The Technology Portfolio

I remember 2010. The technology landscape was straightforward, the cloud was a new, not a ready for prime time product. Some form of SAP and Oracle was implemented by just about every major company. Custom development was for system integration, websites, and SOAP based web services. Mobile was the up and coming technology that everyone was trying to figure out how to support. In comparison to today, life was simple.

I say life was simple because as you look at the technology landscape today, it has rapidly evolved. You still have mobile, web services, system integrations, websites, and even large ERP systems. You also have the cloud, and not just one cloud provider. You have Amazon, Google, Microsoft along with many other small niche players offering what feels like endless services. You have IOT, Machine Learning, and Blockchain. You have serverless and containers. Salesforce is everywhere. As a technology professional, the list really feels endless.

So why am I writing this post. The point is simple; there are more technology services available than ever before. But, I am not convinced the process of choosing technologies for the enterprise has changed. It is the same “follow the leader” approach. With all of the options that are available, I start to think about my technology decisions like I think about the investments in my 401k. Which technologies should I invest in? Which technologies will be useless in two years? I won’t try to answer these questions for you, because like investment advice each situation is unique.

However, for companies, it is time to change how technology choices are made. Investments in skills and services are just that, ‘Investments’. We make those investments with the hope of attaining some value from them. If we group those investments together, we have a portfolio, whether we call it that or not. For CIOs and CTOs, it is time to put together a formal portfolio. It is time to make an investment hypothesis, and to measure value against each investment. Here are a few places to start.

First and foremost, for each investment you should do your research. This means understanding the technologies, understanding your business, and understanding your company’s skills/culture. A technology that is right for one industry might be completely wrong for another, so you need a keen understanding of your business and the technology. You should not underestimate skill gaps. It puts boundary conditions on what you can achieve. It will also identify skills you may need to add.

Like a good 401k, your portfolio should have diversity. You should not have all of your eggs in one basket. Technologies change and fade. There are companies that I have worked with that cannot adapt to the market because the skills are not there. Some continuous investment in new technology can ensure you are hedged if a technology takes off but not over invested if the technology disappears.

Take on only a small percentage of your portfolio as risk. Take on risks that could offer tangible rewards. Google, which has a large technology portfolio, invests what feels like a lot in their “Moonshots”, but that is just a small percentage of what they do. Figure out the right balance for your company. Focus on something new and fresh that can help you reach or understand your customers better, sell for cheaper, or cut costs. How can you be the next Amazon/AWS story? Creating AWS for was a risk, but a risk that became extremely lucrative.

The last point in this metaphor that I will leave you with is analyzing the costs. Mutual funds or stock trades have fees associated with buying, selling, and management services. So does technology. Understand the fees, understand the cost models that goes into the purchasing, maintaining, and retiring software. You cannot adapt to market conditions if you are locked into a dying technology.

With that I say, good luck and happy investing!