CIOs Explain the Benefits of Early Adoption
- 12 December, 2008 12:12
There have been early adopters for as long as there has been new technology. Surely, when the first wheel was rolled out in 3000 BC, just a handful of Mesopotamians had enough insight and risk tolerance to give it a whirl while others looked on from a safe distance.
Not much has changed. That brave soul willing to embrace The New still sits in the same spot on the bell curve that Everett Rogers drew up back in 1962 to denote what he called the “diffusion of innovation” – just after the innovator but well before the early majority, the late majority and the laggards.
But within corporate IT, watching early adopters as they stumble isn’t necessarily the safest course anymore. The pace of technology change has increased so much that corporate IT leaders who don’t embrace emerging trends at some level risk ending up behind the competition. Gartner produced 70 “hype cycle” documents (analyses of new technology adoption trends) covering 1500 new technologies last year.
What’s more, it’s easier than ever to take new technologies for a test drive.
“Sometimes you can do it in your office in an afternoon,” says Matt Brown, a principal analyst at Forrester Research. “You can set up accounts and test out some new collaborative technology in a matter of hours before making a full commitment to it.”
Some emerging technologies, such as Google Apps, the iPhone and many open-source applications don’t even require a full enterprise-wide rollout – at least not in the old, big-bang fashion – to get real value out of their implementation. Then there’s the fact that anyone, not just people in the IT department, can try out the latest tools, whether or not CIOs sanction them.
Adoption of new technologies has spiked as IT has evolved from the complex tools, centralised systems and transaction-based software to the lightweight tools, abundant information and ubiquitous network-centric software that’s taking over the marketplace today, says Brown. As a result, early adoption of emerging technology is no longer limited to technology-centric companies or those with pockets deep enough to absorb the risk. CIOs in industries ranging from healthcare to car manufacturing see piloting and testing lesser-proven technologies as a critical part of their role.
“Ten years ago, CIOs spent a lot of time getting transactional systems – the giant stuff – in place,” says Robert Urwiler, CIO of Vail Resorts.
“But that’s not so much the job anymore. CIOs have more freedom to explore innovative ways to provide business transformation and more freedom to look around at emerging technologies. I feel like I have an obligation to do that.”
Page BreakIf Everett Rogers were to revisit the idea of early adoption in IT in 2008, that classical distribution curve might not look so bell-shaped anymore.
But none of this means early adoption can’t be difficult and costly if it isn’t managed well. Here, four American CIOs who have mastered the art of early adoption share methods that work for selling new technology to the business, for creating processes for shepherding new ideas into practice, for determining the potential benefit of new systems, and for creating flexible ways to roll out emerging tools.
Case Study 1: Virgin America - Putting emerging technology and risk in business terms
Talk to Bill Maguire long enough and he could convince you he came out of the womb embracing emerging technology. “For as long as I can remember, I’ve always been out there looking at new technologies, figuring out how to exploit them,” Maguire says. “I’m diligent about trying to keep up and have a good degree of confidence in my ability to do so.”
Maguire’s history as an early adopter contains successful and less-successful chapters. As the CIO of Legato, Maguire was one of the first IT executives to implement VoIP in 2001, saving the company more than US$3 million. The year before, running the US Postal Service’s primary datacentre as manager of computer operations, his organisation was among the largest, and earliest, users of VMware in the country.
A decade earlier, Maguire had introduced to the USPS one of the first virtual storage solutions in the country, StorageTek’s Iceberg disk-array storage subsystem. That didn’t turn out as well.
“It was bleeding edge,” Maguire recalls. It was also complicated. What should have been up and running in a few weeks took months to launch. “Once we got it, it put us way out in front,” says Maguire. “But it took three times longer than expected.”
Today, Maguire knows the right questions to ask in order to evaluate the business risks. “You have to understand your environment very well,” he says. “Then you have a good idea of whether a piece of new technology will really work for you or not.”
At Virgin America, where Maguire landed as CIO two years ago, that has been easier than at previous companies because Maguire built the architecture from the ground up. Yet risks still lurk in Maguire’s technology choices from the edge.
Page BreakVirgin America’s application stack is open-sourced to the hilt, from spam filtering to load balancing to document management. Although open-source enterprise systems aren’t yet a mainstream technology choice, it makes good business sense because it enables the carrier to keep IT costs down. But because the company is growing and is now running at about 100 flights a day, there’s concern whether these free or cheap solutions will scale. “With spam filtering, when you’re getting a couple thousand emails a day, it’s no big deal. But when you start getting 20,000, can you handle that?” Maguire did scalability testing, but it’s something he must monitor as the company expands.
Maguire doesn’t fall for emerging technology just because it’s new. At Virgin America, new technology must either improve productivity or keep costs low. Successful deployment starts with making sure company leaders understand the business case and the risks associated with less-tested solutions. Maguire might begin by telling them in basic terms what load-balancing software Ultra Monkey actually does. He then explains his thinking behind the open-source option: It costs US$3,500 per server versus a non-open-source option at US$90,000 per box. Finally, Maguire gives Virgin’s leaders a risk assessment for each new system – from low to extremely high – and the criteria he used to make the assessment.
