Risk is often the biggest roadblock to adopting new technologies. From financial risk, to security and compliance challenges, the fear of “what might happen” can stall decision making, leaving companies to rely on obsolete legacy technology.
By understanding the potential risks of new technologies, an organization can proactively work to mitigate those risks, and confidently adopt solutions that will help move the business forward in achieving its goals.
Common Risks Associated with Technology
There are some common and serious risks to consider when adopting new solutions or partnering with third-party vendors. The most common categories of risk that can delay decision making include:
- Increasing Costs – Quality IT solutions are not cheap. Making a significant investment in technology can be extremely stressful, especially when the non-technical members of the decision making team don’t have a firm understanding of a solution’s purpose, or how it affects other areas of the business. The wrong choice can mean losing money on the purchase cost of the solution, but if that solution is ineffective, it can have a far-reaching effect on productivity and efficiency, and can have a negative impact across the organization – all of which affect the bottom line.
- Security – No organization wants the reputation that it cannot keep information safe. Data breaches lead to swift and fierce backlash from the public. Moving from one technology solution to another can open the organization up to significant security risks, especially if decision makers don’t know the right questions to ask potential new vendors. “Security” means different things to different people, and what constitutes “secure” data for one industry may be a compliance nightmare for another.
- Obsolescence – It is almost shocking how quickly a technology can go from the “next big thing” to obsolete. Some organizations are hesitant to adopt new systems and solutions because they’ve seen their investments go to waste in the past. Without inside knowledge of IT trends, it’s easy for a company to find itself operating technology that is no longer effective.
- Skills Availability – CIOs are in a constant struggle to stay afloat with the staff that they have. Organizational leaders with a roster of expensive human capital of IT experts worry that adopting new technologies will see valuable staff troubleshooting glitches rather than working on value-add projects – or they simply do not have the staff or the skills to incorporate the new technology without adding more strain to an already overworked IT department.
Prevent IT Paralysis: Assess Risk by Asking Questions
The first step to minimizing the common risks associated with IT is to assess them with honesty and candor. Address the leadership team’s fears and all “what-if” scenarios head-on, one by one by documenting the pros and cons of each option. This simple, but effective, risk assessment process helps leaders find a solution that addresses their needs as well as their concerns.
To get to the root of risk-related fears, the team should ask themselves questions such as:
- What happens if this fails?
- What does failure look like?
- How will other goals be adversely affected by this potential failure?
- What is the likelihood that this fear will be realized?
When selecting new technologies, the organization’s leadership team must discuss those “what if” cases with potential vendors, to learn how potential providers can and do handle the worst-case scenario.
Once the team has outlined and planned for worst-case scenarios, the team must next tackle the best case scenarios, by assessing the potential benefits of adopting the new technology. Ask question such as:
- Which objectives will this technology help to achieve?
- Which goals will also be positively affected?
- What does success look like?
This can help the team balance the potential for success against the potential for failure, determining if, where and how benefits outweigh risk.
Why a Case-by-Case Approach Fails
Organizations frequently overlook one crucial risk-mitigation step as they adopt new technologies: strategy. Most companies tackle IT projects on a case-by-case basis, seeking RFPs to solve a single pain-point. When a company treats technology as such, rather than taking a strategic, holistic view, risk remains a high concern.
For example, the adoption of new technology may inadvertently impact legacy systems. Let’s say that a company implements a solution that does not interface well with their current technology stack. That solution will never perform to its full potential (if at all), without overhauling the stack. Those changes could require a significant additional investment, and could have a ripple effect on infrastructure, required skills, and even security. In situations like these, the company’s narrow-scope approach left the door open to significant risk.
Mitigate Risk: Align IT and Business Strategy
Companies enjoy more value and less risk by aligning the IT strategy with the business strategy. Technology should drive success – it shouldn’t, and needn’t exist in a constant cycle of breaking and fixing and an endless parade of one-off, point solutions.
The IT department must know and understand the goals of the organization and the company’s strategy for achieving those goals. Why? Because when the CIO and IT leaders understand the business strategy, they have a better idea of how technology can get the company where it wants to go. This understanding also allows them to weigh out the effects that changes can and will have on other areas of operation, and gives them a starting point to strategize ways to minimize those effects.
If, for example, an organizational priority involves moving products to market faster, CIOs and tech leaders can focus on the systems and processes that reduce time to market. They can address the specific risk associated with implementing new systems and predict the ways those new technologies may affect other areas of the business. This affords them the tools to develop plans to minimize the risk of potential negative impacts. If the IT team will need to be retrained in order to get the most from a new technology, for example, that training can occur proactively, rather than reactively. If a proposed system runs on nearly obsolete technology, they can present an alternative that ensures the organization can get the most from its investment for years to come.
When technology leaders have a full understanding of organizational goals, their teams can keep the big picture in mind with each and every proposed change. They can isolate the risk associated with adopting new systems and processes and proactively work to reduce risk. Through open communication, they can lay out the best and worst case scenarios for business leaders; together the team can strategize ways to mitigate against that risk, so that the end result provides value and helps move the company toward its overarching goals.
Whether it’s concerns about costs, compliance, or security, each organization will approach risk mitigation in its own unique manner. But the basic tenets remain the same for any organization: open communication between IT and business leaders is a surefire method to keep information flowing freely and to enable efficient, accurate decision-making that drives success and reduces risk.