Does it pay to be a trailblazer for new technologies or suppliers? Sally Flood talks to three early adopters about the pros and cons
A survey of 1,500 IT directors found that their biggest concern was keeping up with new technologies. However, more than 50% of IT leaders questioned by consultancy AT Kearney described themselves as "fast followers" rather than early adopters, suggesting they are happy to let their peers implement cutting-edge technologies first, and learn from their mistakes.
"It is tempting to watch your competitors screw up a new technology and learn how you could do it better," says Jackie Fenn, a fellow in analyst firm Gartner's advanced technologies group. "The problem is that if the competitor does not screw up, they end up with a significant competitive advantage over you."
Fenn advises IT directors not to be afraid of new technology. Being an early adopter gives you the chance to be more creative than if the technology is mature and the parameters of use more accepted. Another bonus is that the early suppliers will be learning alongside you and are usually more responsive and collaborative. This can lead to competitive advantage and steep discounts for early adopters.
"If you hold back you might end up spending a lot more because suppliers already have their big-name customers in the key industries and are not as happy to negotiate or do things for free," says Nigel Montgomery, European research director at AMR Research.
However, it is important not to overlook the risks associated with being an early adopter. If it goes wrong, you could end up wasting time and money, and even damage your own (and the company's) reputation.
Computer Weekly spoke to three early adopters about how they minimised the risks and maximised the benefits of investing in cutting-edge technologies.
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Company Standard Life
Technology adopted Service oriented architecture
Lesson Roll out new technologies in stages, and invest in customised training early in the process
In the late 1990s, Standard Life was enjoying something of a boom. Customer numbers were up, and the financial services group had launched successful telephone and internet services.
But it was not all good news. Supporting multiple channels was becoming expensive, and many IT systems duplicated one another, according to Ian Muir, the company's senior technical manager.
"We were seeing 900% annual increases in data, and the number of applications was also mushrooming," he says.
To address the issue, Standard Life became one of the first companies to move to a service oriented architecture (SOA), replacing 75 IT applications with 250 reusable software components, or services.
The idea behind SOAs is simple: rather than having separate applications, you have a series of individually developed, reusable software modules that perform the functions of those applications. Since most applications share many functions, modules can be used in more than one setting, reducing overall development time and increasing business agility.
However, in 2000, delivering SOA was not quite so straightforward. "It was an enormous leap of faith because the technology to develop the services - in our case XML and Java - was very new, and there was very little knowledge about it in the market," says Muir.
Even training the 250 developers who would create the services was a challenge. Conventional training companies did not yet offer relevant courses, so Standard Life had to work with suppliers to customise existing courses.
Muir admits that Standard Life took a risk moving to SOA before its competitors, but he believes the company took all the steps it could to minimise the chances of failure.
An internal project management team was set up to create a standard framework for building and defining services, which was then communicated to the 10 project teams working on SOA services. A training team worked with employees to ensure the framework was communicated effectively to everyone in the company, including new recruits who joined mid-project.
But Muir regrets taking a "big bang" approach to SOA. "All the new services went live on the same day, and with hindsight that caused quite a few headaches," he says. "We had so many people needing to be supported at the same time and there was a lot of pressure on us to get it right."
For other companies considering adopting technologies early, Muir advises carefully balancing the overall costs with the benefit. In Standard Life's case, SOA only made sense because it was rolled out across the entire company. A smaller project would not have been cost-effective.
"If we had taken up SOA today, it would have been much cheaper because the standards available now make it much easier to do," says Muir. "To some extent, we really were learning as we went along."
Company Newcastle Building Society
Technology adopted IP virtual private network, voice over IP
Lesson Only invest in technologies that fit the overall business strategy
Colin Greaves, general manager of IT at Newcastle Building Society, describes his company as a funny size. "We are too big to be a niche player but too small to compete with the major players in terms of scale," he says. "It means we have to find other ways to differentiate ourselves in the market."
One of the ways the company differentiates itself is by adopting new technologies ahead of the competition. In 1999, it was one of the first to roll out a converged network using voice over IP and an IP virtual private network, which for the first time allowed companies to replace expensive wide area networks with a secure link between two or more points across the internet.
