A BUSINESS ARCHITECTURE FOR TECHNOLOGY MANAGEMENT*

by

Joseph P. Cory

1. TECHNOLOGY MANAGEMENT AS AN EMERGING DISCPLINE

Technology management is rapidly emerging as a discipline combining the elements of business management and engineering. In support of the meaning of technology management one description views this displine as

the research and education on how to:

· Manage the technology component of individual product life cycles,· Capitalize on process technology to gain a competitive advantage, and· Relate and integrate product and process technologies.

Technology management is applicable to every phase of technology-oriented businesses (in either application or development) such as marketing (services) and planning activities as well as R&D, product development, and manufacturing. Major elements referred by the National Research Council Task Force Report on Management of Technology include

1. Research management2. Product planning and development 3. Project management4. Integrated manufacturing processes5. Production control6. Quality Assurance7. Information Systems design and use 8. Software development9. Product vendoring10. Corporate technology11. Integration of technical [disciplines] with business and financial

decision making

“Formal knowledge of technology management is valuable, not only for managers of R&D, but also for manufacturing, marketing, financial, and general croporate management.” Therefore, it is important to view the management of technology not only across all disciplines and industries but also in a global environment in a rapidly shrinking society. Both manufacturing and services

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industries are in need of this knowledge today, although the latter is just beginning to be cited with frequency.

1.1 Goals and Strategies of a Firm

A firm’s goals and strategies represent the aggregate of its products, technologies, and services. “For such goals to be credible they must be linked directly to the set of development projects the firm intends to undertake [or are in-process or in the market-place].” Therefore, a business architecture in technology management follows for new development projects and their functions. It identifies what business parameters to address to make a good business decision regarding key problems encountered in achieving the objectives and goals of the strategies of a new development project. These problems occur at different steps in the strategic and development processes.

1.2 Development Chain

The development of any product or service can be described as a chain of acceptances by management in its travels from idea conceptualization to the marketplace. Essentially, each acceptance step is a gate that allows one to proceed to the next major step. Concurrent engineering has allowed one to accelerate this process, but the overall business decisions related to acceptance are essentially the same. This chain of acceptance steps is described later, but is defined below to include

1. The research and development of an idea or invention2. The competitive evaluation of the idea3. The research required in technologies to develop the idea4. The transfer or purchase of a selected technology for support of a

process, a component of a product, or a further development of the technology for its own marketability

5. The acceptance of a proposal to develop the product6. The acceptance of the design of the product and/or technology7. The acceptance of the product’s manufacturability, i.e., at the volumes

and specific quality levels required8. The acceptance by the customer of the product that is marketed

1.3 Managing the Chain

Managing these steps, effectively and efficiently, is often met with some difficulty. Problems emerge in implementing functions that are needed to achieve the acceptance criteria. The management practice is “sometimes ineffective resulting in lack of schedule integrity and resource drains,” thus impacting the improvement of the total development process.

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An assessment criterion that allows management to make functionally sound and less costly decisions often is lacking. The cost of lack of commitment to schedule and the drains on resources of the firm result in a poor “payout” to the development project.

1.4 Use of Technologies

Technologies can be used as a component, module of a product, or a part of a process. An example of a technology within a product is the automatic gear that is an intrinsic part of an automobile. An example of a technology that is part of a process is the laminating process in metallurgy to produce sheet metal. The ideas behind technologies such as these are often applicable to other uses and can be expressed in the form of derived demand.

1.5. Decision Problems in the Use of Technology

The decision as to whether to use a technology can be problematic for a variety of reasons. The technology within a product may not be responsive to customer needs in quality, function, or performance. Or the technology chosen for a process may be difficult to implement or lead to poor and costly results. Also, it is possible that an alternate technology is the right one rather than the technology selected. In addition, the technology may lack synchronization with the committed schedule, the engineering changes may be excessive, the wrong product may be produced (i.e., unresponsive to the customer’s needs), the development resources may be displaced to other products for various reasons, or the technology transferred may be changed by product development to the degree that the technology no longer resembles the technology which it represents or for which it was originally intended. There are many other reasons why wrong decisions and actions can cause problems in managing technology.

