This full text paper was peer reviewed at the direction of IEEE Communications Society subject matter experts for publication in the ICC 2008 proceedings.
A Technology Selection Framework for the Telecommunications Industry in Developing Countries Kamal A. Ruder, Marthinus W. Pretorius, and B.T. Maharaj
Abstract— It is becoming ever more difficult to clarify the right technology alternatives because the number of technologies is increasing and technologies are becoming very complex. Technology selection describes the process of making a choice between a number of alternatives. This paper proposes a new technology selection model which can be added to the already existing pool of models, with particular reference to South Africa. To test the model, two case studies were conducted. The results obtained from the study are also discussed in this paper. Index Terms— Multi-criteria decision making, technology assessment, technology selection.
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I. INTRODUCTION
VER the last few years, the mobile wireless industry has undergone and continues to undergo a tremendous amount of change. This change is brought about by a never ending stream of technologies all developed to provide unique services that customers will purchase. Businesses need to learn to deal with opportunities and threats brought by technological change. A company can waste its competitive advantage by investing in wrong alternatives at the wrong time or by investing too much in the right ones. It is becoming ever more difficult to clarify the right technology alternatives because the number of technologies is increasing and technologies are becoming very complex. Also the evaluation process is complex and the information concerning the selection unstructured or unclear. Technology selection describes the process of making a choice between a number of alternatives. The objective of this study was to develop and test a new technology selection model which can be added to the already existing pool of models.
K. A. Ruder is a postgraduate student with the Graduate School of Technology Management and the Sentech BWMC Chair at the University of Pretoria, Pretoria, 0001 South Africa (e-mail:
[email protected]) M. W. Pretorius is the Chair of the Graduate School of Technology Management at the University of Pretoria, Pretoria, 0001, South Africa (email:
[email protected]). B.T. Maharaj is the holder of the Sentech BWMC Chair at the University of Pretoria, Pretoria, 0001, South Africa (e-mail:
[email protected]).
The key contribution of this paper is the proposal of a new technology selection model and the results obtained from the case study conducted to test the new model. II.
TECHNOLOGY SELECTION
Technology selection is a core technology management process [1]. Technology selection is concerned with choosing the best technology from a number of available options. The criteria for a best technology may differ depending on the specific requirements of a company [2]. A key theme in the definitions of technology selection, as noted in [2], is that technology selection is a process that is closely linked to other business processes, and is associated with the broader technological, organizational, and business environment. Technology management functions such as technology assessment, technology transfer, and technology development differ greatly between developed and developing countries [3]. In developed countries, considerable emphasis is placed on the control of technological developments and technology utilization to minimize or offset the undesirable consequences resulting from technologies. In developing countries, which lack the necessary resources to develop much needed technology themselves, the emphasis is on the selection of the most suitable technology, and its transference into the country by the best possible means, to achieve the most rapid economic and social development possible [3]. Technology selection is a multi criterion decision making process. There are social, political, technical, and economic constraints as well as national goals to satisfy. The criteria used to make these decisions include both quantitative factors and qualitative factors [3]. III.
LITERATURE REVIEW OF CURRENT MODELS
Technology selection and justification involve decision making that is critical to the profitability and growth of a company in an increasingly competitive global scenario. However, these selection and justification processes require the analysis of a large number of economic (tangible) and analytical (intangible) factors in a decision support environment [4]. A quantitative model that can be used when choosing the
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This full text paper was peer reviewed at the direction of IEEE Communications Society subject matter experts for publication in the ICC 2008 proceedings.
