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What does it mean for a company to become a technology company?

By Mark P. McDonald | May 18, 2022 | 0 Comments

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Every company will become a technology company to one degree or another in response to customer and competitive demands.  Those demands concentrate on providing greater  value, specific to them, and at an almost continuous pace. Meeting these demands requires information and technology.

A company becomes a technology company when it incorporates information and its supporting technology into its business strategy and core business capabilities.

The figure below describes the different types of companies and high-tech providers. Companies currently use technology to enable business processes and operations.  Technology companies build on these capabilities, extending information and technology into the core of their strategy and business capabilities. Becoming a technology company is not the same as being a high-tech provider.  High-tech providers will continue to create, market and sell technology solutions. There will still be a market for high-tech solutions.

Every company can become a technology company.  The primary distinction between the two is that technology companies make information and technology issues strategic aspects of their business model more than their operating model.  Technology companies can make this move as the nature of technology has changed.

A company becomes a technology company as technology moves from a back-office enabler to a front-office capability. Gartner describes the transition as the techquilibrium between traditional and digital business. (See: Techquilibrium: Traversing the Balance Between Traditional and Digital Business for more details.  Companies become technology companies by increasing the contribution of technology solutions toward customer, growth and price-margin strategies.

Companies become technology companies to make information central to their business. Information intensity drives technology’s progression from the back office to front. Emerging and advanced technologies are more information intensive.  Analytics, Artificial Intelligence, Machine Learning, Hyperautomation, Edge Computing are recent examples[1].  Compared to their process-oriented predecessors, the value of these solutions is proportional to their available information.

Companies become technology companies by consuming front office-oriented solutions. High-tech firm strategies accelerate progression as front office solutions represent the richest profit pool for high-tech companies.  The highest and best use for high-tech was in integrating and managing transactions.  Now, higher and best uses are related to customer experience, revenue generation and operating capabilities. Companies consuming these solutions becoming technology companies their future rests in technology capability.

Companies become technology companies because they can. Advances in technology mean less without advances in business and technology management and operational processes. There is a strong connection between the two. In the past, solution deliver life cycle (SDLC) and program management practices were essential to implementing end-to-end enterprise technologies. Agile, DevOps, Outcome based management and product orientation play the same role in the modern economy. These practices give companies management capabilities to match information intensive technology solutions.

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