Best Practices for Technology Development and Sourcing Transactions

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Sometimes, the most expedient and low-risk way for a company to gain access to innovative technology is to buy a company with an innovative technology. A recent high-profile example of technological innovation via acquisition is Facebook’s recent $1 billion dollar acquisition of Instagram, maker of a photo-sharing application. Facebook faced two key challenges regarding photo sharing in its core business: increasing competition from other photo-centered social media services, such as Pinterest; and the growing market perception that Facebook’s mobile experience was clunky and not improving despite Facebook’s efforts to improve it. By acquiring Instagram, Facebook addressed both issues in a single stroke and bypassed future in-house development efforts. Facebook has subsequently made a smaller acquisition of Face.com for the same reasons.

In recent years, the pace of technology and business change has rapidly increased, requiring new commercial models and changes to the existing models. Companies – all companies, not just technology companies – must now regularly update technology across their entire organizations and customer-facing services and products.

Successful technology projects boost revenues, distinguish a company and its offerings from the competition, and transform and improve a company’s relationships with its customers. Failure, on the other hand, can have a profound impact on product development, customer service and market reputation for years to come. Consequently, planning for technology innovation and deployment projects requires careful mapping of strategic objectives, deliverables, and realistic work-around options. 

Laurence Jacobs and Nicholas Smith, partners at Milbank, Tweed, Hadley & McCloy, have identified a variety of transaction structures that companies can use to develop new technologies and to leverage existing infrastructure, technologies, and customer bases. They have also focused on the relative strengths and weaknesses of these models in fostering technology innovation and best practices when designing and managing a project to develop and deploy technology or technology services.

 

Related Topics : A Big Market for Big Data Jobs, Midmarket CIO, IT Management Automation, SharePoint, Technology Markets

 
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