ONLINE DISCUSSION: ADOPTING NEW TECHNOLOGIES FOR SUSTAINABLE COMPETITIVE ADVANTAGE

Markus Alsleben, DBA Agile, Information Technology 0 Comments

This article was written as pre-reading for the Online Discussion I gave to the CIO Matrix LinkedIn Group with over 1700 members from the global CIO community on 23rd of October. The discussion was engaging and yielded multiple insights:

  • Innovative Adoption of Technology may require to separate “Utility IT” from “Technology Innovation”. One participant suggested to create two organisations, one of the CIO for “Utility IT”, which is mostly concerned with operations, maintenance with focus on costs and service agreements and secondly another organisation headed by the CTO to rapidly prototype and implement new technologies leveraging 3rd party resources and a small internal team.
  • Technology Adoption is often decided in global headquarters with local teams mostly concerned with rollouts and localisation. New ideas and technologies encountered in the local market rarely make it into corporate headquarters, thus neglecting the opportunity of reverse innovation and technology adoption. Considering the rapidly evolving Asian region in terms of software and technology development, surely a missed opportunity.
  • Many industries such as the global financial service industry are required to comply to statutory requirements of governments, which often leaves few room for decisions about technology adoption, especially in terms of timeline and functional scope.
  • Several participants pointed out that they have limited resources to continuously scan the market for new technologies and were looking for independent experts or thought leaders to provide guidance independent from solution vendors. Truly a chance for CIO Matrix to further promote their platform.

Despite the technological limitations and the limited engaging environment that LinkedIn provided, we had good discussions throughout the day. I am looking forward for further opportunities to collaborate.


ADOPTING NEW TECHNOLOGIES FOR SUSTAINABLE COMPETITIVE ADVANTAGE

Today’s fast moving world would be inconceivable without the rapid advances in information and communication technology throughout the last decades. In recent years, businesses around the world have adopted highly interconnected and synchronised supply chains, operational support systems such as ERP systems, sophisticated predictive analytical solutions combined with mobile and web-based digital business solutions to create customer value and stay ahead of the competition.

New technologies and disruptive innovations seem to appear in ever shorter timeframes as product cycles are getting shorter and shorter in the global high-tech and software industry offering new exciting applications across business functions.

The Chief Information Officer (CIO) is typically at the intersection of technological possibilities and organisational desires, evaluating potential business applications and utility of new technologies. In this role the CIO often has to manage inflated expectations that were created by soft and hardware vendors to sell latest technologies to their clients.

I have worked most of my career in IT consulting and software development, here it is common practice to showcase successful adoption of new technologies and innovations in extensive case studies with impressive KPIs that show significant reduction in operational costs, risks and times combined with the possibility to obtain a sustainable competitive advantage. Many of these case studies are marketing materials that advertise the product in the best possible light, but do not answer important questions about the surrounding framework of these so-called “successful technology adoptions”. Questions about project budgets, organisational readiness, specific skills and experiences of required own and external consultants and limitations to application are often neglected and only answered if sales executives are persistently questioned.

It is therefore clear that product marketing or sales statements must be taken with a grain of salt – critically reviewed, benchmarked and evaluated for the context of your organisation.

Strategic Considerations for Technology Adoption

A first step is to understand the maturity of emerging technologies. An often applied and publicised framework to critically review marketing of new technologies is the Gartner Hype Cycle for emerging technologies (see figure 1). It assumes that every new technology follows a distinctive path from new innovation to productive technology.

 

GARTNER_HYPE_CYCLEFigure 1: Gartner (2014), Hype cycles for emerging technologies 2014

In the first phase of this hype cycle, after a new technology is triggered, early proof of concept papers or early prototypes emerge initiating significant media coverage and interest. This interest or hype in the second phase is generated through inflated expectations fuelled by selected success stories that rave about the significant benefits of the new technology. With more organisations adopting these technologies, stories of failures appear where the adoption of technologies were unsuccessful or failed to deliver the promised benefits.

