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Mar 26 2013

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Is Risk-Averse Innovation an Oxymoron?

According to a recent IDC webcast I attended, nearly 60 percent of CIOs interviewed claim their top goal is to better align their IT organizations with their business. In other words, these CIOs feel they must now focus more on business versus technology strategy (register to attend this free webinar here). On one hand this seems reasonable – CIOs are part of the senior management team, so should be focused on the business first, and how IT can be used to further advance these initiatives.

At the same time, the business has made significant investment in its IT systems. CIOs “own” wide range of strategic applications (ERP, MES, WMS, QMS, CRM, etc.) used across multiple locations by nearly every employee in the company. Maintaining manufacturing execution systems and others takes a huge effort, especially for those organizations that truly operate on a global scale across their enterprise. The decision on how to maintain and invest in these IT systems has a direct impact on overall company performance.

Industry leading CIOs strike a balance between their strategic business objectives while maintaining an IT investment strategy. Successfully achieving this objective can help the business to grow while improving competitive advantage.

As part of achieving this balance, some CIOs attempt to rationalize their applications portfolio to remove those programs deemed too costly to maintain, but don’t actually deliver much business value. But, all too often, this discussion is limited to what applications are going to survive instead of a broader discussion about technologies and IT platforms that could best address the future business needs of their enterprise.

Other CIOs take a different approach, electing to simply keep maintaining their legacy applications. This strategy feels “safe,” and falls under the guise of “if it isn’t broken, don’t fix it.” Unfortunately, a CIO that adheres to this strategy over an extended period of time will eventually run into trouble … systems integration problems begin to occur, training needs are unmet and staff turnover can create a nasty support issue if no one knows how to make an adjustment or perform a system upgrade. In the end, there comes a time when legacy applications simply cannot be supported anymore and must be retired.

Reducing Risk to Accelerate Innovation

The best approach is to simply avoid getting “backed” into a corner where a legacy application suddenly fails, which then creates enormous pressure to find a quick solution for a problem that might not be that easy to address. It is all about finding a balance between a risk and return on investment. Now is the time to start thinking about a strategic lifecycle for the legacy applications that are, in essence, orphaned today with not real tie-in to your broader manufacturing strategic objectives. The best perspective is to think about its value to the business, not just to IT.

The visionary CIO looks ahead and changes before they have to. They seek an opportunity to support business changes and elevate the value they bring to the table. If you want to be such a leader, then you will need the “tools” to do so. That means having the flexibility to perform frequent changes within your IT environment without worrying about how to accomplish these changes.

Implementation of a flexible IT platform that adapts to the changing needs of your business can be a powerful enabler of innovation. For the innovative CIO, an introduction of a next generation IT platform for manufacturing is an incredible opportunity to shift their focus away from simply maintaining IT applications to how they can enable the business to take new directions and respond faster to change.

This type of thinking can literally change the way a company does business. New processes and strategic opportunities can instead be embraced and pursued rather than minimized and avoided. This type of mindset can be a turning point in defining a company’s manufacturing transformation and landscape.

Visionary CIOs have the courage to enter the path of improvement rather than stay in status quo. They carefully identify business needs. Then, they plan, design and execute this transition in multiple steps, learning from each step in execution.

Are you a visionary CIO? If not, what is holding you back? Are you risk-averse? One of the most important decisions you face on your career journey is choosing the right IT strategy that also supports your business strategy. If given the choice, I would propose the flexible option results in less risk than the static one … but in the end, you will need to make this decision.

 

Permanent link to this article: http://www.apriso.com/blog/2013/03/is-risk-averse-innovation-an-oxymoron/

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  1. XTC—Examining the Change: Changing the Relationship with Risk | Blanc and Otus

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