Evaluating the value and costs of technology in the manufacturing industry
Editor: Ekströmer, Philip; Schütte, Simon and Ölvander, Johan
Author: Mämmelä, Janne; Juuti, Tero; Korhonen, Tuomas; Julkunen, Pasi; Lehtonen, Timo; Pakkanen, Jarkko; Vanhatalo, Mikko
Institution: Tampere University of Technology
This paper aims to show the shortcomings of current technology valuation methods and propose a new approach to evaluating the value and costs of technology in the manufacturing industry. It uses dispositional thinking to show the value creation mechanisms of technology, and it uses property-driven development to evaluate the possibilities of technology by examining business and product properties. From the theoretical perspective, the paper uses Design Science, which serves as the basis for understanding technical systems and design processes. The motivation of this paper stems from practical managerial challenges in the manufacturing industry. New technologies underlie competitiveness and enable disruptive changes. However, systematic ways to evaluate the effects of technology exploitation during the whole product life cycle are scarce. Based on prior literature, an approach that focuses on income is the most recommended monetary technology valuation method. The literature does not describe how in-depth initial knowledge should be collected as a basis for valuation. In prior research, estimations tend to rely purely on the competence of experts, and the valuation of technology can be compared to the valuation of other investments. Such approaches may not take into account the longstanding and ambiguous effects of technology exploitation. By contrast, this paper shows that a product or concept structure has to be known in sufficient detail to understand the various effects of technology selection. These effects are built upon the fact that all artificial systems that a company realizes through an order-delivery process and that a customer realizes through a technical process are laden with intentions. Such intentions dictate that technology affects a technical system but value is captured within a business system. Therefore, the links between product characteristics and intentions have to be recognized during the product life cycle—from design to manufacturing and use. Based on the motivation above and a review of the current knowledge, the paper contributes to the literature by presenting a new early-phase technology evaluation approach based on Design Science. This approach is based on a holistic view that requires defining technology, product, and business properties. It evaluates technology properties against product and business properties. By showing the active value creation mechanisms, this approach helps to answer the question of how to use technology efficiently with specific products in a business environment. The proposed approach to evaluate the value and costs of technology supports the development of a new technology valuation method for which this paper proposes a future research agenda. The existing business and product environment in the industry represents the target application for the approach developed in this paper. Because technology does not have intrinsic value, practitioners and academics alike should consider the specific context of technology exploitation.