Technology providers only survive in this phase, if they are able to adjust and improve their products to accommodate requirements for technology adoption and product features raised by organisations. As learning effects take place and overall experience of technology adoption increases, in the fourth stage learnings are formalised and widely distributed. More mature versions and updates of the initial technology appear in the marketplace, increasing the odds of successful technology adoption. In the final phase of the hype cycle model, the so-called “plateau of productivity” mainstream organisations adopt this technology as benefits and criteria for successful adoption become widely understood. While the hype cycle model has been criticised for the assumption that all technologies follow such path, despite the fact that many technologies fade away throughout the cycle, is still a good starting point for technology evaluation and adoption.

Early adoption of technologies clearly poses significant uncertainty and risk. Organisations will have to make risk-benefit comparisons for the very technologies they try to adopt. The diffusion and adoption of new technologies has been subject to intense research since the groundbreaking hybrid seed corn study by Bryce Ryan and Neal C. Gross in 1943. Here the researchers studied in Iowa how a new technology or innovation, such as hybrid corn, was adopted by farmers. One inside of this research and the later works of Rogers, was that new technologies over time are adopted by different groups of users (see figure 2).

 Technology-adoptionFigure 2: Technology adoption life-cycle (own Graphic based on Rogers (2003)

Very early adopters of technology have been defined as “innovators”, a very small percentage of the overall adopter community that evaluate new technologies at a very early stage, having sufficient resources and that are not concerned if new technologies fail to deliver on promise. Next follows a larger group of so-called “early adopters” who is more selective in using technologies. This group is typically very much sought after by product vendors for critical feedback and initial funding of products and product revisions. Over time more and more user groups are adopting a technology.

Both, hype cycle and technology adoption life-cycle, strongly correlate as shown in below figure 3. Innovators typically engage technologies at very early stages, right after they are triggered. At the so-called “peak of inflated expectations”, the early adopters start adopting new technologies, realising limitations and issues related to the new technology that leads to disillusionment among early adopters about the benefits that this new technology can provide.

HypeCycle

Figure 3 : Hype Cycle and Technology Adoption Lifecycle plotted together, Bannerjee (2012), 
 http://setandbma.wordpress.com

This moment of truth, in which early adopters realise shortcomings, limitations and issues of new technologies has been named “the chasm” by author Geoffrey Moore. He points out that these challenges need to be overcome by technology vendors to successfully convince larger communities to adopt new technologies. Moore describes it as:

“The chasm is a drastic lull in market development that occurs after the visionary market is saturated and pragmatists will not buy into a discontinuous technology unless they can reference other pragmatists, thus the catch-22. Pragmatists dependent exclusively on references from others in their own industry and are highly support oriented.”

“Crossing the Chasm”, Geoffrey Moore

Is clear that at this stage adopting organisations require close collaboration with technology providers to overcome this “chasm”. It is therefore common practice among technology companies such as software vendors to provide pilot customers of new solutions dedicated resources and contact points to overcome this chasm and successfully adopt new technologies. Early adopters should therefore ensure that in the selection process for new technologies to be adopted such vendor commitment and effective collaboration can be established.

Managing the Adoption of Technology

While stages in the lifecycle of a new technology and a typical risk profile of an organisation provide some indications at what stage new technologies are adopted, CIOs need to also manage the actual adoption process for new technologies. Figure 4 shows an overview of typical adoption process based on research of Ghobakhloo et al. into technology adoption of small and medium-sized enterprises.

Process-ModelFigure 4: Process and stages for technology adoption, Ghobakhloo (2012).

Ghobakhloo et al. identified three major stages in the adoption process, the initial adoption stage in which IT requirements are analysed, internal capabilities and availability of such and the readiness of the organisation evaluated. Based on this initial pre-work adoption is decided and the implementation stage begins. Here the actual deployment takes place supported by the various stakeholder in the organisation. After successful technology adoption, the technology moves into the operations or post adoption stage in which continuous improvement and upgrades occurs.

