While spending on IT declined sharply beginning in the 2000-2002 timeframe, spending on emerging technology solutions from little known firms declined even more calamitously. This state of affairs has been compounded by the new rigor imposed by many organizations around system consolidation.
One CIO explained recently how their firm had "bought one of everything", driven by business users ferociously trying to meet their business requirements in the hyper-competitive environment of 1996-2000. This same organization has now imposed a rigorous centralized IT strategy, whereby it has been made nearly impossible for businesses to purchase new technology without approval from the CIO and corporate technology organization.
To mitigate the risks of new technology adoption, organizations are employing multi-tiered approaches. A number of firms have established or reinvigorated internal organizational groups focused on identifying and vetting promising new technology approaches and solutions. In some instances, the larger firms will even consider taking an investment position to help stabilize and ensure the longevity of a highly promising solution.
One of the critical issues for many F1000 firms is to identify solutions that are ready for prime time, based on initial successes while operating at scale at other F1000 firms. These "development stage" companies may be particularly compelling options for large firms looking to mitigate the risks while taking a more aggressive approach to innovation.
Promising development stage companies are typically below the radar screen of the large industry and financial analyst firms, yet may be establishing a formidable track record of success in the marketplace.
Regaining Competitive Advantage
Whether it means a 50x process-time improvement or a faster way to go to market with a new product solution, emerging technology represents a highly leveraged way for a business to rapidly gain competitive advantage in a congested market.
Industry leaders have gone through a process in recent years of wringing out excess expense and consolidating their core technology investments. As the business climate begins to improve, these same firms will likely refocus on differentiating themselves based on advantages such as speed to market, improved business processes, and building out their customer channels. A renewed focus on growth and competitive advantage is bound to generate an increased level of investment in technologies that will enable this growth and differentiation.
Not all of this will be achievable through the established players. F1000 firms will have to slowly embrace some of the newer, emerging technology options, but with a greater rigor and attention to mitigating the risks than was evident during the past decade. Eventually, this will be good news and mean improved fortunes for technology innovators. However, the process will be evolutionary and cautious.
The days of throwing caution to the winds are not likely to reappear on the foreseeable horizon. Fortune 1000 firms will seek to mitigate the risks entailed through emerging technology adoption, but once they have found the right solution for their particular needs, they will embrace the approach boldly.
Randy Bean is a managing partner at Boston-based NewVantage Partners, advisors to Fortune 1000 CIOs on emerging technology approaches and best practices. For more information, go to www.newvantage.com or call 781-643-9235.