1.6 General Development Steps

It is necessary to look at the general development steps (shown later in Figs. 2.2 and 2.3) and identify key checkpoints in decision making that relate to business parameters.

These steps have a business assessment criteria associated with them for which there must be a payout or payoff. Payoff, in economic theory, often is expressed in the form of a matrix and is “the interaction between arguments or conditions exemplified in terms of firms or people.” The payoff is the interaction between the accepted development steps and the required business parameters. In reality, these business parameters, aggregately, contribute to the business strategy of the firm. The action to respond to this payout can be a benefit to both firm and customer alike, or can be improvement in the operational cost of the business. The effective managing of technology in the business

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decision-making process directly entails the evaluation, use, and consequences of technology. Therefore, technology management requires an architecture (a structure of interfaces) that contains a technical and business decision-making process recognizing these technological impacts.

1.7 Technical and Business Views

Technology management puts into perspective the ways of advancing technology for the benefit of its recipients. To survive, a business must be profitable. If the fir is profitable, it must be responding, positively, to the demand of its products and services.

Therefore, it is necessary to be cognizant of both the technical and business views. From a product development viewpoint, management is faced with many choices in technology. Technologies are researched, developed, or procured for the products intended in the marketplace. These technologies must be coupled to the payout of the business.

From a business viewpoint, the products result in profitability to the firm and benefits to the customer. Effective management of technology is achieved when the products that the firm markets are profitable and the processes that are developed to build them are cost-effective. Technology is the means of solving the customer’s problems for two primary reasons: to help them become more efficient and to help them grow. Also, the firm’s processes for supporting these products can produce cost-effectiveness and time savings through the improvement of productive yields.

2. INTRODUCTION TO THE BUSINESS ARCHITECTURE

The architecture that follows shows the major functional steps in research and development with their corresponding examples of business parameters. These steps are those used in the industrial sector and describe the technology and product strategy processes employed in the development process. Analogous steps exist in the service sectors but are not addressed here.

2.1 Definition of a Functional Step

Each critical step in the process, from research to the marketplace, is identified and mapped to corresponding business factor(s) that provide a return or payoff. The business architecture, consisting of a technology and product development chain, is mapped against the corresponding business factors; these business factors, in turn, form a chain which is defined. Each functional step invokes one or more processes and, if managed effectively, responds favourably to the business factor(s) of the enterprise. A functional step generates other steps for

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which business decisions must be made. These subordinate steps may be identified only to make a point.

2.2 Understanding the Architecture (Process)

To understand any process, it is necessary to identify its goals and the strategies used to achieve these goals. It is said that a goal “should focus on significant areas of organizational need.” A strategy is “a guide to action or a channel of thinking,” i.e., a general direction employed to achieve specific goals. There can be more than one strategy to achieve the same goal. For example, let us say that a computer manufacturer is to develop information-handling products that will be responsive to customers’ needs in the office environment. One solution is to automate the office using workstations, printers, and intermediate-size computers to respond to those needs. One manufacturing strategy may be to build these products using the company’s resources. Another manufacturing strategy may be to use vendors in place of the firm’s own manufacturing facilities. The goal is still the same. In the same fashion, a technology is developed with function, quality objectives, and performance as its goals. One strategy may use a particular innovation as the technological solution, yet another strategy may consider a completely different innovation as a solution.

2.3 An Example in Technology Research and Transfer

As an example, technology research and transfer is used in Fig. 2.1 to show the practice of technology management in responding to the business. The model shows a process that identifies major development steps beginning with technology research and technology transfer, followed by product development, and market segmentation leading to an ultimate customer payoff. Correspondingly, on the business side, there is also a process which shows projects funded on the basis of customer requirements (wants and needs), funding priorities, the strategy of the business, and the contribution that the projects must respond to achieve revenue and profit objectives. Successful correspondence between development steps and payout to business objectives through decision making gives the ultimate successful result.