The system was designed jointly by Newcastle Building Society's internal IT department and experts from BT, replacing the society's existing private branch exchange telephone system. The aim was to intelligently route calls to qualified staff working in branches.
"Branches are not as busy as they used to be and we wanted to maximise that available resource, while improving the existing call centre service," explains Greaves.
The results of the £1m project were impressive: using the new technology allowed 90% of calls to be answered immediately, and 95% of queries were dealt with on the first call.
However, these results were not achieved without challenges. "We had some problems with the interactive voice recognition for a time, and getting the quality of service right was a problem. We were a bit twitchy for quite some time," says Greaves. "We had invested in all this new technology to improve the service only to find we could not rely on it because at first callers kept getting disconnected."
For any early adopter of new technology, there is the chance that the implementation could fail, so the IT team at Newcastle Building Society researches any new technology carefully before investing. This includes insisting on supplier demonstrations and staged roll-outs so nothing irreversible is put in place that could affect the business. The company also ensures that any new technology fits in with its priorities. "We cannot afford to invest just because something is fast or looks flash," says Greaves.
"If you get it badly wrong the costs can be horrendous so we try never to be in a position where we are the ones proving that the technology works. If you know the technology works, you can focus on the change management, which is really the most difficult aspect of any new IT roll-out."
However, planning does not always make life easier when you are forced to explain the teething problems to the board.
"You are the person who has sold this stuff internally and when you have problems, the boss is very quick to ask exactly how much money you have spent," says Greaves.
"There is definitely a point where the beads of sweat are forming and you have to believe that the pain will make the pleasure all the sweeter."
Company Becker Acroma
Technology adopted IFS enterprise resource planning software
Lesson Begin training well before deploying new systems
Manufacturers are not known for being cutting-edge, but in 1997 wood finishing specialist Becker Acroma was the first UK firm to roll out an enterprise resource planning application from the Swedish company IFS.
Until then, Becker Acroma had been using a series of bespoke character-based applications to run everything from finance to logistics, explains IT systems manager Paul Marlow. "On the one hand it was great because our developers were on staff and could make changes to the system as needed," he says. "But maintenance was horribly expensive and each site within the company used its own, completely different systems."
In 1996 the company moved to Windows terminals and began looking for a global IT system that could be rolled out across European, Asian and US sites. It chose an ERP suite from IFS because it offered all the modules required, and was the most competitively priced option at that time.
However, persuading 1,000 employees to ditch their green-screen terminals in favour of Windows PCs and complicated new software was not easy, says Marlow. Staff were used to having a software team on site who could modify applications on demand. "Quite a few people thought if it did not work after a couple of weeks, we would go back to the old system but that was never an option," says Marlow. "But we did get people digging their heels in and giving it a try anyway."
The change also put a lot of technical pressure on the IT department. It had to adopt new supporting systems and databases. "None of us had any experience with SQL or the terminology used in the new ERP apps, and it did not help that the product manuals were translated into English from Swedish. We ended up with what seemed like a completely new language we called Swinglish," Marlow says.
Since then IFS has responded to its own international expansion with a focus on comprehensively meeting its customers' training and communications needs across the world. "We now offer IFS Applications 2004 in 23 languages and provide a comprehensive web-based training system called IFS eLearning, and IFS business modeller as part of the implementation," says Alastair Sorbie, managing director EMEA at IFS.
In the weeks before the ERP system went live, Marlow and his team had to convert the existing Cobol and Powerhouse files into the new SQL database which would be used by the new ERP application. In many cases, transferring files was a matter of trial and error, Marlow admits. "Sometimes you would press a button, see what happened, and then be able to make sense of the manual," he says.
The most valuable lesson Marlow learned from the experience was the importance of preparation when using new technology. "If we were doing something like that now, we would start training and education a lot earlier," he says. "As it was, we ended up doing the technical work while we were trying to train people, and in a busy trading period. The first days were not good for any of us as a result."