Modern technology can make a business more effective, but spending large amounts on it does not always have the desired impact. Getting results is a question of management.
Technology is how a task is accomplished. It may involve machines, tools, paper and pens, computers, procedures, knowledge utilisation and information transfer. It also refers to how and why these means are used.
Management of technology is always present in business strategy and functioning and usually plays a part in creating and holding on to competitive advantage. But doing it better requires an understanding of some basic principles.
Technology may be grouped into three areas, to do with physical things, processes and training.
Physical technologies used or produced by the business form the most obvious group and spending on this area is usually dominated by equipment costs.
Process technologies comprise all the ways of working that form part of business management. They do not always have an immediate impact on business revenue, but they build the framework in which physical technology is used.
Any technology is only as good as the person using it, so training of people to use physical and process technologies forms the third area.
It is important to view these technology groups as a whole. In combination, they influence business effectiveness and revenue generation. If a balance is achieved among the three technology groups, it will have a positive impact and if there is an imbalance it may create overheads and be a burden on revenue generation.
For instance, the more complex the physical technologies are, the more important it becomes to invest in process and training technologies to keep the balance.
Without revenue, there is no capital to invest in the three groups. So there is a feedback loop in which the initial investment in any technology group will have an amplifying effect on future technology investments. Investment in any single group will upset the balance, making it necessary to invest in the other groups as well. The amplifying effect will be delayed. If the initial investment is done carefully, though, it will be possible to make further investments in technology.
Initially the growth or reduction in business effectiveness caused by this feedback loop will not be very obvious, but the impact will grow exponentially and its direction will become more difficult to change.
That makes it important to review returns on technology investment frequently.
If returns are not achieved, it is necessary to reinvest in physical technologies or to invest in one of the other technology groups to achieve balance. For instance, if a business has state-of-the-art physical technologies, but the employees don't know how to use them fully, it would be better to invest in training than to spend more on equipment.
The efficiency of all three technology groups must be known to see whether any of them is hindering the combined positive effect. When they are balanced and creating growth, they should all receive incremental investments, taking into account the effect of delays in the feedback loop.
If technology investment planning is done with these factors in mind, it will allow an exponential increase in the effectiveness of a business.
- Boshoff is currently doing his PhD in technology management at the University of Pretoria