2.4 Phases of the Architecture.

The overall architecture is in two phases: the research-and-technology phase shown in Fig. 2.2 and the product development phase shown in Fig. 2.3 . It is stated that “The product development process represents the crucial interface between applied research, development engineering, and the market groups.”

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3. RESEARCH-AND-TECHNOLOGY PHASE

The research-and-technology process phase begins with research and closes with successful technology transfer to the product development phase. The

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goals of the technology strategy are represented often by quality objectives, performance objectives, and function(s). The steps include

· The research and development of the idea or concept· An analysis of competition that relates to the idea· The creativity and innovation to development technology(ies) derived from

the idea· The technology research, including technology forecasting, selection, and the

transfer of technology to development

3.1 Research and Development (R&D)

One standard definition states that research is an undirected basic science or a directed or applied science. Development in research can result in innovative products and processes from either of these sources. Research differs from development of a product in that it is an exploration of ideas rather than a tangible output to be marketed. There is no guarantee that a new idea will be successful. R&D must provide a high degree of insurance so that future gaps can be closed to meet corporate goals, such as profitability. Therefore, many innovations are necessary and should be allowed to proliferate to assure the achievement of these goals. “Invention is an idea that must next be reduced to practice, i.e., one must show the technical idea is feasible and can be demonstrated.”

Industry analysis is one step used by business strategies to examine the external environment to assist in establishing business goals. Thus, a payout to industry analysis can be achieved through the practical results responding in invention. For example, the invention of semiconductors was well received and was a handsome payout to the industry providing a new generation of computers.

3.2 Competitive Analysis

Competitive analysis verifies that the innovation is valid, timely, and responsive to competition. This analysis is portrayed by asking four questions:

· “What are the implications of the interaction of the probable competitor’s moves that have been identified?

· Are the firm’s strategies converging and likely to clash?· Do firm’s have sustainable growth rates that match the industry’s forecasted

growth rate, or will a gap be created that will invite entry?· Will probable moves combine to hold implications for industry structure?”

It is fair to say that technology management is instrumental when applied through forecasting, assessment, and implication of technologies for competitive advantage. Competitive advantage views technology as a way of improving a

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process of any firm regardless of whether the process is a competitor’s or from another industry.

3.3 Creativity and Innovation

“Creativity by thought is invention and that inventiveness is a quality usually required and always desirable in all phases of the innovation process.” Formulation of “the creative process contains the following stages:

· The perception of the problem (coming from the R&D process) with its idea(s).

· Frustration of the inability to solve it,· Relaxation or sleeping on the problem,· Illumination or sudden inspiration, and· Solution and verification.”

Innovation exploits opportunity to seek a return on investment. Creativity provides the forum for innovation by being one of the requirements for the successful entrepreneurs in their quest to innovate. Six stages are outlined in the innovation process:

· Preproject stage, including inside and outside R&D communications of what may be of interest to the firm and networking ideas with peers

· Project possibilities: what could be useful to the customer· Initiation of the project; managing the idea with the marketplace· Execution: managing the innovative project· Outcome evaluation: evaluating the development of the innovation· Project transfer: transferring the development to the next point for further

work on the project.

As simply as this is stated, the important point is that innovation as differentiated from creativity has a constant reference to the marketplace because that is where the opportunity (return on investment) and the risk for success or failure lie. Risk analysis assesses creative and innovative ventures in technology to determine technologies that are worth considering. Many risk analyses are common tools for the entrepreneur who exploits the opportunity to get the maximum return on investment. For example, Marconi, who did not invent the telegraph, exploited the opportunity with risk and received a handsome payoff from the return on investment.

