Inflated Expectations

By Andrew Moore, Chief Operating Officer, DAV Management

As the pace of innovation continues to increase, technology companies are investing heavily to develop their products and gain first mover advantage in both business and consumer markets. Big tech companies also have huge marketing budgets allowing them to seduce buyers with the heavy promotion of shiny new features and design. The media then pumps things up with stories on the latest and greatest technologies and trends, all set to transform our businesses or indeed our lives. The hype is palpable.

For organisations this can be dangerous stuff. Invest too soon in new technology and the technology and/or the business might not be ready. Move too late and you may not benefit from competitive advantage. So how do organisations work out what new technologies mean to them, and more importantly, how do they know if the latest and greatest technologies will add real value to their business?

Part of the problem is that technology is becoming cheaper, in one sense making it easier to invest. However, taking the wrong decision can still have a severe impact on a business, particularly where that technology is intended to be the catalyst for transformational change.

Being drawn in by the hype must be avoided at all costs. It’s really about going back and concentrating on the basics – no matter how seductive the technology. Business cases must be developed and be sustainable, and there needs to be a focus to ensure that the business itself is ready for the new technology and the change that it is intended to drive.

One recent market development that we at DAV were called to comment on was the new alliance between IBM and Apple. This announcement certainly created a big splash over the summer and is indeed a potential game changer. What it will mean to businesses, however, is less clear – at least in terms of deliverable solutions. Before organisations jump to take advantage of what this particular alliance might offer, they first need to be sure that they understand the increasing convergence of consumer devices and business applications and architectures, and how this offering might satisfy a real business need.

Andy Moore

Whilst the levels of business investment in technology remain undeniably large, there are signs that companies are spending less on technology relative to the past. This is partly due to technology itself becoming cheaper, but more interestingly businesses have also cottoned on to the fact that they can spend relatively less on IT and get significantly more for their money. This is a concept that was recently explored in a blog by Justin Fox in the Harvard Business Review entitled The Real Reasons Companies are Spending Less on Tech. He showed that the amount of money corporations have been putting into IT, relative to the size of the overall economy, dropped sharply in the early 2000’s and has stayed down. But he says the estimated value that they’ve been getting out of those investments has continued to rise.

Market hype, particularly in the tech sector, is a dilemma for all concerned. It’s an issue for corporations because they have to balance the need to invest in new technology to innovate, drive change and advance, with the fact that they can’t always bring themselves to move away from existing technology that is still generating a healthy return. It’s a dilemma for tech providers because they need to see their innovations developing into sustainable business solutions that can deliver real business benefits and sustain not only their market position, but also funds for R&D.

So what can organisations do to cut through the hype and identify those new technologies that can truly add value to the business and work out how best can these be delivered. Well, like most things it comes down to a dollop of common sense and a healthy application of structure:

1. Do your due diligence
It’s important to do as much due diligence as necessary before taking any decisions. Look at the all the angles, if you want to push the envelope and embrace new technology that could help your business leapfrog the competition, go into it with your eyes open – but have the feedback loops in place to give you a chance to address any hype/reality shortfalls. Consider a feasibility study, even a short one, which examines the pros and cons of the new technology and compares this to alternative solutions. And stay objective, if the technology you are considering does not add value to the business its wasted investment.

2. Be crystal clear on the business case
It may sound a little glib to say that the business case is the foundation for success in any investment, but it’s staggering how many organisations fail to do this properly. The business case must be fit for purpose and compelling, with all stakeholder aligned with it. If the business case is weak, poorly supported or badly executed you will be setting yourself up for failure.

3. Be honest about your organisation’s readiness for change
Introducing new technology necessitates change, and change generally isn’t easy. A whole host of non-technical factors come into play and need to be taken into account. Typically this include commercial, process and organisational factors – and above all, people. All of these things need to be considered before embarking on any technology change initiative.

4. Gear up to shape, manager and deliver the change in the right way
One only has to consider the staggering number of failed projects and wasted investment to understand the importance of adopting the right approach from the start. Bringing on board the right skills and experience at the outset will significantly increase the chances of delivering the outcomes and benefits that the business expects.

Market hype is exciting and can be prescient to truly game changing technologies for the business. It’s also a minefield and full of inflated expectations. If you stay focussed on these four points though, the hype just might turn into reality.