It’s amazing what a massively reduced price tag does for the business’s willingness to take a chance on new systems.
“They’ll at least give you a few months to try it out,” he says.
Maguire’s biggest aides when assessing the risks of emerging technology are also his biggest doubters – the business systems analysts. “They’re technically knowledgeable but also understand the business,” he says. “And they’re the most conservative because they know whether something is really going to meet business requirements. They don’t have time to goof around with products that don’t solve a business need.”
Case Study 2: Vail Resorts - The search for the next big thing
Vail Resorts’ Robert Urwiler and his team of 110 think of themselves as technology innovators because, as a ski resort operator, they don’t work in a tech-centric business. “All technology innovation comes through the IT team so that has to be part of our core competency,” says Urwiler, who previously worked at software firm Macromedia. “It doesn’t mean we’re always going to be the very first user of software but it does mean we’re always on the lookout.”
Page BreakFrom his office in Colorado, Urwiler explores everything from social networking tools to mobile device applications to biometrics, looking for emerging technology that might be brought to bear at the company’s ski mountains in Vail, Beaver Creek, Breckenridge, Keystone or Heavenly. He works closely with vendors to identify emerging trends, keeps his ears open at conferences and talks to his peers. He encourages his team to keep abreast of the latest IT tools. “Ideas come from every place,” Urwiler says, the best ones being those that can provide competitive differentiation for Vail Resorts by improving the guest experience.”
When Urwiler explores new technologies, he worries most about the potentially negative effect on the customer. “Once we set an expectation about a new tool, it has to work,” he says. “We are very cautious about what we expose to a guest. This is the vacation of the year for some of them.” Urwiler doesn’t want to be the one to ruin it. To manage the flow of new ideas and make sure only technologies that will improve the guest experience get the green light, Urwiler created Vail Labs. It’s an idea incubator for vetting ideas and moving those with potential value from proof-of-concept to rollout.
The RFID wireless guest tags Vail Resorts will roll out next season started there. Urwiler’s team looked at biometric passes being used at some theme parks, which are based on finger geometry and involve scanning people’s hands. The Vail Resorts team determined that scanning hands wouldn’t work in the heavily gloved and layered ski environment, but the RFID component of such a system had promise.
Vail Labs fielded a proof-of-concept on the slopes, bringing mountain operations staff into the process. “Early on, there’s always a natural scepticism. You’re dealing with operations people who are very good at what they do. IT comes in with grand ideas about how to improve that, and there’s a show-me mentality.” For a pilot last season, 1000 patrollers and ski instructors wore RFID tags while Vail Labs logged information on usability, and the system was accepted.
If a new tool fails to meet requirements for usability and reliability, if there are concerns about the vendor, or if the cost-benefit analysis doesn’t add up, the technology never leaves the lab.
Last season, Urwiler looked at a friend-finder application for mobile devices. Urwiler had an agreement with the vendor whereby Vail Resorts would pay through a predefined usage model only after the technology proved usable. “The proof-of-concept was brilliant. There was a lot of excitement around it.” The pilot wasn’t so thrilling. The application, intended to enable skiers to locate each other via GPS, did not meet the reliability threshold. Urwiler and team are still hopeful in making the solution work.
“But because we took a conservative approach to it, we had very little money invested,” says Urwiler. “It was low risk.”
Case Study 3: Genentech - Controlled chaos and the scientific method
“I have a high level of comfort with paradox and ambiguity,” says Todd Pierce. “That helps when talking about new technology.”
That’s a bit of an understatement from the vice president of corporate IT of Genentech, who is currently overseeing roll-outs of Google Apps and iPhones. “A lot of being successful is figuring out what tensions – what paradoxes and conflicts – to hold,” Pierce continues. “Combining what’s possible with what’s practical, holding that tension, determines how successful I am as CIO.”
Cycling in the latest innovative technology is an exercise in controlled chaos for Pierce, who sees his primary role as figuring out how fast to deploy emerging technology to gain the ultimate benefit. This, Pierce notes, turns out to be a pretty tall order with new tools being introduced at a faster rate than ever before. The scientific approach of a biotechnology company, currently exploring new treatments for cancer and auto-immune disease, is boon and bane for IT. It’s innovative, “but that scientific mentality makes it very easy for them to question what you’re doing,” says Pierce. “People here are very willing to try new things, but it can’t just be new. It has to be new and better. And you have to prove it.”
The company was using 5000 mobile devices, including BlackBerries, last year when the iPhone hit the market and Pierce saw a business solution. Genentech deals with a lot of image-based data, but no one could imagine accessing it with the devices they were using. Pierce saw the iPhone’s touch-screen interface as an enabler for a truly mobile Genentech workforce.
He tempered his excitement with a five-month study last year, for which he gave iPhones to a group of mobile device users on his IT staff. Eighty-five percent of users preferred the iPhone and to date Pierce has rolled out 3000 of them.
