Selecting the Right Technology Strategy
New technologies can benefit an organization by disrupting traditional processes, creating efficiencies, and therefore leading to competitive advantages. Technology experts forecast technology shifts that disrupt organizations, industries, and sectors in order to determine whether an organization should adopt a new technology.
However, the timing of implementation continues to be a challenge for most organizations. The challenge lies in being too late to the party or too early. For example, in 2000, the founder of Netflix, approached Blockbuster’s CEO with a proposal for partnership, in which Netflix would run Blockbuster’s brand online while Blockbuster would promote Netflix in stores. Blockbuster’s CEO laughed at the idea and Netflix went on to dominate the online video rental industry, leading to Blockbuster’s bankruptcy in 2010. In this case, Blockbuster failed to recognize the emergence of new technology which would disrupt what had been traditionally a very profitable business model.
Now let’s look an example of a company that was ahead of its time. In 1999, Napster was founded as an independent peer-peer files sharing service. Napster specialized in sharing MP3 files of music through a user-friendly interface. It became widely popular with college students sharing songs from their dorm rooms for free. However, Napster was sued by the music industry for copyright infringement and ultimately was shut down by the courts in 2001. In 2003, Apple launched its iTunes Music service in cooperation with record labels and consisting of digital rights management, which was an evolution of Napster’s idea. In this case, Napster failed to consider how the use of this new technology would impact the music industry and business models. Technology adoption and implementation timing can have a profound impact on the success or failure of an organization.
Another key factor to consider when adopting new technologies is whether the technology utilizes existing ecosystems or emerging ecosystems. For example, when Voice over IP (VoIP) technology was emerging in the 1990s, the adoption of the technology made sense for most organizations given that the new technology would use existing data networks to transmit voice, thus cutting costs and enabling integrations with applications. Similarly, when virtualization technology emerged in the 2000s, its adoption also made sense for most organizations, given that the new technology could operate on the same on-premise hardware infrastructure, but would provide more efficiencies and consolidation, thus reducing costs.
By the mid 2000s, “Cloud Computing” which is on-demand delivery of resources by a cloud services provider, started to emerge. However, for VoIP and virtualization technologies to be successful in the “Cloud”, a new ecosystem would have to be created in order for the adoption of the new technology to be feasible. The emerging ecosystem would have to provide satisfactory performance, which depended on reliable internet connectivity with sufficient bandwidth to transmit data or voice across the internet without latency. It also had to do so securely. Therefore, the adoption of Cloud Computing technologies depended on a foundational ecosystem to be developed in order for the concept to be adopted and therefore successful. The consideration of existing versus emerging ecosystems is critical in determining the timing of new technology implementation.
Written by: Payam Pourkhomami, President & CEO, OSIbeyond