3.4 Technology Research

It is stated that there is a technology paradox which concludes that all technologies are fated to be replaced, eventually; however, most attempts to replace them will fail. “Starting with the beginning step¾a bright new idea¾those that survive all the way to application are probably less than 1 per cent.” This

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statistic calls for the primary task of technology forecasting to be performed as a required part of technology research in this process.

Technology forecasting is defined “as a collection of formalized processes or methods of future technology evolution caused by developments in science and society, and the interactions between these developments.” Note that

Scientific phenomena are precursors to technology. All technologies are based on exploiting the possibilities of guiding the selection of the courses of natural events and states of a phenomenon… The discovery of a scientific phenomenon is a predcondition to the utilization of that phenomenon for a technology¾a precursor to technology forecasting.

There are two major types of technology forecasting: exploratory and normative technology forecasting. Exploratory forecasting begins with today’s knowledge and is oriented to the future. An often-cited example is the succession of techndiques used for the function of lighting, in which the 1860s’ paraffin candle progressed to Edison’s first lamp, followed by the cellulose filament, tungsten filament, sodium lamp, mercury lamp, fluorescent lamp, and white light (and now the halogen lamp). This is a deliberate evolution.

Normative technologyforecasting first assesses future needs of society and market potential and analyzes these for their technological potential. An example of this type of forecasting is the automatic gear shift. To expand the demand for driving automobiles to a significantly greater number of users, it was necessary to satisfy a need for “ease of use” with a much simpler and less intimating technology by embedding the gear shift within the product and providing “automatic” control to the driver.

Surveys find that “innovation shows clearly that normative technology forecasting has a [greater] potential for success than exploratory technology forecasting.” Still another approach to technology forecasting is viewed as a creative problem-solving process with techniques which can be used equally well to stimulate group creativity. An example of this was “the completion of the lunar mission with astronauts requires the completion of a number of inventive problem-solving steps that can often be approached in a number of different ways.” Customer requirements help identify technologies that are needed to assist in solutions for customer operations or to help customers grow.

Accordingly, “some people, especially economists outside the steel industry, already saw clearly the need for major technological change that would convert steel-making into a chemical flow process. This temperature-conserving flow process would have a significant impact on the economy and did.”

3.5 Technology Transfer

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The technology transfer step results in the transfer of a technology from its development to product development and manufacturing. It can be considered as part of a component or module in a product, or a product itself for derived demand, or it may be used to support or implement a process.

There are two major concerns in technology transfer viewed in two dimensions: technology and people. The first dimension is “the problem of transferring information about physical phenomena, equipment, analytical and manipulative techniques, terminology, etc. associated with the technology.” The transferral of information can introduce ambiguities in specifications, misinterpretations of meaning, and lack of on-the-job training to understand the technology and its interdependencies and architecture. The second dimension “concerns the feelings and attitudes in both organizations [of] R&D and product development engineering [regarding] the two sets of people with different skills, values, and priorities to become successful in passing the baton from one to the other.” This is often a problem in management style and practice. Funding is needed in the technology transfer process to support the transfer of critical technology for inclusion in a product or process. For example, there is “an important property of technological innovations for full-scale production settings that remain to be considered and that is the impact of learning effects on unit production costs and pricing of an innovative product.”

3.6 The Payoff

The payoff of a timely technology can make a firm gain a market edge by lowering price, even with a strategy that places it below production cost. The expectation is that increased sales would ensure future cost reductions from increased volume of output due to increased sales.

4. PRODUCT DEVELOPMENT PROCESS PHASE

In most manufacturing firms the critical product development steps are similar. These functional steps include

· A product proposal· Design of the product with its relevant technologies· Capabilities of the manufacturing or software processes to build and support

the product· The marketing (and servicing) of the product to potential customers

These steps constitute the major gating factors for delivering products and services. These steps, like the ones in the research and technology phase described in Sec. 3, constitute the major checkpoints for delivering technologies to product development or for process implementation of the product.