The key for Pierce is that he doesn’t have to get to full consensus before rolling out an emerging solution. Ideas are floated and tests are run. At a certain point, once everyone’s concerns have been considered and the potential value of a technology has been validated, says Pierce, “I become the decision maker.”
It’s not as scary as it sounds. “We have a CEO who would rather be fast and make a mistake and recover from it than be slow and miss something,” Pierce says. “We don’t have to do everything all one way, or wait for all the factors to line up. A lot of decision makers get caught in that trap.”
Instead, Pierce segments his user base. Not everyone needs an iPhone and maybe Google Apps isn’t a good solution enterprise-wide. “There are cultural barriers when you have this much diversity of talent,” says Pierce. “So we’re breaking things down into smaller segments. We’re allowing for more personalisation, more customisation, more choice.”
Page BreakThat approach doesn’t work all the time. “It’s tricky with technologies that require you to enter at scale. You can’t phase your way into SAP,” says Pierce.
With Google Apps, however, Pierce started with 100 users and now has 1000 people using the software, at just US$50 a head. He can justify a bigger rollout based on the benefits of the calendaring system alone.
If any of the other applications show value, it’s an added bonus.
Case Study 4: Dannon – The art of modern mainstreaming
“Any organisation can play with cool new things,” says Jeff Hutchinson, CIO of food products giant the Dannon Company. “The key is figuring out which ones will actually drive business value and mainstreaming those into the organisation.”
To make the cut at Dannon, a “cool new thing” has to help the company increase sales, increase market share or improve efficiency. Once Hutchinson’s team proves an emerging technology is worthwhile, the real work begins – rolling it out to the workforce and creating new business processes to get value from it.
“Mainstreaming is when the business sees the solution or tool as something they wish to use, day in day out,” Hutchinson says. Today it can mean having to support several generations of technology for some users until the larger universe of them catches up. And it’s particularly tricky given Hutchinson’s diverse workforce.
“The workers coming out of school today have only had the internet,” Hutchinson says. “The way I hate having to write a letter and go to the post office to send it, this generation feels the same way about email. They’d rather use IM, SMS or avatars.” Meanwhile, he adds, the adoption cycle from research to roll-out, which used to take years, is down to a year or even less.
Hutchinson is figuring out the best methods for fast and effective mainstreaming of new tools with the rollout of Dannon’s massive Unified Communications and Collaboration (UC2) project. UC2 encompasses not only a leading-edge, unified communications component whereby calls and email and videoconferences can transfer from a business phone to a mobile phone to home to hotel without interruption, for example, but also the exploration of Web 2.0 tools such as wikis, blogs and technologies with capabilities similar to those provided by Facebook and Second Life.
Page BreakJim Panos, Hutchinson’s director of informing and innovation for the Dannon Company, along with CTO of Danone North America Mike Close, conducted a UC2 pilot within IT. They didn’t encounter any interoperability issues, because Dannon had been diligent about adopting standards-based technology in the past. Concerns about network capacity were solved with some additional investment in the network backbone and traffic management. At a corporate leadership event, Dannon IT highlighted some UC2 capabilities: a wiki for financial results and a videoconference capability for monthly business unit updates that could replace costly executive travel. Top business executives were sold on the value of UC2 right away.
Dannon is halfway through a rollout that could take another six months to a year. Panos found that audio and videoconferencing usage spikes shortly after these tools are given to new users, but, as he points out: “There’s a difference between adopting capabilities and institutionalising them. The challenge is to take those tools and redefine business processes.”
One HR leader started interviewing candidates by teleconference instead of flying them to the firm’s New York HQ, and Finance figured out a way to use a collaborative website to eliminate the large email files sent around during a close.
“You can’t underestimate the value of putting these tools into people’s hands early,” says Close. “The business folks innovated with the tools. They’d say ‘I get it, but can I use it to do this?’ That’s where it takes off.” Then Hutchinson spreads the word. He uses a wiki to share progress with business units. He is working with his parent company, Groupe Danone, and a network of regional business and IT leaders who share their UC2 approaches and concepts.
Just as voicemail has not been eradicated by email, IT leaders don’t expect the UC2 tools to replace all existing communication technology. “Both methods have to be there for a while. We’re going to have wikis and blogs, but some people will still [feel] comfortable with more traditional methods of communication,” says Panos. “We say, ‘Here’s another possible way to do things’.”
ROI calculations can be tricky, though. Beyond reduced travel costs and some increased productivity calculations, the payoff of UC2 is a little amorphous – increased quality of communication and work-life benefits for employees, for example. So Hutchinson measures success for the project differently, by tracking usability, adoption rates and employee feedback. “Those are soft benefits, but ones that are on the minds of executives today,” Hutchinson says.
Next, Hutchinson’s team will explore how other emerging communication and collaboration tools – intelligent search, streaming video on mobile devices – can take UC2 even further.
“I fundamentally believe what JFK said: ‘Change is the law of life. And those who look only to the past or present are certain to miss the future’,” Hutchinson says.