Emerging Tech: Weighing the Cost of Early Adoption
A Framework for predicting emerging technology adoption
From the CPA Ontario Centre for Performance Management Research and Education at the University of Waterloo
The Covid-19 pandemic has rapidly accelerated businesses’ technology take-up. Almost 60 per cent of customer interactions across the world happened digitally in July 2020, while 55 per cent of products and services were either fully or partially digitized, according to research by McKinsey & Co.
KEY TAKE AWAYS FROM THE PAPER
Which emerging technologies to adopt and when to adopt them
Cloud computing, video conferencing and customer relationship management, which were not so long ago seen as cutting edge, have become mainstream. The choice for these applications is not whether to adopt them but simply which provider to use.
However, emerging technologies such as machine learning, smart manufacturing and virtual reality are riskier propositions. Artificial intelligence (AI) has been touted to boost profitability, but the fact remains that many of these new tools are expensive and their value proposition is not always clear. Early adoption of the right tools may also provide a distinct competitive advantage.
CPAs can play an important role
Now that digital disruption has itself gone mainstream, the question of what technologies to adopt and when can have an outsized impact on a company’s bottom line. The role of CFO is to ensure that impact is a positive one.
Research from the CPA Ontario Centre for Performance Management Research and Education allows businesses to predict when a technology will go mainstream, helping them estimate the period of competitive advantage they could gain by adopting new tech early.
Companies can use publicly available data, such as Google searches and magazine articles, to create their own leading indicators, which will help them predict when a technology will go mainstream, says Dr. Theo Stratopoulos, the study’s author. Finance teams can use this data to assess investments in new technology, including net present value.