appropriate technology among many available alternatives is proposed by Sharif and Sundararajan [3]. The model provides a systematic and analyst-independent methodology for the multi-criterion technology selection process, which requires consideration of socioeconomic as well as technological factors. A different selection model presented by Yap and Souder [5], proceeds in two related stages. The first stage, the elimination filter, weeds out candidates that do not fit the missions, capabilities and environments of the organization. Technologies surviving the first stage are evaluated in depth at the second stage of the model, where the winning technologies are selected. Another framework which incorporates the filter concept described by Yap and Souder [5] is that discussed by Shehabuddeen, Probert and Phaal [2]. The structure of the framework is based on the key factors that influence technology selection decisions. It uses the concept of filtration, and uses a process view of technology selection and relevant processes. Also a systems view of internal and external business agents is employed. A model that uses the organization’s existing core competencies to establish the technology alternatives and determine the selection criteria and importance is presented by Torkkeli and Tuominen [6]. The framework discussed by Haagsma, Haylock and Sandrasegaran [7] defines key characteristics, after which a quantitative scale is given to these characteristics. A statistical model is then used to evaluate technologies quantitatively. IV.
PROPOSED MODEL
Research done by Lamb and Gregory [1] notes the experience of businesses in using selection methodologies and provides a number of clear themes. These included: little can be gained in searching for quantitative accuracy as evaluations are subjective, quantitative methods used alone can produce misleading guidance and methodologies may fail to balance the commercial view with the issue of capabilities. Also, research conducted by Shehabuddeen, Probert and Phaal [2] concluded that technology selection tools may be useful as a means to arrive at better quality decisions and to reduce the risk of poor decisions, and at the same time to derive other management benefits such as standardization, traceability and team working. With their empirical research, they found that all the cases studied preferred a mathematically straight forward tool as this improved traceability and transparency. Also, simplicity of the tool was a major factor for selection tools being chosen. Taking all of this into account, a technology selection model is proposed by combining previous models. The model presented by Torkkeli and Tuominen in [6] forms the basis for the proposed model. The model presented by Shehabuddeen, Probert and Phaal in [2] as well as the model presented by Sharif and Sundararajan in [3] fits into the base model. Techniques from the model presented by Haagsma, Haylock and Sandrasegaran in [7] are
incorporated into the model. The phases of the model can be seen in table 1. A. Phase 1 – Identification of decision makers and stakeholders The framework begins by first identifying if the decision is going to be individual or a group decision. The process differs slightly if it is an individual decision. Many technology selection decisions are made by a group of people rather than a single individual in an organization. This is due to the fact that the decision will affect the entire organization which includes, the profit of the organization, the employees of the organization, the clients and everybody else that the organization has contact with. This group will include both managers and experts. If the decision is an individual decision, selection criteria and the weighting of these criteria need to be substantiated and documented. If the decision is a group decision then the criteria selection and weighting will be done using group consensus and organization policy but also needs to be documented. This phase helps to assign responsibility and it documents the role of participants. This reduces confusion and clearly defines the participant’s roles. B. Phase 2 – Identification of existing core competencies Once the decision making group and the stakeholders are identified, the decision group needs to identify the core competencies or technologies that the organization currently possesses. This phase helps the group to understand the position of the organization, where the organization currently is and where it would like to be. The new technologies’ purpose and task needs to be defined. This needs to be done with regards to products or services that the organization would like to offer its clients. The current industry trends need to be determined. Also the goals and strategy of the business need to be understood. This phase helps the group to understand where the organization is positioned currently and where it needs to go to. C. Phase 3 – Establishment of agenda and strategy This phase help the group decide how the company is going to move from its current position to the position it needs to be in or wants to be in by means of the new technology. Exactly what the organization wants to achieve is understood and documented in this phase. This helps to gather high level requirements of the new technology that is needed. This phase looks at the products or services the organization would like to offer its clients. From this it extracts the requirements of the new technology. D. Phase 4 – Identification of alternative technologies This phase develops a list of all the technologies that will
This full text paper was peer reviewed at the direction of IEEE Communications Society subject matter experts for publication in the ICC 2008 proceedings.
