Thursday, March 22, 2007

Does technology dictate how business is currently done or is it the business that decides what tools are best for it?

I saw this survey in the following article:

“A survey released from Forrester Research Inc. this week said that 106 of 119 CIOs from companies with more than 500 employees are comfortably riding the Web 2.0 bandwagon… What’s surprising is that they say they’re doing it because they are afraid of losing market share otherwise…For those with 5,000 or more employees competitive pressure was cited 74 per cent of the time as a driver for adopting Web 2.0, compared with 46 per cent of the time for companies with less than 5,000 employees. This suggests that the Fortune 500 are particularly concerned about keeping up with each other”

It seems to me that companies are sometimes using those tools not because of real necessity but because they are afraid not to keep up with the competition. The fact that those tools exists does not mean that a company must use them.

Does technology dictate how business is currently done or is it the business that decides what tools are best for it?


N. Venkatraman said...

Adoption of new innovative processes is often based on imitation--the fear of not falling behind. The same logic applies to new technology--whose functionality is not easily understood in the beginning. Over time, companies experiment and explore ways to capture value from technology or discard them. That experimentation is part of what makes a modern IT organization tick.

Interesting survey; worth reading.

Tom Hamilton said...

In a recent McKinsey survey executives were asked "Given hindsight, what might your company have done differently during the past 5 years to make more effective investments in Web 2.0 technologies?" Of the 2,623 respondents 42% said they "invested at the right time but should have invested more in our company's internal capabilities" and 24% said "Should have invested sooner in technology that in the meantime had a significant impact on our industry."

This tells me that they're still looking for the "magic bullet" solution without investing in the people skills needed to get them there. This supports Ruvi's assessment that firms are jumping in just to keep from falling behind, with no clear idea of how to reap benefits from these technologies. This surprises me because you wouldn't see this type of activitiy in other investments by firms. For example, firms have been slow to adopt solar energy as a means for hedging rising energy prices, yet it has a clear ROI model and would lead to competitive advantage through cost containment. As usual, firms are falling into the media hype trap of Web 2.0.