Evaluating Value Creation in 2020 and Beyond
Value Creation
As time goes on, technology evolves more and more, and there are so many new technologies that both positively and negatively impact our lives. Information Technology and the data that powers it gives individuals and groups the potential to do great things. However, it is important to understand that there is a lot going on behind the scenes. For any organization, you cannot haphazardly implement technology, no matter how simple it may seem. Proper research, planning, development, and implementation are all key steps in the integration process, and they each take a long time.
Why bother? It takes a lot of time and effort to implement various technologies, and it may take a while, if ever, for benefits to show up. So why bother with all of these new gadgets when the old tried and true methods work? The simple answer is that if you don’t, others will.
For any company to prosper, they need to have some quality that makes them preferable to their competitors. For example, Amazon has practically made fast shipping a requirement for online retailers. After all, if you cannot ship out a product in a couple of days, but Amazon can for the same price, people are going to use Amazon’s services instead of yours. This is how you can create value with technology.
How to create value
So how does a company create value? Imagine a local retail company that has stores in only a few states but offers their services internationally with a goal of opening more stores. This imaginary company has a few thousand employees and produces their own, high-quality goods. Though this description may have parallels to actual companies, please understand that this imaginary company is only being used as an example. But how can we use technology to create value for this imaginary company?
First, let’s start by understanding what this company already has. They have a respectable number of employees and departments. Product Development, Marketing and Research, Customer support and more. The company also has an existing supply chain to manage. For all of this, there is an existing infrastructure that has to be understood in order to add or change anything.
Sample Company
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Research and Evaluation
The next step is to explore the company and decide what can be changed to bring about improvements or new advantages. The sample company is a retailer that creates high-quality products. Naturally, this would lead one to believe that creating a new product is the best way to create value and stand out from the competition. But with Amazon’s example we see that they introduced a new service (next-day shipping) which caught on quickly. This service has nothing to do with the products they sell, rather they gave convenience to their customers, which caught on much faster than any individual product could.
Innovation can come in many different shapes and sizes, and it’s important to any company that they understand this and explore new areas. But consider the following: What if next-day shipping didn’t take off? Amazon had put a lot of time, money, and resources into improving their supply chain to make that possible. If it didn’t take off the way it did, would those resources have been wasted?
Understanding Risks
Innovation is a risk. New products and new services bring about their own risks. If a new product is made and the company expects to sell a certain number of units, there is always the risk that they undersell the product, or the inverse, where it takes off and they haven’t produces enough units. The same applies to the technology that the company uses. Adding or changing the technology incurs its own risk. For example, new software creates new potential security holes and avenues of attack for hackers. These risks need to be understood before the organization can continue.
This sample company that creates products must already understand risk, every time they create a new product, they take a risk, and have accepted that it might not turn out in their favor. When creating a new product, there is money and man-hours that go into researching and creating the product, long before it goes into production. All of this is to reduce the risk and increase the chance of success. Once again, the same applies to technology. If the sample company wants to change or modify their existing infrastructure to improve efficiency, it is important that adequate research is done to figure out how to best do so safely and securely. Keep in mind though, that this risk is not removed, only reduced. Risk can never be removed, but it can be managed.
Security
Security is important to Risk. Improving the security of your systems reduces risk. There are many different things to consider with security, such as the hardware that the programs run on, is it up to date and protected? Are wireless communications secure? Is personal Data protected and are laws and regulations met? There are many things to consider in security, and a proper analysis must be done before the next steps.
Develop, Implement and Monitor
Once research is done and risks are accepted. The remaining steps are to create, implement and monitor your proposed solutions/products. These steps are not as intricate or detailed as the other two, as better research and risk management makes the remaining steps easier. All that has to be done here is actually go through with the plan that was created.
Process for technology implementation
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The “final” stage, monitoring, is where results start to be seen. Since you cannot be fully certain that something will work as anticipated, this step is where you will find mistakes or places where improvements can be made. This is why Monitor loops back to the beginning, so that the technology can be improved.
Ideally, this will be a never-ending process for the organization, there is always a way to improve. The company can create new products or services or improve the existing ones. Value can be created from technology in subtle ways, be it a new service, a new product, or something that makes processes easier on the back-end. How an organization takes advantage of this is how a company can stay competitive in 2020 and beyond
Great article, Taylan. I agree that the starting point for any organization should be analyzing what is already in place and what resources the company has. That helps identify the next steps - whether value can be created by expanding on current process, if the required resources are currently available, or if new resources will need to be acquired to achieve the company's goals.
I really enjoyed this Thylan. I like how you touched upon the "never ending process" in order to maintain security and integrity. IT systems do require constant attention to verify and validate their value and security. Well done.
Your brought up a great point that improved and more efficient processes is also a type of innovation, not only the product innovation. This is where the CRM, ERP system bring value to organizations. The continuous improvement is great idea. Thanks for sharing your thoughts!
Taylan, great article. I think you covered that concept of overcoming initial fears of branching out and seeking opportunity for innovation. To create value it's important to be willing to extend resources and foster an environment that will grow and adapt in line with its given market. Seeking improvement even after an initial release or implementation will offer great reward through competitive advantage and the ability to leverage new technologies and processes.
Your loop-back process for technology implementation, with the final stage being to monitor and improve, is something I have seen some businesses forget to do, or they just don't want to take the time or money to do. They think that it is working so why bother. As you pointed out, going back to the beginning of the process with any noticed mistakes or areas of improvement is necessary if the business wants to succeed in the future.