meet the initial high level technology requirements from the previous phase. Experts in the group will populate this list with currently available technologies, emerging technologies, and technologies that are still being developed. No decisions are made at this point. This phase creates a list of possible technology alternatives as well as gathers data on each technology alternative. This data or characteristics of each alternative technology will be used in the following phases to make the technology selection decision. E. Phase 5 – Identification of selection criteria Once the list of possible technologies and their characteristics is generated, the group chooses the selection criteria that will be used to make the decision. The selection criteria will be chosen by group consensus. Using the filter proposed by Shehabuddeen, Probert and Phaal [2], the requirements of the firm are split into requirements that are critical to the success of the technology selection project and requirements that are desirable but not essential. Based on this, primary and secondary layers of the requirements filter are proposed. The primary layer enables the elimination or screening of technologies that do not fulfill the critical or must-have requirements, and the secondary layer enables the identification of technologies that exhibit desirable but non-essential attributes. This phase uses expert’s knowledge to gather the criteria that can be used in the selection process. The group takes these criteria and chooses which criteria will be used as well as adding other criteria they think as necessary. This is done by group consensus. Also, the criteria that will be used are categorized. F. Phase 6 – Determination of utility and weights for chosen criteria Once the criteria are chosen and categorized, a utility function and weight for each criterion needs to be determined. The weights for the criteria can be gathered from expert’s opinions or using methods such as AHP. This depends on the organization’s policy and the decision making group. Which ever method is chosen needs to be documented and must have group consensus. The utility functions for the criteria are also chosen based on organization policy and group consensus. G. Phase 7 – Assessment of alternative technologies Once the ground work has been done, the assessment takes place. All the alternate technologies are first put through the requirements filter. Technologies are discarded even if one of the requirements criteria is not met. This is due to the requirements filter having criteria that is critical to the success of the project. After all the technologies have gone through the requirements filter, the remaining technologies go through the adoption filter. Usually there are no more than four
technologies that go through to the adoption filter. Now, the weights assigned to the criteria play an important part. The remaining technologies are assessed using the criteria’s utility functions and weights. The technologies are then ranked and a decision is made as to which technology should be chosen. This is the phase where everything comes together, whereas the other phases were data gathering and preparation. This phase needs to be done carefully and if there is a feeling that the correct decision hasn’t been made then the group should go back and redo previous phases. V.
RESEARCH METHODOLOGY
A case study methodology was used to test the model against technology selection frameworks currently in use. A case study methodology is used as it is an ideal methodology when a holistic in-depth investigation is needed. The phases in the proposed model were combined and mapped to four levels. These levels were then used to develop a questionnaire which tested the model. The four levels are as follows: • Identification of decision makers and stakeholders • Identification of existing core competencies and the establishment of the agenda and strategy. • Identification of alternative technologies as well as the selection criteria. • Identification of the utility functions and weights for the criteria as well as the assessment of alternative technologies. Two case studies were conducted for the research. Case study 1 is a state owned fully commercial enterprise. They are in the broadband network business, supplying communication solutions and services to wholesale and retail customers to chosen markets in South Africa and the rest of the African continent. The company is structured using functional departments. However, the company also has a project management department, thus giving the company a matrix structure. The functional departments are also further subdivided into smaller functional departments. Case study 2 is a commercial enterprise listed on the Johannesburg Stock Exchange. They are Africa's largest integrated communications company, providing integrated communications solutions to an entire range of customers. The company is structured using functional departments. The functional departments are also further subdivided into smaller functional departments. Some of the functional departments go down as far as four levels. VI.
RESULTS AND CONCLUSION
Decisions of this sort were found to be made in teams. These teams consisted of people who have been with the organization for some time and have a deep understanding of how the business of the company works. The team is made up of 5 to 10 people from the different departments in the company. The people on the team hold senior posts and are
This full text paper was peer reviewed at the direction of IEEE Communications Society subject matter experts for publication in the ICC 2008 proceedings.