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4. 1 Product or Technology Proposal

A product proposal is a common instrument used by management to review and consider new products or major enhancements in the product line. This proposal is best described with the following content:

· An opportunity analysis which analyzes the characteristics of demand and competition

· The sociotechnical environment which assists in defining the opportunity· The feasibility and capability requirements of the firm’s engineering,

manufacturing, and marketing resources which relate to the potential product solution

· A market structure and market segmentation evaluation of the competitive economics, and the design and communication alternatives

· The overall firm’s line of business policies and strategies as they relate to the new product opportunity

Using this as the background of the proposal, the outline of key parts to its contents must be a part of the business case and include

· The product’s business objectives such as revenue and customer demand from benefits derived from the product or technology

· A description of the product or technology· The market channel to be used· The segment(s) of the marketplace being addressed· Preliminary market tests with their results to determine the usefulness for the

product, if possible· A description of the market opportunity, e.g., what the market is and who the

competitors are· A description of the product opportunity from the firm’s viewpoint· The opportunity sizing, e.g., how large is the opportunity in the market sought

after and how much is anticipated for this product· The financial risk and summary of measurements such as return on

investment, customer value, and return on assets· Work schedules, resources required, and expected time for completion and

delivery

On review and acceptance of the proposal the product is funded, dropped, or returned to the “drawing board.” The positive response to the business case to the proposal is the payoff. If the analysis of the opportunity shows a potential for the proposed product, then a reasonable business case can be developed and a proposal accepted.

4.2 Product Design and Technology

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In this step, the design specifications, which include the technologies to be incorporated, are developed. Design and product engineering reviews and modifies these specifications for manufacturing implementation. The acceptance of the design and technology is reached after the models of the product design and the technology are developed and the product is stress-tested for design limitations and in compliance with customer requirements. Shortcomings to that compliance must be assessed to determine the impact to anticipated demand. To arrive at the best design point, the design and technology of a product must respond to customer requirements. Managing the technology, for instance, in computer-assisted design or in the packaging of a product with human factors is the payout to customer wants and needs.

4.3 Manufacturing and Software Development

On completion of the verification for design, manufacturability must be assured through stress testing for capability of assuring function objectives, volumes, performance, and quality objectives. Software, as required, must be in place and fully tested. At this point, these actions must be capable of achieving the proper return on assets and intended minimal cost and capital expenditures compared to expected revenues.

The payoff from return on assets is not realized, for example, in managing technology in a computer-integrated manufacturing (CIM) environment unless it is cost-effective in relationship to the revenues that result.

4.4 Market Release, Marketing, and Servicing Products

The final step that leads the product to the marketplace is a market release process and the implementation of the marketing plan to market the product or technology. Final plans to market a new product through marketing programs and selected market channels are put into place. A marketing program, for example, can include advertising in the press, TV exposure, or promotions using trade journals. Market channels can range from mail order to selling the product directly to companies. The sale strategy for the product should be in place. A program to service the product through either direct installation or installation aids, as required, should be developed. In addition, a program to service and maintain the product may also be part of a firm’s objectives. This is highly desirable in the case of complex and high-tech products. The ultimate payoff is customer delight and satisfaction, and the revenue derived through market acceptance and increased demand. This can be successful only with the right technology and product responding to the correct market segment.

5. SUMMARY

A business architecture for technology management is fundamental to understanding the relationship between functional disciplines and managing

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technology as the causal parameter for producing effective results. The morphology presented identifies business objectives as the practical considerations of the firm. Without that, significant costs can be experienced. What is demonstrated here are the examples of business parameters and their relationship to critical functional acceptance factors in the “value chain” of the enterprise from research to the marketplace. Technology is the lead factor and, to be managed successfully, requires a progression of decisions from a business perspective. Without that, it can become a costly venture. These numerous examples in this architecture demonstrate the need for technology management to realize the firm’s profitability and customer satisfaction as the ultimate payout to the firm.

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