3 Reasons Businesses Fail to Innovate in IT

  • In today’s markets, businesses need IT solutions to stay competitive and reach customers to drive sales and revenue. New technologies are constantly being developed to help businesses achieve greater efficiency and lower costs.

    Despite the availability of these technology innovations, many businesses lag behind the technology curve, continuing to use older, more inefficient solutions. Some smaller businesses simply may not be aware of the latest technology solutions, but for most, there are other more sinister flaws in decision making that prevent IT innovation.

    Here are 3 reasons that businesses hold themselves back from innovating in IT.


    1 . The Sunk Cost Fallacy

    Rather than try to explain the sunk cost fallacy completely, I’ll instead just ask you to Google “sunk cost fallacy” and read one of the many in depth descriptions you will find, if you are not already familiar with it. To summarize it briefly, it is the idea that if you have made a significant investment in a solution, you must continue using that solution because of the investment. It is basically using the rear window when you are trying to drive business forward. That investment is history.

    Everyone wants to get the most out of investment but in the technology game, newer better solutions come along all the time. Making the decision to hold onto a solution when there is a better solution available may well end up being a bigger cost than having switched. For example, you might invest in a storage solution that you plan and budget to use for the next 4 years. After 2 years, you may have both a need and opportunity to go to a better solution but you might delay because of the sunk costs of the “4 year” investment.

    2. The Rotating Budget Cycle

    This is related to the sunk cost fallacy but is more related to adhering to a certain budgeting schedule. IT assets can be expensive and sometimes replacing them gets budgeted on a cycle and the cycles for different types of assets do not align.

    For example, you may have purchased some server assets one year, the next year you purchased a storage solutions, and the next year you purchased some software solutions. You create a budget cycle where you are only purchasing part of the overall solution per year. This way of planning may help adhere to steady annual budget that is easier to account for and then you begin repeating this on a 3 year cycle.

    But what if one year when you were supposed to buy servers, you want to buy a combined solution that includes both servers and storage? Are you able to adjust the budget to accommodate for the extra spending in that year or have you locked yourself out of that prospect and you instead have to wait until the following year because that is when the storage budget is available.

    3. The Brand Name Game

    When making any purchase, it is good to know something about the vendor, especially when there is support and warranty involved. It’s good to make sure the vendor is not a sham or a business that will be shuttering in a year or two. But is a brand name a safety net in this case?

    The technology industry is known for innovation arising from little know startups as much or even more than from established brands. While small startups may fail or are at risk of being sucked into an abyss through acquisition, it is also not uncommon for large brand name products to be discontinued or brand name vendors to be acquired. Where brand name means a certain level of consistency and longevity in other markets, it is much less the case in technology solutions. By shopping only brand names, IT organizations are putting about as much though into buying IT technology as they would buying a hair dryer.

    Smaller vendors with lesser known brands can be more of an asset than a liability in IT solutions because they may offer more personalized services, more responsive support, and more innovative solutions. With older, larger, more recognized vendors, you may be treated as just one of tens of thousands of customers who are shuffled through the support and service queues. The small startup that was passed over because of the lack of brand recognition often becomes the next big brand that replaces the solution you went with.


    When it comes to technology innovation, it is important to stay open to new and emerging technologies to solve your immediate challenges. I know some IT professionals have their headphones on listening to “The Way We’ve Always Done It” by Zero Innovation, but many others are starting to get it. Continuing to use less efficient solutions may not only be slowing you down, it may be costing you more in the long run.