Quick Guide to Understanding External Driving Factors of Technology Strategy

Jason
May 31, 2024

This guide explains the main external driving factors that could influence technology strategy – from start-ups to large enterprises.

As you will soon learn, your technology strategy will, ultimately, reflect the landscape in which your company operates. For example, if it’s on a growth trajectory or repositioning, then it’s going to address its weaknesses.

External Driving Factors

External Driving Factors of Technology Strategy - infographic summary
(click to download/enlarge)

Going Multi-Region (Common Strategy)

Even today, many things do not support proper localisation or internationalisation. Just consider the fact that we still force people to enter their first and last names when two-thirds of the world don’t have that concept.

So the basic information and how it’s categorised can become an issue. Additionally, a lot of suppliers don’t support that kind of internationalisation as well. It is a soft spot in every tech strategy.

Mergers and Acquisitions as Significant Factors

As you can imagine, there will be a lot of overlapping systems. The first thing we must decide is which ones we want to keep.

Two seemingly similar systems are, in fact, different because each company operates differently. And that’s going to affect your technology strategy.

Take, for example, Microsoft’s Dot.Net and merge it with a Linux-based company. Such a merger would cause a myriad of problems. In such a scenario, you, as a technology leader, must evaluate each option and decide what goes and what stays. Because, in the end, you want your strategy to be clear, simple and easy to follow.

Rebalancing Between a Group

As a rule of thumb, on a group level, every division has its individual tech strategy and tech stacks. However, major decisions are made on a group level. As you can imagine, this can create significant friction and cause major delays in optimisation and synchronisation between group companies.

One way to tackle this common problem is to take the initiative and pitch/propose a specific strategy/tech to a group – with a promise of driving it.

The issue you can expect in a group rebalancing scenario is resistance to adopting new technologies or, on the other hand, reluctance of multiple teams to switch to a single (common) tech.  

Here, you need a tactical approach, especially if you’re considering more risky technology choices. What you need is a group of people who did due diligence or, even better, used it so you’d have tangible arguments.

Considerations when choosing a new technology:

  • What level of assurance do I have?
  • How does anybody use this in production?
  • Is there anyone in any of the teams that have already used it?
  • What are their experiences?

Dealing with the legacy tech

The first thing to do in this situation is to understand who thinks it is a legacy and for what reasons.

There are instances where people flag the tech as legacy just because they’ve depreciated it on a balance sheet. It’s an accounting view.

Sometimes, it’s depreciated because there’s a competing in-house technology standard, only they can’t decide which one to retire. So they simply flag one as a legacy.  

Or the system has been around for a long time which, by no means, makes it a legacy.

What are the determining factors that could make a system potential legacy?

It’s legacy if it has some problematic features that do not exist in a new substitute tech. For instance, tight coupling, invisible business logic, it isn’t easy to read and understand, returns unusual business results and similar.

So how do you decide to retire a system or extend its use?

STEP 1: Find out who could potentially raise an issue if you switch it off.

STEP 2: Understand what exactly a system does.

STEP 3: Interview users to get feedback.

Remember, every time you try to flip a legacy system, you always run the risk of running out of goodwill and funding. If there is strong resistance caused by fear, it’s better to stop. Because if you don’t have support, it won’t matter how great your tech is. They are not going to adopt it.

Cost of Transition to a New Technology

We will take cloud services as an example here. The big promise was that the cloud would be cheaper. However, that’s not exactly the case. It can get really expensive really fast. Because, unlike data centres that have a limit on a number of servers, clouds enable you to keep provisioning new things and never turn them off.

As a rule of thumb, large companies never turn things off because nobody is managing the systems.

Now, from the technology strategy perspective, you should choose a single provider instead of trying to build redundancy on several systems just to have that safety net.

The choice, ultimately, depends on the volume metric projections, the overall cost and potential compatibility (eg, if you have Microsoft products in your environment, the integration of active directory will go smoother on Azure than on AWS or GCP).

TIP: If you don’t have an explicit function that looks after your cloud operations and finances, you’re going to have to set that up and make sure that you stay on top of the cost of your cloud provider.

Skills Availability

The availability of skills in your market is another important decision-making factor. In some instances, you will have to choose technologies that are more widely adopted to have a larger pool of available skilled workforce.

Remember that you can always check the TIOBE Index to see what technology is trending.

Summary

TECH-INFLUENCING EXTERNAL DRIVING FACTORS

  • Going multi-region, multilanguage:
    • Inadequate suppliers’ support for internationalisation
  • Merger, acquisition:
    • Overlapping systems, difficult to decide which to keep
    • Scalability issues
    • No compatibility between flagship technologies
  • Group rebalancing:
    • Different tech strategies between divisions
    • The tendency toward popular technologies and big suppliers
    • No synergy
    • Technological monoculture, high resistance to new tech
  • Cost of transition to a new technology
  • Skills availability

These are the most common external drivers that will influence your technology strategy. Module 3 of our Digital MBA for Technology Leaders, consists of over 20 lectures explaining technology strategy and business goals. Starting with alignment to value drivers, planning and, most importantly, execution.

So far, over 400 technology leaders have taken our course and they all agree on one thing: it provided them with the comprehensive knowledge required to excel as a Chief Technology Officer.

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