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In a recent earnings call, Jamie Dimon, the CEO of JPMorgan Chase, made a very curious concession when asked about the bank’s ambitions to modernize its infrastructure: “If we can spend $2 billion more and get to the cloud tomorrow, I would do that in a second.”
How could an organization – known for an IT budget larger than the GDP of entire countries – lag behind on the single most important industry trend? After all, the global shift toward cloud computing has been in full swing for years.
So was it oversight, or a miscalculation regarding the importance of the cloud? Most likely it was neither of the two. Chances are the problem stems from commitment to legacy technology choices that hampered uptake of innovation.
In other words, it is vendor lock-in to systems that is most likely to blame.
Practically every enterprise battles with lock-in as it moves to the cloud. Ironically, those firms that are known to be eager early-adopters of technology are often the ones most affected by vendor lock-in—exactly because of their early bets on new trends. In particular, the vendor lock-in of databases often hampers modernization efforts down the road.
In the following, we take a look at the primary ways IT leaders may accidentally increase their exposure to tech vendor lock-in. Three roads to adoption stand out as being quite common – and responsible for stunting future modernization initiatives.
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1) The Resume Builder Trap
Enterprises expect their IT leaders to constantly evaluate and adopt new technology. What better way is there than measuring a leader’s instinct for innovation by their resume? So, not surprisingly, IT leaders have long been conditioned to collect brand and product names on their resumes.
Enterprise software salespeople have equally long known about this phenomenon and exploit it quite artfully when selling into early-adopter accounts. Even though executives in the data space seem less susceptible to it, resume building remains a weak spot in most organizations.
Once a new infrastructure or methodology gains ground, it can quickly morph from the initial hype it once was to becoming the proverbial Holy Grail. Given the strong emotional buy-in from an IT leader, the technology is then untouchable even when it’s become clear it wasn’t the right technology or it has outlived its usefulness.
There’s a fine line between being a visionary and being stubborn. The mileage an organization gets from a technology choice makes the difference between these two very clear. Instead of building a resume based on technology, IT leaders are better off emphasizing value and the outcomes they affected.
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2) The First Mover Advantage Trap
Data analytics is the ultimate competitive advantage. There are few superlatives and probably no colorful metaphor that have not been used to underline the importance of data in the past years. A close second is naturally the processing of data. The ability to process more data, process data faster, or process data in new ways can be a distinct competitive advantage.
However, at the macro level, individual data processing systems are rarely the limiting factor. Inefficiencies in business processes and how data is handed off from one stage of processing to another are much more likely culprits that keep the enterprise from getting maximum value from their data.
This puts IT leaders in a difficult position. Adopting a wide range of technologies on an ongoing basis can advance the firm’s competitive posture. At the same time, it typically requires a highly skilled workforce to manage these systems. Often the benefit of new technology and the cost of operating it cancel each other out.
For example, as cloud database offerings mature, custom solutions or personnel-intensive technology like Hadoop quickly fades and cloud offerings win out in the long run.
Just as with the resume builder above, IT leaders who prioritize first mover advantage run the risk of creating a situation where a particular technology becomes so entrenched that it keeps the organization from moving forward.
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3) The Going All-In Trap
The third challenge in this analysis is often the result of forceful corrective action. After years of liberal adoption of various technologies, an organization comes to a breaking point of being unable to maintain a sprawling fleet of technological systems and sees increasingly limited return from their investments.
At this point, IT leaders may be tempted to change tack radically and re-platform the entire organization to a small, select group of technologies. Such a move will require many, if not all, applications and clients to be rewritten in the process.
This going all-in approach is fraught with extreme risk. First, there’s the risk of not being able to actually complete the initial rewriting of applications. Second, it is the classic “scuttling the boats” approach and instantly creates lock-in to both the leaders’ doctrine and the chosen technology.
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How to Make a Move: Striking a Balance
Ultimately, tech adoption is but a strong reflection of the well-known Innovator’s Dilemma, as formulated by the late Harvard professor Clayton Christensen. As he laid out, at any point in time, current technology and processes hamper innovation because of the commitment to the status quo.
Typically, the Innovator’s Dilemma is used to explain a manufacturer’s failure to advance their product offerings, but it applies equally effectively to IT departments whose innovation is curtailed by vendor lock-in.
This is not to say that early adopters are worse off in general. Much to the contrary. However, the discipline of technology adoption is still vastly under-appreciated. Striking a balance between the different aspects above requires a sophisticated approach and an eye for robust solutions that combines strategic vision and incremental implementation.
About the Author:
Mike Waas is the founder and CEO of Datometry