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Technology investments need to fit the organisation’s business model

Generating business value

The right technology ‘fit’ with a business model provides the best return on financial and time investment.

Ultimately, a business’s model and its technology need to work together and support each other.

How does a business model generate value?

Briefly, a business model can be considered the logic of the firm. It describes how it operates, how it creates revenues and, ultimately, value for its stakeholders.

Business models are evolving. This change can occur incrementally (through gradual improvements) or radically (by launching a new product or through technological innovation). A good business model will grow your organisation as quickly as a bad one will destroy it.

Business models operate through the strategies the organisation puts in place and the resources and capabilities it develops. Strategies need to be assessed for their effectiveness and adapted to ensure the organisation remains competitive over time. Each existing strategy feeds the development of the next strategy: like an athlete continually improving their personal best.

How does technology support a business model?

Technology investments need to fit the organisation’s business model, and support its ongoing evolution to remain competitive. For example if an organisation’s business model depends on being highly efficient, then technology that helps automate its key processes would typically represent a good ‘fit’.

Unless technology investments fit and augment the business model and its ongoing evolution towards competitiveness, the technological decisions could end up becoming liabilities rather than assets in the business.

Your task

Think about about a business model for an organisation you are familiar with. Have the technology investment decisions been aligned with the business model. Do you think the technology investment represents a good fit with the business model? Discuss with other learners in the comments section.

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This article is from the free online course:

Competitive Advantage: Using Information to Gain a Competitive Edge

Deakin University

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