Centre for Technology Management

Business appraisal of technology potentials

Sept 2004-Sept 2006

Aims

To provide manufacturing (and other) companies with the means to assess systematically the benefit of new technologies to their business. The objectives and outputs are:

• To review the tools and techniques currently available to managers in industry for the assessment of technology for business purposes.
• To identify the gaps and limitations related to the use of these tools and techniques.
• To develop selected new approaches which integrate and complement existing tools and techniques, filling significant gaps.
• To apply the developing tools in selected case examples.
• To provide guidance to potential users in the application of these new approaches.

Background

The issue of assessing technology for business application remains a foremost concern for managers in industry. Companies are pushed towards diversifying their portfolio of technology as well as accelerating commercial exploitation. They do this by increasing resources directed towards growth and by acquiring developed or developing technologies. This has increased the trading of technology between firms, and these technologies must be valued. Other reasons to value technology include obtaining finance and valuation for tax purposes. In practice, many managers know that there is something unsatisfactory about the standard use of Discounted Cash Flow (DCF) techniques, particularly when there is high uncertainty and flexibility.

In recent years much progress has been made, however many key questions remain, in particular that of estimating the value of a particular technology to a particular organisation, now and in the future. This is of central concern in the choice of development projects, and when considering the acquisition of technology external to the firm. Valuing technology is more of an art than a science and methods have been developed from tools used to value tangible assets, and thus there is still a huge amount of scope for research in this area. Recent advances in options and hybrid-model thinking have opened up new paths, but the application of these ideas in practice is very limited.

Research approach

• Initial interviews in a range of companies to determine issues, current practice and future requirements.
• Multi-company workshops to firm up concepts for further development.
• Case studies or collaborative projects in companies to develop new techniques.

Deliverables

• Review of literature & practice, based on working papers and company interviews & cases
• Framework principles for technology evaluation
• T-VAL cd to raise awareness of integrated nature of technology evaluation - concepts, techniques and resources
• Value roadmapping guide to support the evaluation of early stage technologies
• Decision tree software tool to support more enlightened use of quantitative approaches, supported by two management guides (Beyond DCF and Get better estimates for input into quantitative models)
• 7 conference papers and 10 journal papers

Sponsors/Collaborators

• EPSRC (IMRC)
• Philips
• BAE SYSTEMS
• GKN Aerospace
• GSK
• Racal Acoustics
• Irkelan
• Oce
• Intel Research
• BOC
• AND Research Technology

Researchers

Clare Farrukh

Marcel Dissel

Charles Romito

Rob Phaal

Rick Mitchell

Francis Hunt

Emre Kazancioglu

Lan Tao

Val Thorn