department managers or were chosen by their department managers. Depending on the decision to be made, either group consensus is used to make the decision or the team leader makes the decision after gathering information from the rest of the team. For some decisions, included in the team is a representative of the technology supplier or contractor. When a decision needs to be made about an alternative technology, the company goals, strategy, mission statement and vision plays an important part. Business opportunity analysis is also considered when making the decision. Also, what technologies the company already has is considered. Economic factors such as the NPV, IRR, payback period, initial investment and available funding are important factors when making technology decisions. Regulatory factors such as obtaining licenses for the technology play a crucial role. International trends, especially those from the European continent play an important role when looking for or considering alternative technologies. This is followed by American and Asian trends. Support from major organizations for the particular technology is also considered because it shows confidence in the technology. The selection criteria considered by both case studies are the same. The ranking of selection criteria depends on the organization’s mission and strategy, the respondents for each case study ranked criteria in a similar fashion to other respondents in the same case study. When the case studies were compared to each other, it was clear that the ranking of criteria fell in line with the organization’s mission and strategy. Utility functions for each of the criteria and the assignment of weights to each of the criteria are done by the team using group consensus. Technology selection frameworks exist in the organizations. They are used when the decision is important enough to warrant documentation of how the decision was made. These frameworks are not mathematically intense as they are used by people of varying levels of skills. Also, they are simple in nature and have to be transparent and easily comprehendible by everyone. The selection frameworks do specify some documentation to be used when making the decision and produces documentation; however this is only known by the team leader. Organization protocols do require documentation for the decision process which is not specified by the technology selection framework. REFERENCES [1] [2] [3] [4] [5]
Lamb, M. & Gregory, M., “Industrial concerns in technology selection,” 1997 Portland International Conference on Management and Technology (PICMET ‘07) pp. 206-208. Shehabuddeen, N., Probert, D., & Phaal, R., “From theory to practice: challenges in operationalising a technology selection framework,” Technovation, Vol. 26, Issue 1, pp. 324-335, 2006. Sharif, M.N., & Sundararajan, V., “A quantitative model for the evaluation of technological alternatives,” Technological forecasting and social change, Vol. 24, Issue 1, pp. 15-29, 1983. Chan, F.T.S., Chan, M.H., & Tang, N.K.H., “Evaluation methodologies for technology,” selection. Journal of Materials Processing Technology, Vol. 107, Issue 1, pp. 330-337, 2000 Yap, C.M., & Souder, W.E., “A filter system for technology evaluation and selection,” Technovation, Vol. 13, No. 7, pp. 449-469, 1993.
[6] [7]
Torkkeli, M., & Tuominen, M., “The contribution of technology selection to core competencies,” International Journal of Production Economics, Vol. 77, Issue 1, pp. 271–284, 2002. Haagsma, J.J., Haylock, R.D., & Sandrasegaran, K., “Technology assessment for single stage and multi-stage mobile applications,” 2005 IEEE Proceedings of the International Conference on Mobile Business (ICMB’05), pp. 452-456. TABLE 1 PHASES OF TECHNOLOGY SELECTION MODEL
Inputs • list of relevant and affected participants
Phases of the process 1. Identification of decision makers and stakeholders
Outputs •
• • • The purpose and task of the new technology • The business goals and strategy of the organization
2. Identification of existing core competencies
• •
•
A list of the participants for the group that will make the decision A list of participants that will be affected by the decision A list of any other participants A list of existing core competencies and technologies Linkages between core competencies and the competitive advantage of the organization Trends in the industry
• List of existing core competencies and technologies • Trends in the industry
3. Establishment of agenda and strategy
• The knowledge of experts • Planned application areas and tasks for the technology • Requirements of the organization
4. Identification of alternative technologies
• Business goals of the organization • Expert’s knowledge and opinions about the criteria to be selected • Experts knowledge and opinions • Business goals of the organization
5. Identification of selection criteria
• •
List of criteria Criteria classified into categories
6. Determination of utility and weights for chosen criteria
•
Utility functions for each criteria Weight for each criteria
• Categorized criteria • Criteria weights and utility functions
7. Assessment of alternative technologies
• •
• •
• • •
Redefined business strategy Requirements of the new technology A list of possible technologies to be acquired The characteristics of all the technology alternatives
List of ranked technologies Technology selection decision
