The Importance Of Elasticity
For instance, elasticity in a long-term technology plan is needed. How "elastic" are technology expense and related resources? How do these adapt to business changes, such as changes in revenue and business profile? And just what level of elasticity is really needed for the business? Elasticity is also closely related to elastic response time, which is how quickly the technology economy reacts to a change in the business. Elasticity is also important when considering the fixed and variable cost profile, which ultimately determines the underlying cost structure of technology.
In addition, CIO/CTEs need to determine a firm's IT supply chain, which includes what vendors are in the portfolio of providers. This will help determine how much of the technology economy flows outside the company and what the time-based commitments to vendors are. This information will help determine the elasticity of the portfolio.
Finally, a CTE needs to evaluate and determine how technology investment decisions are made. This includes how investment choices are made and what processes and KPIs are used. This analysis also needs to evaluate how applications are slated for retirement, which is very important. Ultimately, these investment decisions will help manage the portfolio of technology and, if done correctly, will maintain vitality over the long run.
In conclusion, the headlines in technical journals always seem to focus on technology innovation. However, it's interesting to consider whether the greatest potential innovation itself is not in the raw application of IT. Instead, it may be in the management of technology investment itself by the CTE -- continually optimizing the balance of IT expense, investment and outcomes, just like a chief economist constantly adjusts an investment portfolio.