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Balancing Agility, Innovation and Cost Efficiency: The CIO's Challenge

By Curtis A.Carver Jr, PhD, VP & CIO, The University of Alabama, Birmingham

"May you live in interesting times”. Attributed to a Chinese curse, but actually apocryphal, the phrase describes the challenges of the modern CIO. These challenges can be characterized by the delicate balancing act between services demanding agility, innovation or cost efficiency. Let’s start by defining what is meant by agility, innovation and cost efficiency and provide a framework for why this is so essential for the modern CIO.

"The relentless pressure to lower costs and provide new services contribute to the difficulty of balancing agility, innovation and cost effectiveness"

Agility refers to the rapid development and deployment of solutions that may be short-lived and not necessarily perfect. Mobile apps with short lifespans are a good example. Responsiveness, speed of deployment, and, adapting to a rapidly changing world present a compelling case for a portion of the CIO’s portfolio to be very nimble. This results in different tradeoffs in terms of risk, development approach and maintenance, organizational culture, and resourcing. Do it and move on immediately to the next emerging opportunity.

Innovation is different and references the portion of the CIO’s portfolio demanding process or technology transformation. This is a quite different approach and the term innovation means different things to different people. Woody Allen characterized this space with the pithy quote, “If you are not failing every now and then, you are not doing anything very innovative.” Innovation is a venture  something that transforms a process and creates a strategic advantage or differentiator. Again, this results in different tradeoffs in terms of risk, development approach and maintenance, organizational culture, and resourcing. Gathering enough data to determine early what will succeed and what to fail is critical.

Cost efficiency relates to all services but specifically those services that have become commodities and the cost of service is the principal driver. How can the CIO provide the lowest possible cost service that runs flawlessly always? In a race to the bottom, how does the organizational CIO determine services should be provided and which are better suited to a different internal or external organization? The CIO is constantly adjusting and balancing this portfolio of services and striving to drive the cost as low as possible.

So why is this balancing act between agility, innovation, and cost effectiveness the center of gravity for the modern CIO? Why is this so hard? Perhaps the most difficult component of this balancing act is that each component, agility, innovation and cost efficiency, requires a very different organizational culture. Consider risk averseness. The cost efficiency commodity arm of the organization wants services that run flawlessly at the lowest possible price. They are typically risk adverse. The innovation arm of the organization expects to fail occasionally while the agility arm asks what is this risk you are referring to? These differences in culture and associated challenges should not be underestimated.

Another component of the equation is that CIOs have to do all three  they have to be agile, innovative and cost efficient. No longer is IT simply a cost center  it must do more. Consider a CIO friend of mine who works for a major transactional company. About 50 percent of his portfolio is mobile apps that have an average life expectancy of 90 days. The remainder of his portfolio is enterprise systems processing millions of financial transactions every second and each must be executed flawlessly. Might there be a difference in risk tolerance, development cycles, and work culture and customer service expectations between the two groups? Leading an organization with such differences requires finesse and contributes to the difficulty of being a modern CIO.

IT organizations must do more for less is the final component of the equation. IT budgets are not keeping pace with the dramatic growth in demand for IT services. This means the CIO must realize internal savings, and invest those savings in agile and innovative projects that create business value. This involves significant risk and requires a mature business leader who is constantly evaluating the environment and investing and championing different projects. Move too slowly and the constituent groups complain. Move too fast and the constituent groups complain. Don’t move or don’t save enough money to reinvest in emerging services and the constituent groups complain. The relentless pressure to lower costs and provide new services contribute to the difficulty of balancing agility, innovation and cost effectiveness.

Picture if you will be this three armed mythical juggler of the modern IT organization with the CIO as its head. Each arm is juggling a different object. One arm is juggling running chainsaws. The juggling must be flawless or everyone will witness the resultant mess. Turning off the chainsaws is not allowed ever and this part of the IT organization is not very keen on adding more chainsaws. One arm is juggling works of art. Each takes some time to build and deploy and there is heavy demand from across the enterprise for works of art. The third and final arm is juggling orders at a fast food stand. Its order is fast and quick and immediately consumed. The customer will be back for more food later, but often orders something different. Each arm pulls the organization in a different direction, creating cultural tensions based on different perspectives and perceived paths to success. Keeping each arm in balance so that the organization does not implode due to the cultural differences is challenging. Keeping all the objects in the air is challenging. Keeping the IT organization aligned with the parent organizational culture and expectations is challenging. It is the dilemma and the delight of the modern CIO  the balancing act between agility, innovation, and cost effectiveness.

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