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Timing Your Business Case with the Technology Valuation Lifecycle - page 2 / 8

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distribution, with their segments defined as standard deviations from the mean. Each segment represents a psychodemographic profile of a technology prospect. Each segment (Innovators, Early Adopters, Early Majority, Late Majority, and Laggards), from left to right, has:

  • A decreasing tolerance for technology risk,

  • A decreasing investment in indirect costs, such as learning costs/skills of employees, and

  • A decreasing strategic advantage and financial reward.

For the

example, Early Adopters are willing to risk investment

technology

is

largely

unproven.

The

Late

Majority,

to learn new by contrast,

technologies, even when is unwilling to invest in

learning and demands market proven technologies.

Technology Valuation Lifecycle

Different companies comprising small industry groups that share similar buying characteristics within market segments are more prone to using different metrics to build a business case for technology investment because they hold different tolerances for risk. The Technology Adoption Lifecycle (TAL) maps to a Technology Valuation Lifecycle (TVL):

Early Adopters

C H A S M

Early Majority

Late Majority

Laggards

ROA

TCO

ROI

Technology Valuation Lifecycle (TVL)

1.

2.

Innovators do not purchase technology on the basis of an economic business case and rarely would take advantage of any metric. They are also individuals who rarely need to make a business case to others in an organization for such projects. Early Adopters, or Visionaries, acquire technology as a change agent, for competitive differentiation. ROI is a sufficient measure for this objective, because the project is usually focused on creating new strategic advantages outside the focus of core operations. ROI is effective for determining the utility value of a differentiated new technology that does not have

direct competition.

Visionaries are risk tolerant in that

they will

technologies and will accept ROI models based upon reasonable

invest time to assumptions.

learn new Since the

investment objective deployment are less

is as a change agent, the operational and capital expenditure costs for of a risk factor than achieving basic competitive advantage with basic

3.

returns on invested capital. Early Majority, or Pragmatists, acquires technology for productivity improvements.

TCO

contextualizes benefits within the operations of the company, as measured by operating expenditures. TCO informs decisions on technologies of similar benefits. ROI is used to

support the argument, but than the aforementioned,

will not be the metric of focus. This segment is less risk tolerant

and

requires

references

to

offset

risks.

This

means

that

TCO

models cannot be pure theory. They require actual or deployments to stress test results. Their strong

case studies from comparable customers reference requirements may also require

third party validation (e.g. from an Industry Analyst) of the model or cases. investment objective is to improve productivity, the technology is deployed within of operations, putting greater focus on operational expenditures put at risk deployment.

Since the the context created by

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