Technology Audit Maria Donna N. Beech

• • • •

Introduction Model Implementation Summary References: [1] R.A. Goodman and M.W. Lawless (1994d), “Evaluating your Advantage: The Innovation Audit” [2] R.A. Goodman and M.W. Lawless (1994e), “Detailing the Innovation Audit Technique” [3] David Ford and Mike Saren (1996), “The Technology Audit as a Basis for the Technology Strategy” [4] Tarek Khalil (2000), “The Key to competitiveness and Wealth Creation”

Introduction

• Excellence in strategy: ability to balance the potentials against the needs of operational effectiveness, the market viability of the results, and the nature of barriers to competition. • Technology has a significant potential for developing an effective corporate strategy by promising the creation strong earning streams and for building barriers for competition.

• The Innovation Audit a systematic approach for determining a firm’s innovation potential. analyzes the firm’s competencies and explores the match with previously identified opportunities.

• The Technology Audit a process performed to identify the strengths and weaknesses of the technological assets of an organization.

Model

• Four – Stage Model of firm development

(Wheelwright and Hayes, 1995)

• Technology Audit Model (Garcia-Arreola)

• Technology Life Cycle (Arthur D. Little)

• Technology Life Cycle (Ford & Ryan)

• The B-TECH Approach to Planning

• Technology Programming

•

Four – Stage Model of firm development (Wheelwright and Hayes, 1995)

1. A firm is flexible and reactive. 2. Product design must reflect industry standard, and manufacturing costs must be reduced. 3. Product design and manufacturing design are merged into a competitive plan. 4. A strategic plan aimed at sustaining advantage by engaging in long-term investments and broad agreements.

•

Technology Audit Model (Garcia-Arreola)

•

aims to determine technological status, to stress areas of opportunity, and to take advantage of the firm’s capabilities.

• • • • • •

Technological Environment Technologies Categorization Markets and Competitors Innovation Process Value-added functions Acquisition and Exploitation of technology

Technology Life Cycle (Arthur D. Little)

• deciding

whether to invest in the technology based on the competitive impact of the technology.

Technology Life Cycle (Arthur D. Little) stage

tech

performance/ investment mode

in the development phase, but has not shown potential for embryonic emerging changing the basis of competition in the future.

growth maturity aging

pacing

has shown the potential of changing the basis of competition in the future. Selective investment is suggested.

key

has a strong impact on the performance, cost, and quality. This is essential for the success of a company.

base

necessary for participation in business, but provide little or no competitive advantage. Divesting is suggested. Company must have developed strategic options.

• Technology Life Cycle (Ford & Ryan)

• an

evolution of the extent of use of the technology by all companies in all applications when compared to the use of other technologies in the same applications.

• plots the Company Production Cycle, Company Technology Sales, and Technology Cycle.

• Technology Life Cycle (Ford & Ryan) stage

Production

Tech Sales

Technology Cycle

development

-

-

-

application

-

-

-

launch

increase

increase

increase

increase

greater increase than in production

greater increase than in sales

maturity

increase

greater increase than in production

greater increase than in sales

degraded technology

decrease

decrease

decrease

growth

Company Production Cycle: sales of the originating company’s own products based on the technology Company Technology Sales: measure of the potential revenue generated by direct sales.

• The B-TECH Approach to Planning

• recognizes the importance of integrating technology strategy with business strategy. • imposes a separate development path before integration.

• The B-TECH Approach to Planning

Steps: • • • • • • • • • • •

Business Segmentation Technology Segmentation Strategic Audit Business Environmental Scan Technology Environmental Scan Impacted Businesses Impacted Technologies Generation of Alternative Strategies Selection and Resource Allocation Implementation Strategic Controlling

• Technology Programming • provides framework for examining a firm’s excellence indicated by balance and coherence. • the manner by which technology may assist corporate strategy and the creation of corporate operational effectiveness is evaluated.

Generic flow of Technology Programs

Implementation

• Dimensions

of a Technology Audit

• The Technology Audit Model (TAM)

• The Innovation Audit Technique - Advantages - The Audit process - Complications of a Technology Audit

• Dimensions of a Technology Audit

1. 2. 3. 4.

What technologies does a company possess? Where did the technologies come from? What is the range of the technologies? What categories to the technologies fit into? – – –

Basic – technologies that the company is completely dependent on (process technologies). Distinctive – technologies that confer competitive advantage. External – technologies embodied in the products and services, but are not possessed by the company.

• Dimensions of a Technology Audit

5. What is the standing in the existing technologies? Means of assessment: – –

Outside consultancy Relate technological standing to companies that are utilizing a similar approach to its own strategy. - Wide Analysis –according to the requirements of the application and according to the requirements of other companies in other application areas. Technological Standing – the absolute level of the company’s competence in a particular technology. This is application-specific.

• Dimensions of a Technology Audit

6. How new are the technologies? – Identify what specific aspects are new about the technologies. 7. What is the life-cycle position of the technologies? » development, application, launch, growth, maturity, degraded technology 8. What is the performance in acquiring technologies? 9. What is the performance in exploiting technologies? 10. What is the performance in managing technology?

• The Technology Audit Model (TAM)

• provides a quantitative evaluation for technology assessment. • proposes a 5-point scale, ranging from outstanding to poor. • there has to be a specified scope of what each numeric score should encompass. • recommended to be repeated periodically

• The Innovation Audit Technique

•

provides a convenient technique for structured collection of information about innovative potential.

•

Information can be analytically linked to technology strategies.

•

Analytic linkage provides substantial input to managerial judgment in the selection of short and long-term strategic actions.

• The Innovation Audit Technique The Audit process:

1. Introduction: executive summary 2. Body: based on three audit frameworks: – Technologic Innovation Process Audit (TIPA) – Innovative Comparison Audit (ICA) – Technological Position Audit (TPA)

• The Innovation Audit Technique The Audit process:

3. Interpretation: comments and analysis 4. Conclusion: linking audit data with strategy sets, employing internal and external perspective on which conclusions and recommendations are based

• The Innovation Audit Technique

Complications of a Technology Audit 1. Determining the basis of comparison 2. Conceptualizing and Narrowing down the scope of technology 3. Relating a company’s technological position to that of its customers 4. The trend in preference of buying technology bundles

Summary

• Technology Audit a tool for companies for determining strengths and weaknesses, to identify opportunities for improvement to come up with better competitive strategy.

• several methods were presented for forecasting technological changes and evaluating its efficiency • Periodic technology audit is necessary to develop a competitive enterprise capable of effectively integrating technology planning and business planning.

Thank you.

Maria Donna N. Beech