Inside CIOs’ Investing Decisions

PALO ALTO, Calif. — Even executives at large technology companies can find themselves challenged about when and where to invest in the latest gadgets, software and IT improvements.

“One thing we contend with all the time is being presented with innovations that don’t solve a problem we have,” said Colleen Berube, vice president of enterprise applications at Adobe Systems. “We have to make a decision on what’s actually worth making an investment in.”

Berube joined a panel of tech execs at the AlwaysOn Summit here about where CIOs are putting their IT investment dollars.

Moderator Al Delattre, a partner at tech consultancy Accenture, joked that we may be in for another round of products and services with an ‘e’ or ‘i’ before their name “to make it sound cooler” rather than truly useful innovation.

One hot trend that did get a lot of discussion is cloud computing. Russ Daniels, vice president and chief technology officer for cloud services at HP (NYSE: HPQ), said he feels part of his job is to dampen expectations of what the technology can do. While promoting the benefits of cloud computing for certain applications, Daniels said he also has to “help calm down some of the hype that’s out there that two years from now you’ll throw a switch somewhere and you won’t need data centers.”

In Daniels’ view, cloud computing is appropriate technology for implementing self-service applications. As one example, he cited Amazon’s EC2 service, which lets individuals access compute services with a credit card.

“Also, you need to be able to take advantage of the technology and collect and analyze the data and understand how it’s being used,” he added. “For the enterprise, it [cloud computing] is not a great substitute for delivering complex applications.”

While a proponent of cloud computing, Daniels said other technologies have even greater promise to advance IT’s agenda. “Virtualizaiton and automation technology are examples of what we can do to reduce operational costs and create new value,” he said. “Innovating there is absolutely critical.”

Anna Ewing, CIO at the giant Nasdaq electronic stock market, said she has to consider regulatory and securities issues when evaluating new technology. “Having said that, we take a lot of pride in ensuring we can partner with our technology vendors and present innovation,” she said. “In our world it’s about managing a huge volume of data in a secure and accurate way.”

On the cloud computing issue, Ewing agreed with Daniels comment on it being a gateway to easy to use consumer services. “I see cloud computing as a distribution channel for some of the information services we offer,” she said.

About the iPhone

During a Q&A session, the panelists were asked about its policy regarding one controversial technology, at least in enterprise circles: Apple’s iPhone. The sudden success of the iPhone has put the support question at the top of some IT departments’ agenda, because they primarily support other devices like the RIM’s BlackBerry, and other smart phones from Nokia and those based on Windows Mobile. The latest iPhone 3G supports Microsoft Exchange and has other “enterprise-friendly” features, though not on the level of more established competitors in that space. For example, encryption is not a standard feature.

“Our CIO fights technology anarchy, so we can be creative within limits,” said Accenture’s Delattre. The CIO lets employees buy any mobile phone they want “as long as we can make it work, he’ll support it to a point,” he said. More broadly, he said Accenture’s CIO waits for generational improvements before committing the firm to standardizing on a device or technology.

Ewing was the most bullish on the iPhone, noting that Apple (NASDAQ: AAPL) is “a cherished” member of Nasdaq. “We’re looking at how to integrate the iPhone long term into our corporate network,” she said.

HP’s Daniels said he worked at Apple for 15 years and has a keen appreciation for its focus on the user experience in its products. “Many HP employees have iPhones and a lot of people want to understand what the excitement is about,” he said. “The reality is that at any large company there are a lot of …people that like anything new.”

He added he didn’t think HP allowed employees to expense an iPhone purchase and noted it was not integrated with HP’s corporate mail system.

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