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Mister CEO, Is Technology Arbitrage Possible?

You are CEO and your organization is about to spend $100 million on a new IT system to replace an outdated system. That $100 million dollars includes software licensing, hosting, consulting services and internal costs. The implementation is expected to take eighteen months. Your CIO has “de-risked” the project by selecting leading software and consulting partners. He even hired a big IT analyst firm to help legitimize the investment. You’ve given the project your blessing and have agreed to participate in monthly steering committee meetings. You’re doing your job properly, right?

Maybe not. Maybe all the benefits you sought from the new system are available for $30 million, but you didn’t realize it. Maybe you didn’t realize that the software vendor, the hosting company, your chosen consultancy, the analyst firm and your CIO want the $100 million project because your vendors make more money and delay their accountability, while your CIO gets to play in the “big game” that will help him land a $200,000 salary increase with his next employer. Maybe all those touted benefits from the new system including analytics, mobile, big data, cloud and increased security won’t help your company or your customers one bit.

Mister CEO, do you know how often $100 million projects become $300 million dollar projects? Or how often eighteen month projects remain unfinished until the sixtieth month when they are declared complete with merely thirty percent of the functionality you originally sought? Maybe your original objectives could have been realized in a much shorter timeframe for a $30 million investment. Don’t forget the first axiom of IT projects, “The bigger it is, the more likely it will fail.”

Mister CEO, have you surrounded yourself with people that can help you identify those technology arbitrage opportunities?