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Last updated on 12/21/23

Focus on Real Value Versus Vendor Hype

Apprehend the Competitive Forces of Vendors

IDC, a market intelligence analyst firm, publishes a ‘worldwide digital transformation spending guide’ twice a year, which predicts how much organizations are preparing to spend in this sector.

In April 2019, their report predicted that a staggering $6 trillion will be spent on technology and services over the next four years, with robust growth of 15 - 20 per year. Six trillion dollars over four years. Think about it.

As you’d expect, an entire industry has developed to relieve companies who are planning and executing digital transformation roadmaps of their budgets. And that means that there is fierce competition amongst a wide range of technology vendors, consultancy firms, and other service businesses vying for their share of this market.

And whenever there is fierce competition, and a marketplace of customers who are potentially bewildered by the range of choices available to them, then there is no shortage of hype and hyperbole.

So how do you separate the hype from the reality? Amara’s law, named after Roy Amara, who was president of the Institute for the Future, states that:

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

Map New Technologies Against the Hype Cycle 

Over the past twenty years or so, Gartner has published its General Hype Cycle, which you can see illustrated here:

Gartner hype cycle for technology
Gartner's Hype Cycle for technology shows that expectations related to technology start out very high, and then are go through a period of disillusionment. 

Their point is that more often than not, new technology trends fit something close to this pattern - and it reflects Amara’s law quite closely. It is a useful tool to apply to the promises that technology vendors make about their latest innovations.

Check out this short video on Amara's Law, which recaps the trap which businesses often fall into.

The Hype Cycle can be criticized for not being a true cycle, and for being a somewhat blunt instrument; however, it is a useful tool for assessing how seriously to take the promises of vendors keen to flourish a magic wand that can solve your business’s issues, in the hope of quickly getting your signature on their contract.

Consider Running a Proof of Concept for New Technology

The point at which you decide to adopt any new technology is going to be based on how well that technology matches your real business issue. A good starting point is to use the same business case methodology you learned about in Chapter 2.3.

In particular, pay attention to your attitude toward the risk of innovation. The earlier a technology is in the hype cycle, the fewer genuine detailed case studies you’ll see; therefore, the execution risk in the technology is likely to be higher.

Balance that against the cost and potential return on investment to help inform your decision. In the face of uncertainty, run a limited trial or proof of concept with clearly-defined commitments of resources and capital, and equally well-defined success criteria.

It is also good practice to have a pre-agreed roll-out plan, should the trial be successful. In this way, you avoid delays between the conclusion of the successful trial and the rollout, so you don’t lose momentum and have to go back to the organization’s stakeholders for their approval all over again.

Check Out How Risks in the Tap Dogs Project Were Counter-Balanced

🐕 If we go back to the Tap Dogs project, the use of contactless payment systems carried by dogs in tailor-made vests was a new application of the technology, so some element of risk existed. However, contactless payment technology was already well established, and the general public used it to pay for everything from a casual coffee to groceries.

The cost to set up the technology was also pretty minimal - it mostly involved putting together a few relatively inexpensive items in a different way, and the potential return on the investment was high.

Saying yes to the Tap Dogs project was relatively low risk - but even so, the approach wasn’t to go for an immediate large-scale launch. The risk was further mitigated by using just four tap dogs to test the idea before moving to a larger rollout in the months and years after the trial project was a success.

Let's Recap!

  • Vendors of both technology and consultancy sometimes exploit the hype of new opportunities.

  • Understanding where a new technology lies in the hype cycle, balanced with your organization's attitude to risk, will help you separate the hype from reality.

  • A proof of concept with a clear plan to move to full adoption, if successful, is a great way to approach these challenges.

Now we've gone over the need to focus on technology that matters, and you are more aware of the risks related to this, let's move on to the final chapter about protecting your organization from external disruption. One chapter to go!

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