Eight Business Technology Trends to Watch

December, 2007 from The McKinsey Quarterly, a publication of McKinsey & Company – “Technology alone is rarely the key to unlocking economic value: companies create real wealth when they combine technology with new ways of doing business. Through our work and research, we have identified eight technology-enabled trends that will help shape businesses and the economy in coming years. These trends fall within three broad areas of business activity: managing relationships, managing capital and assets, and leveraging information in new ways…”

180 View (written by Lawrence Young) – This illuminating article discusses eight emerging technology trends that are changing the way businesses manage relationships, assets and information. The authors emphasize by way of relevant examples that ‘technology alone is rarely the key to unlocking economic value’, and that ‘companies create real wealth when they combine technology with new ways of doing business’.

Having been intimately involved in the deployment of technology in hundreds of companies over the past three decades, we’ve seen first-hand that the authors make an excellent point that has stood the test of time. Purchasing technology is simply not enough-business models and processes, as well as organizational structure, must be rigorously examined and re-engineered to maximize the return on a company’s investment in technology.

Some companies have reaped significant benefits by using technology and the information stored in their massive data warehouses to drive sales and elevate customer satisfaction levels. I am one of I suppose millions of consumers that, as the article talks about, have bought merchandise from Amazon.com after receiving an email informing me that one of my favorite recording artists had just released a new CD. Similar emails have suggested that I buy a book, which I’ve subsequently done, that falls under a subject matter of a book that I had previously purchased from Amazon.com.

Some of our clients have in fact expanded their core business models to exploit their own investment and success with technology and re-engineered business processes. For example, one client, who invested heavily in specialized software and processes to make his distribution company more efficient and profitable, offered his logistics capability to other distributors on an outsourced basis. The result-the company made a tidy fortune letting other non-competing companies benefit from the expertise and capability it had initially developed for its own internal use only.

More and more of our clients are realizing huge savings in transaction-processing costs by giving their customers and suppliers access to corporately stored data on a secure, need-to-know basis. Just think about what the banks have accomplished with ATM machines-the customer does the work of the teller, and often pays for this privilege to boot! Consider the impact on the corporate bottom line when your customer logs in to your web-based portal instead of calling your Customer Service department to see the price or availability of a product, to place a new order, or to get a tracking number of a recent shipment.

As the article aptly points out, ‘although technology always promises benefits, actually gaining them requires a good understanding of its real business implications and of the concomitant managerial changes’. Business leaders would be well advised to take this reality to heart in order to gain significant and sustainable benefits from the dollars they spend on deploying technology in their companies. Often times it takes little more than expanding a company’s existing business model to get the ball rolling.