Modes of acquiring Technology

Acquiring a technology is important since every business out there relies on some or the other technology. In this competitive business landscape, it is important to either develop or acquire a technology you need since you don’t want to lag behind just because of your technological laggardness. In addition, we live in a world filled with technological products & services so, technology management is highly important.

Every business in the world is using technology management tools like S-Curve, Roadmapping, etc. to carry out technology management activities in order to serve their customers better, automate their process flows, or to reduce cost and time. If you are not the inventor of that technology, then before using the technology you need to acquire it legitimately. Acquisition is the process of obtaining the technology needed for our business.

There are many different modes of acquiring these specific technologies. For organizations that focus on developing and deploying IT, the process might include applying for government programs, getting funding from venture capitalists and international agencies, purchasing complementary technologies and operating a joint venture with another organization. For organizations that specialize in the manufacturing of IT equipment, the process might include obtaining patents, licensing out technologies to third parties and establishing joint ventures with other companies. However, there are also other approaches to the acquisition of technology, such as sourcing or leasing.

Technology acquisition methods that are used for passive sources of technology include subscription purchase and lease buying. These methods involve an exchange of payments between the buyer and the seller. For active sources of technology, such as those that are being developed or deployed, the method used is contract process. Contract processes can be a complicated process, but they are usually characterized by short-term or long-term terms.

Technology acquisition methods may be used in all different forms of industries. Some of the most common types of technology requirements include software development, software outsourcing, hardware sales, computer manufacturing, digital electronic product sales and contract process outsourcing. The methodologies for each of these types of activities have their own specific characteristics. The acquisition of software development is characterized by a focus on new technology that may not be available from existing vendors. For software outsourcing, the focus is more on obtaining IT services from an external source while contracting the design and implementation of these services. In the case of computer manufacturing, the acquisition methods include purchasing the raw materials from an outside source while the methods for contract process outsourcing include incorporating these resources into the manufacturer’s production line.

Technology acquisition methods are continuously changing as technologies change. For example, during the last decade, the telecommunications industry has experienced rapid growth as a result of mergers and acquisitions and capital investments. These mergers and acquisitions have allowed companies to incorporate newer technologies into their business models. In addition, a variety of tools and devices designed to facilitate the integration of technologies have been introduced to the market. As a result, companies must adapt to these changes if they want to remain competitive in the marketplace. It is important for organizations to consider acquiring the latest technologies because they can help them to improve their competitiveness, reduce cost and reduce waste.

Internal R&D

The first method is to leverage the Research and Development department of your organization. Keep in mind this is an internal acquisition method since you are using resources internal to your organization. The R&D department does research to generate new knowledge at technical ideas aimed at solving the problems your business faces. The goals should be shared with R&D department when the strategy is development phase. The R&D department chooses projects based on these goals to satisfy the strategic needs.

This is a continuous process and involves frequent ideation, prototyping, testing and finally commercialisation if the research is successful. Many larger firms have in-house R&D departments that work all year round to innovate existing products or create new products/services. The internal R&D method has various uses like new product/service development and new process development.

The R&D department can also foster innovative ideas to improve process flows and on-going operations in the organisation. R&D portfolio is essential to reduce uncertainty. We must also make sure that we protect our developed technology using the intellectual property protection methods to prevent problems in the future.

Contracted-out R&D

We outsource all the research and development activities in this method. Now, the outsourced third party may be a contract research organization, teams of consultants, researchers or experts.

In some cases, we also outsource the research work to universities. Many enthusiastic students, under the guidance of their professors carry our research work on innovative technologies. Hence, universities are also a good option for firms to acquire any new and innovative technologies. The only thing to keep in mind is that as the work is contracted out, the company has little managerial input in the process. Thus, regular feedback must be taken to keep goals and efforts aligned.

Strategic Alliances

Ad-hoc partnerships formed to solve specific problems. Complex alliances and joint ventures are formed, to complete acquisitions. Ad-hoc alliances are flexible and are normally used to develop a technology that is critical to two or more businesses. Forming a consortium is another flexible alliance form, where many partners come together for pre-competitive R&D with no equity relationship involved.

More complex alliance forms are used, when two or more businesses are operating in different sectors to pool their resources. In addition, it helps them generate synergy so that the companies can gain access to a critical technology in which they are weak. Joint venture is vital when the area of cooperation is well defined. A joint venture shares the risks and acquisition costs between the partners and this method is highly valuable when these are high.

Licensing

A license is a legal binding document which allows a third party firm to use the invented technology for a specific purpose. In this situation, we are the licensee company and the company that own the technology and is ready to license it is the licensor.

Mergers & Acquisitions

Acquisition of a company is the most certain way of securing a technology and preventing others from acquiring it. But if the two companies are of roughly equivalent size, a merger may be appropriate. The goal in all M&A activity is to acquire and integrate an external entity into the existing company. Acquisition is the fastest way of transferring the required external critical capabilities and resources.