New technology: risk or opportunity?

by Martin Courtney

Research published last month suggests that 20 % of European technology, media and telecommunications (TMT) companies see new technology as their biggest business risk.

While the majority of the 692 global companies polled identified economic and political factors as bigger potential threats to their success, the unrelenting pace of change within IT undermines the confidence of others looking to balance innovation in pursuit of a competitive edge against the risks often introduced by new technology into their IT infrastructure.

The survey was conducted by market research firm GfK NOP’s business and technology division on behalf of law firm Simmons & Simmons. The pollsters would not reveal who they contacted, but TMT firms can include anything from large broadcasters like BSkyB and the BBC, to telecoms service providers like BT and Cable & Wireless.

The report suggests the greatest technological risk seen by TMT companies is the rate of technological change (13 %), though energy use and cost from IT equipment was seen as a risk by five %, with affordability of technology by four %.

“These high figures indicate some are not able to transform quickly, and that technology keeps them on their toes though not necessarily up at night,” said Simmons & Simmons partner Andrew McMillan.

Of those polled, only 11 % saw the internet as their greatest commercial opportunity (though 42 % said it was a major opportunity), way behind new markets, new product development and market share growth, indicating a degree of complacency about being on top of the internet game as far as supporting technology is concerned.

“The media is least concerned about technology risk as a risk type, which is quite surprising given new formats like the iPad, and the battle over paywalls. They see new technology as a new route to market, but have to make sure they can charge for the content,” said McMillan.

The most influential technology developments indentified by the survey are: IT consolidation (46 %); virtualisation (43 %); cloud computing (38 %) and mobility (33 %), with open source and unified communications also registering on the respondents’ radars.

They also reported that technology changes are most likely to have an impact on specific elements of business operations, including product innovation, logistics, supply chain management and outsourcing policies.

The security challenges, and therefore heightened risks, around cloud computing and mobility could present TMT companies with significant headaches.

But while the price of introducing new devices and services to any organisation can be high, cost savings are also possible through infrastructure consolidation. 

“It is a platform and it is up to them what they do with it, but it is about recognising the enormous potential of the mobile internet for location-based advertising and other new services,” said McMillan.

“The proposed BSkyB acquisition of the Cloud is one example that provides the company with significant mobile and cost-saving opportunities if they can get customers off the radio access networks and do it through Wi-Fi, for example.”

The definition of technology risk management is loose, arguably covering issues as diverse as electrical fires caused by faulty equipment to the prospect of legal action resulting from data security breaches.

Easily the biggest perceived risk to most companies is the damage that can be caused by data security breaches that result in financial loss, fines, prosecution and adverse affects on a company’s brand or loss of trust from customers or partners: one reason why – wherever possible – firms affected will try to keep these types of incident away from public eyes and ears.

Vulnerability and security management, privacy and data protection are obvious challenges which that technology can both create and solve.

But increasingly every part of the business relies on IT to support daily operations, meaning any disruption to the underlying technology infrastructure for whatever reason can cause significant problems.

Intel, for example, lists operating and maintaining multiple servers without consolidating them as number eight on its list of top 10 technology risks – though predictably for a hardware vendor, it also puts delaying regular refresh cycles for desktop and notebook PCs in an effort to save money in at number one.

To discuss this and other articles please visit The Business Technology Forum group on LinkedIn.

Comments are closed.