Managing Technology

Managing Technology CHAPTER FOUR



Chapter
4 Managing Technology
Notes for Dr. Swafford OPMA 3306 class


The focus of this chapter is to discuss how technology can be used to achieve/sustain a competitive
advantage.

A. The Meaning and Role of Technology
1. Technology is defined as the know-how, physical things, and procedures used to produce
products and services; also support network
2. Know-how is the knowledge and judgment of how, when, and why to employ equipment and
procedures.
3. Technology exists in the form of knowledge (experience and abilities), equipment, people, or
a combination of the three. Technology is embedded in the organization’s environment
referred to as the support network.
4. Three primary areas
a. Product technology: translates ideas into new products and services for firm’s
customers
b. Process technology: determines methods by which an organization does things.
c. Information technology used to acquire, process, and transmit information; particularly
revolutionary in offices
5. Examples of different technologies in a firm shown in figures 4.1 and 4.2 in your book
(examples in operations and support operations – otherwise known as backoffice and
frontoffice operations). Front office operations are those that deal directly with the customers.
6. Technology’s role in business performance
a. Companies that invest in and apply new technologies tend to have stronger finanacial
postitions than those who do not.
b. High technology and technological change, for its own sake, may not always be best.
Companies must determine if:
a competitive advantage is created
it is economically justifiable
it fits with the desired profile of competitive priorities.
it adds to core competencies

B. Information Technology
Four components
a. Hardware: computer and devices connected to it
b. Software: computer programs written to make hardware work and carry out different
application tasks
c. Databases: collection of interrelated data or information stored on a data storage device
d. Telecommunications: equipment that makes electronic networks possible

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Managing Technology CHAPTER FOUR
C. E-Commerce
E-Commerce is the application of information and communication technology anywhere along
the entire chain of business processes
1. The
Internet
a. A network of networks
b. A medium to exchange all forms of digital data
c. A fundamental enabling technology for e-commerce
2. World Wide Web
Software (web servers) and thousands of independently owned computers and computer
networks that work together as part of the Internet.
3. How e-commerce affects processes
a. Cuts costs by
Linking companies to customers and suppliers
Improves inventory management
Automates procurement processes
Provides inexpensive sales, marketing, and customer support channels
4. Business-to-consumer (B2C) commerce
a. On-line business sales over $30 billion in 2000
b. Forecasted on-line business sales of $1.6 trillion by 2003
c. Traditional retailers are establishing effective on-line channels, competing with newer
“dot-coms.”
d. Encryption of customer transaction information is helping to resolve security concerns.
e. Technology allows companies to reach a broader customer base (anyone who has access
to the internet).
f. More effective for products that customers buy without prior touch/feel. Examples are
books from Amzon.com or t-shirts from Lands’End.com.
5. Business-to-business (B2B) commerce
a. $335 billion in sales in 2000
b. $6 trillion in sales projected by 2005
c. E-commerce can transform B2B processes and streamline the supply-chain process .
d. Currently, the predominant business model is one seller to many buyers.
e. Virtual marketplace is gaining on the current model as a viable B2B business model
(involves a number of both sellers and buyers)
f. The Web is becoming the global infrastructure for e-commerce, helped by
advanced software and security measures. This allows firms to move beyond
restrictive private networks to the Internet.

D. Enterprise Resource Planning (ERP)
ERP is a large, integrated information system that supports many enterprise processes and
data storage needs
1. What ERP does
a. Integrates functional areas allowing firms to concentrate on enterprise processes rather
than functional boundaries.
b. Supports all enterprise processes that are activated as a result of a transaction (a sale,
for example)
2. ERP
applications
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Managing Technology CHAPTER FOUR
a. Revolves around a single comprehensive database, available to the entire organization
b. Applications may include
Financial and accounting information
Human resource and payroll information
Supply-chain
information
Customer
information
Manufacturing
information
3. Use of ERP
a. Most systems use a graphical user interface
b. Users navigate through various screens and menus to accomplish tasks
c. Used by service providers and manufacturers
d. Increasing interoperability in ERP systems has promoted acceptance
Interoperability is the ability of one piece of software to interact with other software.

E. Technology Strategy
1. Technology as a competitive advantage
a. Lower costs
b. Improved quality
c. Quicker delivery times or product development times
d. Improved volume and product flexibility
2. Fit with competitive priorities
Change should have a positive impact on one or more of the above competitive priorities.
3. First-mover considerations (question is when to adopt new technology)
a. Possible advantages
Market share
Establish competitive rules
Create barriers to entry for others
b. Risks
High cost of R&D
Speculative market demand
New technology may become outdated quickly
4. Economic
justification
a. Traditional
techniques
b. Factoring in uncertainties and intangibles
5. Disruptive technologies
a. Two properties are:
Performance attributes not yet valued by existing customers or products.
Performs worse on some performance attributes that existing or future customers
value, but will quickly surpass existing technologies when refined.
b. Dealing with the paradox of disruptive technology
First step is recognition (seeing different viewpoints from employees).
Next step involves analysis of performance trajectory.
Third step is to exercise a willingness to undertake major and rapid change, while
realizing low profit margins in the short term.

F. Summary
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Managing Technology CHAPTER FOUR
1. Technology decisions must support/align with corporate strategy (competitive dimensions).
2. Technology typically stretches across functions within a firm (backoffice operations such as
manufacturing, IT, purchasing and frontoffice operations such as marketing, distribution, and
customer service)
3. Technology can be used to achieve a competitive advantage. The key decisions are 1)
whether to adopt incremental technology changes or disruptive technology changes and 2)
when to adopt.


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