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The Hidden Cost of High Technology

Companies must guard themselves against obsolescence
by Marshall Lawson, Transport Technology Today Magazine

September 2000 — The recent problems at Orbcomm, the shutdown of Iridium, and the disappearance of several major dot-coms players provides a cautionary note for all of us. While new technology can provide seemingly miraculous benefits and cost savings, it can also suddenly reach a dead end of high cost and poor performance. Technology also faces tremendous competitive pressures, not only from similar technology companies, but also from brand new technologies, and the growing maturity of older technologies.

Pressures from the rapid advancement of technology, coupled with the high costs of research and development, are forcing many hardware and software providers to bring systems to market that aren’t quite ready for prime time. In addition, some of those companies are following technological paths that are destined to fail.

The problem with this, of course, is that it’s all too easy to invest our hard earned money in a product or service that will eventually fail. Even without an investment in expensive hardware, the loss of a technology provider costs money in lost training, and a loss of credibility with customers, partners and employees. There’s also a cost to find a replacement technology, re-implement it and retrain workers.

So, how do we protect ourselves from buying obsolescence? In one sense, we can’t. None of us would go back to the old-style diesel engines that got three or four miles per gallon. None of us (well at least MOST of us) would go back to manual adding machines or manual typewriters. Sometimes you just have to face the situation and move ahead. When a faster, better, cheaper way of doing business comes along, staying competitive means staying current.

Still, there are cautions we can employ. When examining any new technology or provider, it’s important to look beyond the product or service to the company behind it. Have they earned a reputation, good or bad? Do they have a record of accomplishment? Have they hired knowledgeable people? Are they financially solvent? A little investigation can gather valuable information about the prospective supplier.

Another place to look is companies already employing the product or service. Contact them directly and ask some hard questions. Has the product worked? Was it implemented on schedule and on budget? Were the supplier’s people easy to work with and knowledgeable about both the product and the customer’s needs? If training was required, was it adequate? Is it operating within the expected cost range? Is it producing the expected results? Probably most important of all, have the affected employees accepted the new technology and incorporated it into their work?

Another consideration is the viability of the service or technology itself. Is it a stand-alone or proprietary product, or does it make use of other, more established technologies? An example of this would be a mobile communications system that requires the implementation of an exclusive network. Buying or leasing property, then erecting a series of antenna towers is a highly capital intensive project, that requires a considerable amount of time and expenditure before any revenues can start to be realized. While this isn’t an impossible task, a mobile communications provider that uses existing networks that have already been built-out by other providers, can skip some major hurdles.

Finally, probably the best protection against buying technology that’s doomed for failure is - DON’T BE FIRST. Let someone else be the guinea pig while you keep your checkbook in your pocket and watch from the sidelines. Once other people start having success, then consider making the investment.

Investing in technology is just as important, and requires just as much care, time and energy as investing in equipment and personnel. You can avoid becoming a laboratory experiment by taking a careful, reasoned approach to adopting new technology. Handle all major purchases or technology changes with a carefully planned approach that involves staff and customers in the decision-making process. Don’t fall for the gee-whiz factor or high-pressure sales tactics. It’s not only money you stand to lose; it’s also reputation and business.

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