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Timing is Everything

Timing is Everything

New technology is arriving at a dizzying rate and cannot be ignored. But knowing when to introduce a new technology is no mean feat. Presenting it too early without an appropriate strategy or too late with or without a strategy could cost you your job. But how does a CIO know when a new technology should be introduced? To answer this question, it is important to understand the role of new technology in the competitive success of your business. Is technology the key to differentiating your business from your competitors? Is your company known for technological innovation? If you answered yes to these questions, your business may be or may want to be a technology leader. For example, Fidelity's 401(k) [superannuation] business has consistently differentiated itself from its competitors by being the first to offer new technology enhancements and platforms, such as self-directed trading, Internet access and voice-response units. That advantageous position requires the relentless delivery of new technology enhancements as quickly as the underlying infrastructure can support them.

Follow the leader

For other companies, the business strategy may be to introduce a new technology shortly after the industry leaders do. For those companies, which might be called technology followers, the objective is to mitigate the risk and cost of being the first to introduce a new technology while capturing - or at least not losing - a share of profits generated by it. In essence, the aggressive follower balances the costs of being too soon (introducing unproven technology that could be a potential dead end; proceeding without the necessary implementation expertise, and so on) against those incurred by being too late.

Companies in industries where technology is not important in differentiating one competitor from another can afford to be late adopters or laggards.

Oftentimes, the product itself may not be differentiated easily from others (for example, when it is a commodity). Under those circumstances, technology's principal objective may be seen only as a way to reduce costs.

However, today there are fewer industries and companies where technology - in either products, services or operations - is not a differentiator. In those few cases where it's not, that perception may be more the result of a lack of creativity on the part of business leaders than anything else.

The financial services industry currently is wrestling with the timing of the use of monetary transactions on the Internet. Several technology leaders have implemented new technology encryption and certifying authority capabilities for retail customer monetary transactions. Others are waiting to see how it will all shake out, thereby forgoing initial market share. Some late followers, those who might be called laggards on the technology adoption curve, are just beginning to develop their own Web sites. For example, health care has delayed Web development because of patient privacy concerns, which makes sense. The insurance industry also has been slow to adopt Web technology, although in this case, I don't agree with that strategy.

Variety prevails

In a large organisation with many products and services, a variety of technology strategies may prevail. Some groups may be leaders, others followers and still others late adopters at different points in time. For any organisation, however, whether large with a variety of technology strategies or small with a single strategy, a continual evaluation of each strategy must occur. As business conditions change, for example if the industry matures or a new technology is brought to market, a CIO must reconsider his or her position as leader, follower or cost-reduction implementer and act accordingly. For example, a company that wants to reposition itself from follower to leader may need to increase the size of its advanced technology group or invest in training the staff in the new technology.

In the 1980s, Frito Lay introduced its now-classic inventory-replenishment system by employing new hand-held computing technology. The application allowed Frito Lay to differentiate itself from other snack companies in service to its grocery store customers and to reposition itself as a technology leader.

Conquer the curve

Unless a CIO understands and recognises where his or her company resides on the technology adoption curve and acts accordingly, a technology-follower strategy easily could become one of a laggard - especially if the CIO and other managers try to minimise their own individual risk by avoiding the tough adoption decisions. When this happens, a company whose customer services are based on being a leader or aggressive follower may see its market share or profits slip away. Customers who have come to expect the best service or a continuous stream of new products through technology may see this change and start to look elsewhere as a company slips from leader to follower to laggard.

Creative management can turn a technology follower into a leader, and while the risks of sliding down the scale are great, opportunity may be had in moving up.

For example, a hospital in the Boston area not well known for its technology suddenly has begun featuring technology as a selling point in its advertisements. If that push is successful, the hospital may position itself as a technology leader in the public's mind. As long as management backs up the claim with an early-adoption strategy, the hospital will increase its differentiation among the region's numerous health-care providers.

Growing pains

Besides knowing where your business fits on the technology adoption curve, CIOs need to master the skills for properly timing technology adoption. When first introduced, a new technology can be viewed as being on the bleeding or leading edge. If adopted at this time, questions will arise: Will it work as planned? Are our schedules and budgets accurate? Will this project be a short cut to disaster? This leads to the question, "Why would a company want to be a technology leader and expose itself to leading-edge technologies and the risks and costs associated with them? The answer is simple: in an industry where technology differentiates (or where customers can be convinced it differentiates), the lion's share of the growth and profits of innovation go to the leader.

Useful techniques to mitigate but not eliminate the risk of early adoption include prototypes, contingency plans, extreme testing and vendor partnerships.

Partnerships spread the risk and accountability between customer and vendor.

That can make way for customisation, modification and training, elements that could mean the difference between success and failure. The further out you are on the leading edge, the sharper these skills must be and the more important it becomes to have strong management buy-in. Technology leaders must master managing this part of the maturity curve if they are to succeed.

As a technology matures, it moves into the leading or mainstream phase, which is characterised by widespread adoption and moderate risks. At this stage, companies have higher success rates hiring IT staff familiar with the technology rather than training people from scratch. The aggressive followers sign on quickly so as not to be left behind. If their timing is right - when the risks are moderate, the technology's direction is clear and few companies have yet to implement it - aggressive followers can reap significant benefits.

For example, commercial applications of voice recognition and massively parallel processing have significant customer service potential, and leaders and aggressive followers currently are using those technologies in new applications.

Successful technologies eventually slip into the mainstream or legacy phase.

Unix might be one such example. In this phase, the technology's business benefits are clear from the examples of the leaders and followers that have adopted it. In companies for which technology has little strategic significance, the clear benefits and minimal risks make the timing right for adoption. The company would not need to pursue vendor partnerships or extreme testing; it could spend its time negotiating a good price.

Wherever you are on the adoption curve and whatever strategies you use to maintain your position there, you must master those strategies to be successful. Technology leaders must learn or continue to master how to successfully implement leading-edge technologies. If you don't, your success as a leader will be short-lived. Until you have both the business strategy and the appropriate expertise, you are not ready to introduce a new technology.

Albert Aiello Jr is president of Open Print Server/Intelligent Document Factory and former CIO at Fidelity Investments in Boston.

He welcomes comments at al.aiello@fmr.com

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