dot com era.

The result was a decade of budget devaluation with an emphasis on the cliché strategy of ‘doing more for less’.  From a business perspective this strategy has been relatively successful.  The number of situations where IT failure has impacted earnings and brand has been relatively small, particularly given the breadth and depth of IT cost cutting.  That defines a kind of success as executives cut back and held the line on tech spending without the predicted end of the world.

The Emerging Technologies of 2002 – signally a ITs entry into the lean

Starting in 2002, you could cut the IT budget and not harm the business because there were few, if any, disruptive IT technologies introduced during that time. Consider Gartner’s emerging technology hype cycle for 2002 as a proxy for the predicted future supply of emerging technologies.

 

In 2002 the 21 emerging technologies on the hype cycle some have come to pass, such as text-to-speech, public-key infrastructure (PKI), natural-language search and web services.  Others have not come into the mainstream like personal fuel cells and nanocomputing are still on the horizon.   The accuracy of the 2002 hype cycle is not the point here; it is the number and type of technologies that were seen on the horizon at that time.  There was not much to look forward to in 2002.

Emerging Technologies 2009 – signs that the IT desert was ending

Compare that hype cycle with the one Gartner published in 2009 – seven years later.  It’s a hype cycle that predicts the coming of a range of business related IT technologies.  The prediction of seven years of plenty is readily apparent when you look at the hype cycle published in 2009.

 

The 2009 emerging technologies hype cycle is filled with new business oriented technologies that were nowhere on the horizon just seven years before.  Social media, Location-aware applications, tablets, e-book readers, 3-D printing, etc. represent a robust pipeline of new business-oriented technologies.  Again the point here is not about the accuracy of the predictions but in the comparative size of the emerging technologies compared to 2002.   The difference represents the coming of seven years of plenty and an end to IT’s time in the technology desert.

Leading in a world of expanding opportunities

CIOs and IT leaders have been through the desert on a horse with no name, actually its name was “more for less.”  As it comes time to set the cost horse free, CIOs need to recognize that success in playing the hunger games in lean times is not the same pursuing strategies in times or relative plenty.  CIOs face strategies that call for both continued cost efficiencies and creating growth through innovation.   CIOs should not squander their hard won efficiencies, but they also cannot use cost and risk as reasons to squelch innovation.

This is the concern as CIOs know who to live lean and they may feel more comfortable sticking with their cost control knitting and miss the innovation and growth boat.   There already signs that this is happening, from the widespread consumerisation of technology (BYOD), to the growth of Software as a Service to predictions of increasing technology spend driven my marketing – all herald the return of IT and Technology led innovation and growth.

The reason for this post is simple. Growth can tear IT apart.

It is easy to bash IT and IT performance.  It is easy to make sudden demands for greater innovation, faster cycle times, increased responsiveness and agility.  Each of these elements is part of a future where new technologies create the opportunity for IT based innovations.  When those innovations do not come, then it seems easy to set the blame.

So far, the early results are that many IT organisations are more comfortable living in the lean then they are venturing into an innovative future.  Growth is more important than ever as it has to be earned via innovation, differentiated offerings and delivery against the brand promise.   How IT can avoid being torn apart by growth is critical to its future.

Emerging digital technologies and the potential they represent to create a digital edge  a significant change in context that drives changes in ITs context and desired capacities.   IT’s response to increasing digital demands global competition, and rising customer expectations to date is mixed at best.  While there is certainly room for significant improvement in IT, it is critical that everyone recognise where IT is coming from to know how far it has to go.

It is not an excuse for IT, but rather an explanation regarding the challenges facing CIOs and IT leaders as they leave an environment of emerging technology scarcity and walk in a land of digital based technology opportunity.  CIOs need to lead through that change by changing the way they think, manage, measure and lead IT.

During the lean times applying old answers to old questions or even new answers to old question was sufficient.  After all, the goal then was to do more with less.

Now the goal is to do more to build the business not put it on a diet.  The technologies exist to create the type of innovation required for growth.

Now, CIOs must recognise the need to put those tools to use.  If they do not, then someone else definitely will.

Mark McDonald, Ph.D., is a group vice president and head of research in Gartner Executive Programs. A link to a press release on Gartner's report on 2012 emerging technologies can be found here. The full report (registration required) can be found here

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