In Amalgam’s recent Analyst Insight, “Domo Hajimemashite At Domopalooza 2018, Domo Solves Its Case of Mistaken Identity”, Amalgam introduced a figure showing the 5 Tiers of Technology Value. This pyramid, based on Maslow’s Hierarchy of Needs, demonstrates how technology provides value that can be documented, calculated, and used to build business cases.
5 Tiers of Technology Value
To better understand these five tiers, Amalgam provides this guidance to companies seeking a better understanding of how IT investments are justified, as well as the pros and cons associated with each tier.
Level 1: Does It Work?
As crazy as this may sound, IT has not always been charged to provide solutions that work. However, from an employee’s perspective, this issue is an obvious starting point. If a solution does not work, employees will not use it. Conversely, the ease of cloud-based deployments makes it extremely easy for individual employees to quickly create enterprise-grade technology deployments and enterprise-grade financial liabilities. So, this level defines the table-stakes level of functionality that is necessary for technology to provide value at an individual level. Software as a Service, Infrastructure as a Service, mobile apps, and desktop apps such as spreadsheets often meet this first level and are extremely usable. However, this base functionality can result in challenges in supporting higher levels of value needed to justify departmental or enterprise levels of adoption and usage.
Level 2: Do I Trust It?
There are several levels of trust that are involved in technology usage. The most basic categories of trust include solution uptime, data quality, functional consistency, corporate and legal compliance, support, and, of course, security. All of these functional, technical, and corporate trust issues must be met for a technology to be promoted from an individual, temporary, or project-based use case to a permanent departmental or enterprise enabler. This is the hurdle that spreadsheets have traditionally failed to hurdle (with the exception of content managemewnt and governance solutions or workflow enablers such as Vena that allow companies to support spreadsheets at scale). Without trust, technology can never evolve into a trusted enabler and reliable enhancer of human efforts.
Level 3: Does It Help Our Team?
This level differs from Level 1’s “Does It Work” in that this level coordinates team productivity by providing a shared infrastructure, shared version of the truth, shared processes and workflows, or shared business goals that lead to increased productivity. Trust is a pre-requisite, but not the end-all and be-all of creating productivity. The tricky part of Level 3 is to maintain individual flexibility and functionality and appropriate trust while also allowing multiple teammates or departmental colleagues or partners to simultaneously work within a shared environment. Although there are a boatload of collaborative solutions that allow people to work together, those that start with collaboration may have to rebuild Levels 1 and 2 as they seek to support different markets, geographies, or functions.
Level 4: Does It Improve the Business?
Level 4 can be a confusing level for technical or operational employees who look at a technology, sees that it improves their individual job role in some way, and assume that this is sufficient to build a business case. Although individual or role-based productivity can be enough to build the business case, savvy technology buyers will also look at a high level view of how this investment affects customer experience, executive decision-making, and business outcomes. For instance, bringing in Amazon Web Services, Microsoft Azure, Google Cloud Platform, IBM Cloud, or Oracle Cloud from an infrastructure augmentation perspective solves an operational need. However, companies that also provide executives with sufficient evidence of how this cloud investment can lead to new business models, strategic experiments, tangible analytic insights, and increased customer access to relevant data and resources will be better positioned to keep their current cloud budgets and to expand as necessary rather than being forced to prove each individual expansion on a case-by-case basis. No matter how tactical or foundational a technology may seem to be, technology buyers should always seek to understand how this investment will make the business, as a whole, stronger on a short-term and long-term basis. In corporate and large organization environments, Technology should be bought to improve business decisions and business outcomes.
Level 5: Does It Change Our Company?
Level 5 is a more aspirational level that few companies reach. Much like the “Level 5 Leadership” concept brought up by Jim Collins, Level 5 Technology Value represents a level of value that few technology solutions typically reach. This type of investment might be an Internet of Things investment that digitizes a current product in some way, a data monetization launch that translates internal data and benchmarks into a new customer-facing service, or an augmented reality deployment that allows people to fundamentally re-imagine architectural projects or fashion decisions, for instance. However, Level 5 value represents successful digital transformation that expands corporate revenue portfolio or substantially changes the company’s cost structure without changing corporate and customer outcomes. The few investments that are true Level 5 Investments end up becoming core platforms for the business. Although this promise has been made over the years by ERP, mobility, and other disruptive technologies, the reality is that technologies that claim “Level 5” impact and cannot deliver often lead to new disruptions and new families of technologies that start lower in the pyramid and eventually usurp large areas of the legacy provider’s use and functionality.
This 5 level view of technology is used by Amalgam Insights both to measure the value of technologies during the briefing and inquiry process, but also as a starting point for our Business Value Analysis where we look at the work-life balance, executive value, and financial value associated with a technical solution. By looking at all 5 levels, our goal is to both provide a practive perspective on the value of tech, but also provide a methodological basis for the transformational value of technology. To better understand how your technology investments and strategy fit into this model, please feel free to schedule time to speak with us or email us at firstname.lastname@example.org