What's the most efficient way for IT to bring new technology into the enterprise?

By Howard Baldwin

At various times in my career, I've been lucky enough to be the designated "new technologies" editor - the one to whom vendors explained how their latest breakthrough would solve the problems of the enterprise. It was fun: people were always telling me what the future was going to look like.

But new technologies are not so fun for CIOs. When 80 percent of your IT budget is spent on maintenance and only 20 percent is available for new technologies, your buffer for error and misjudgments is severely limited. Prudent CIOs might feel that it would be easier not to deploy any new technologies at all, but competitive pressures abrogate that plan of action. In many industries, especially global ones, product innovations - many of which come from technology these days - mean the difference between success and stagnation. You can't stand still, and moving forward is fraught with peril. Welcome to IT.

How do you discern the technology that will make the most difference to your company? Experts recommend three key tactics - building an advanced technology group within your company, looking for innovation beyond your company, and designing the prudent pilot project. These methods won't eliminate every misstep, but they will improve your odds for success considerably.

Build an Advanced Technology Group

When you set sail in search of innovation, not unlike the navigators of old, you need a lookout sitting atop the mast in the crow's nest, someone who can see better than anyone else on board what's ahead. Most IT organizations call their lookout the advanced technology group, but the function matters more than the name. Its members - and there may be anywhere from a handful to a dozen, depending on your size - follow technology innovations to see how they might serve your company's needs.

You might think this is the perfect place for your technocentric staffers, but it's not, experts warn. Even - or especially - in advanced technology, IT must understand how what they are proposing will impact the business. "One of our clients starts the process with a discussion between the senior technology planning team and business strategy team," says Chris Curran, chief technology officer of Diamond Management & Technology Consultants. "The business people talk about the business capabilities that are needed over the next three years, and that guides the technology planners."

One of Diamond's clients, a property and casualty insurance company, wanted to better understand the reasons behind the claims their customers were filing. "One of their technology staff realized the company wasn't leveraging a lot of the information stored in ancillary forms of communication relating to the claim," Curran says, and the IT staffer started talking to vendors about software that mined pertinent text from unstructured data. "When he comes back with suggestions, he has an immediately interested party, as opposed to his coming to the table with whizbang stuff the business can't apply. There's immediate linkage."

Certainly your advanced technology group should be able to propose a new technology. But whatever the group proposes must make sense within the context of the business. Bringing a new technology to the table with nothing more than "isn't this cool" will inspire blank stares and less credibility for IT.

In companies that may not consider themselves early adopters - precisely because they have little room for error - the advanced technology group should also be looking for ways to apply technology that has been successful in other industries. What's new for your industry may not be new for others, says Bob Haas, who heads the strategic IT practice of consulting firm A.T. Kearney: "Product lifecycle management is widely used in the automotive industry, but it's just beginning to catch on in consumer goods." By looking at such applications, you can reduce risk considerably. For instance, consider the application of RFID technology in the medical industry. Whereas RFID is traditionally used to track inventory in the supply chain, hospitals are using it to locate expensive equipment within the confines of the building.

Look Beyond the Walls

Just as important as sitting in the crow's nest is coming down from it. Understanding how technology from one industry applies to another comes from having an open mind. "The team should leverage a network of colleagues, especially those in other industries," says Haas. "They need to talk to universities, consultants, and vendors about what's new and different out there."

One of Curran's clients formed an alliance with the MIT Technology Lab. "They brought people from MIT in and asked them to talk about what's on the horizon. With both business and technology people at the table, it gets people thinking about applicability of the technologies." (Again, he stresses, the conversation has to be bounded by business needs, not just pure technology.)

Curran notes that there are ways, through such partnerships, to try out new technology inexpensively. He suggests developing relationships with the R&D labs of the larger consulting firms; you may be able to offer them a venue to test a technology in a real-world situation, simply by agreeing to be the subject of a subsequent case study. Frequently you don't even have to deploy the technology permanently or get involved with the sales side, Curran says. The consulting firm gets the credibility of your name, and you get their expertise.

Solve the Puzzle of Pilot Projects

Pilot projects are a common way of testing new technology to see if it actually meets the needs it purports to. How do you gauge that? By setting up metrics for success based on a hypothesis and the parameters of the pilot. For instance, using the example of unstructured text cited earlier, an insurance company might want to offer 100 agents in three cities use of the technology for three months, and then determine if they were able to settle claims by specific metrics - faster, cheaper, with fewer appeals.

But experts recommend against looking at pilot projects as a simple yes-or-no experiment. Within the consulting and system integration firm Computer Sciences Corp., CIO David McCue works with a portfolio governance board that runs studies of new technologies. "The board develops a business case and a plan for pilot projects. We fund them against a series of milestones until they can demonstrate a viable commercial offering."

Milestones are the key. They provide a predetermined element for gauging progress. "We have gates and checkpoints through each stage of measurement," says McCue, "and we make judgments about whether it's worth taking the project to the next stage." The challenge in a large enterprise, he notes, is "getting the right people to pay attention to the pilots at the right time. The people working on the project have a vested interest in making it work. That passion is good, but you also need someone to maintain perspective, someone who can step back and stop it if necessary."

It's important that the team also acknowledge unexpected results: "Issues pop up during pilots," he says. "You get results you never thought about." Because of that, both McCue and Haas suggest that you might want to stretch the payback period of ROI on a completely innovative technology. McCue says, "We have approved pilots based on intangible benefits that overweigh the financial ROI. When you're experimenting with newer technology, it may lead you somewhere you don't anticipate going, where it's hard to quantify."

Strive for Consistency

One thing about new technology is reliable: its onslaught is as relentless as the seasons. For that reason, if nothing else, consultants recommend that when you create an advanced technology group, you commit to it going forward. This not only provides a cultural consistency, but also ensures that the results of suspended projects are kept and catalogued for future reference.

Not all companies succeed in this commitment. Haas remembers, "In the eighties, everyone had an advanced technology group. But companies tended to overreact to cost pressures, and all those groups were disbanded. The hardest part may be convincing management that you need a steady year-in, year-out budget, but the fact is, if you whipsaw the group between the two extremes, you won't get anything out of your efforts."

But the situation is better today, Haas says. "There's more recognition that IT can play an important role in driving innovation," he notes, and "an ongoing advanced technology group can provide that capability." That means that embarking on a voyage for innovation is more likely to open up new worlds to conquer.