While this identified adoption process follows most standard IT implementation project frameworks, Ghobakhloo et al. draw attention to a number of external and internal factors, that determine the success of an intended technology adoption (see Figure 5). Among the most important external factors identified are the availability of suitable IT products in the market, competitive pressures, quality and quantity of external IT consultants and vendors and the influence of the government e.g. through the provisioning of statutory requirements.

Successful technology adoptions require a solid internal framework to be successful. The adopting organisation must have certain internal factors present to facilitate the adoption and increase the odds of its success.

 Initial Framework for Technology Adoption

Figure 5: initial framework of external and internal factors for technology adoption, Ghobakhloo (2012).

Ghobakhloo et al. found that the attitude of the top managers / owners of a company towards technology significantly moderate the success of adoptions – Do CEOs understand the potentials of new technologies, do they align technologies to business strategies and create the required environment for adoption? Also need organisations to have the capability to adopt new technologies in terms of their IT skills and capabilities, but also in terms of accepting and promoting organisational change.

Many IT departments have been primarily seen as cost centres, with controllers forcing CIOs to continuously reduce operating expenses. In such a scenario, firms’ resources to evaluate, prototype, select and implement new technologies may be significantly challenged. CIOs may require the help from independent experts or peer groups to compensate for the lack of such critical resources.

Diffusion and Adoption of Technology is Change Management

In his book “Diffusion of Innovations”, Everett Rogers describes in very detail both diffusion and adoption processes and influencing factors. For Rogers, diffusion and adoption are first of all social processes, involving people. While functions and features of the technology to be diffused and adopted are clearly of importance, the social side of this adoption process requires special attention to ensure its success. Rogers frames the diffusion/adoption process as a change management and communication challenge in which the change agent (e.g. technology provider such as software or hardware vendor), tries to diffuse his innovation to convince a potential adopter to utilise this new technology (see figure 6).

STRAGON_Diffusion

Figure 6: Diffusion and Adoption of Technology as Change Management and Communication Challenge. (Own Graphic based on Rogers (2003).

Rogers states five important factors in successful diffusion of new technologies, the innovation itself, the type of communication and utilised channels, the social context from which the change agent originated and in which he acts and the time of diffusion. The change agent has to built up credibility and convince the potential adopter that the new technology has a relative advantage over existing technologies or alternatives, that it is compatible with his current landscape and organisation, that its complexity can be managed, that he can try out this new technology and that the new technology can be observed in action. Once these concerns and requirements are addressed the odds of successful diffusion and adoption are favourable.

An important role plays the so-called evangelist. Typically an independent expert or thought leader who is trusted by adopters who strongly advocates the adoption of a new technology. Such evangelist can appear in various forms, such as an industry leading author, academic thought leader, government official or visionary company leader. The evangelist is a moderator that typically accelerates the rate of adoption among potential adopters.

Summary

Adoption of technology poses an ongoing challenge for CIOs. Screening the market for new technologies, trialing them and creating the right organisational framework for successful adoption are not easy tasks in time of ever shrinking IT budgets. Understanding both strategic and operational considerations of technology adoption, as laid out in this article are important foundation for an organisation that is ready to adopt new technologies for achieving competitive advantage.

Literature

Bannerjee, U. (2012). Technology Adoption – 2 beliefs you need to undo, accessed at http://setandbma.wordpress.com/2012/05/28/technology-adoption-shift/ on 18th of October 2014.

Moore, G. A. (1999). Crossing the chasm : Marketing and selling high-tech products to mainstream customers. New York: HarperBusiness.

Gartner (2014). Gartner’s 2014 Hype Cycle for Emerging Technologies Maps the Journey to Digital Business, accessed at http://www.gartner.com/newsroom/id/2819918 on 18th of October 2014.

Ghobakhloo, M., Hong, T. S., Sabouri, M. S., & Zulkifli, N. (2012). Strategies for successful information technology adoption in small and medium-sized enterprises. Information, 3(1), 36-67. doi:10.3390/ info301003.

Rogers, E. M. (2003). Diffusion of innovations. New York: Free Press.

Ryan, B., Gross, N.C. (1943). The diffusion of hybrid seed corn in two Iowa communities.

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