Blind Leap

Report highlights the need for proper decision-making when investing in IT

Arlington, Mass  September 25, 2002  Despite the billions of dollars spent on technology, not much money is spent on how major technology decisions get made.

This conclusion was made by Cutter Consortium Fellow Ken Orr in the analyst firm's executive report, "Managing Technology Decisionmaking".

Orr illustrated his point by saying that choosing technologies is not unlike choosing stocks; there are many to choose from, and you can't make the right call all of the time. In an up market, almost all stock choices look like good ones; in a down market, it's hard to find any good ones. "The same thing is true with technology decisions," he said. "In times where there is general agreement about the direction of technology, it is relatively easy to make good decisions; in uncertain times, it's easy to miss the turns in the technology road."

Managers need to look at diffusion of innovation (DOI) theory as a major tool in their management toolkit, he asserted. Orr has conducted research on how innovations are absorbed or rejected by society and how decision-makers actually make these decisions. He recently developed a basic technological decision-making strategy based on what he calls the Orr technology maturity model.

Orr's framework presents three different decision-making strategies, similar to those found in the game of chess:

1. The opening game: the prototype market  focuses on strategies for dealing with emerging technologies and products. It recommends developing a consulting relationship with emerging technology suppliers and ways of maintaining partnerships in early markets.

2. The middle game: the niche market  deals with strategies for dealing with suppliers and products that are perhaps technology leaders moving into strong niche markets.

3. The end game: the mass market  deals with strategies for dealing with market leaders. It also deals with how to keep an eye out for disruptive technologies and mental paradigm shifts throughout.

Said Orr: "Technology decisions, whether from the standpoint of the technology supplier or the technology buyer, are high-risk and high-value propositions for all large organizations. Technology suppliers, especially the successful ones, understand this very well. [Chief information officers] and CTOs [chief technology officers] need to be as well grounded in DOI research as are the people across the negotiating table from them."

CIOs and CTOs are expected to be change agents in their organizations. But there is a big difference between being a change agent and being a successful change agent. "Successful change agents," explained Orr, "understand their organizations, their businesses, and the technologies that they need to foster their business." According to Orr, understanding DOI models will better enable IT executives to:

" Evaluate technologies for maturity and use them within their organizations

" Anticipate the kind of support and packaging that various technologies will need to be successful in different organizational units

" Explain and sell diffusion efforts to management and staff

" Develop an organization that promotes change to all types of groups (innovators, early adopters, early majority, late majority, and laggards)

Orr, who, as part of his work with the Cutter Business Technology Council, predicts future trends that will have important impact on organizations, concludes: "In the next few years, CIOs and CTOs around the world will be making the investments that will set IT's direction for at least the next decade, maybe more. To make the best possible decisions, they need to think not only about the next cool technology but how that next cool technology will evolve as it is introduced to the real world."