Best Practices for Technology Development and Sourcing Transactions

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The most fundamental characteristic of a joint venture – the shared economic incentives, costs, and risks – goes far in establishing a framework that encourages innovation and sharing. That interests are shared in this manner, though, should not be seen as a panacea to overcome whatever challenge comes the joint venture's way. Joint ventures also have significant drawbacks that a company should consider and take steps to mitigate:

  • all joint venturers should expect to sacrifice control and flexibility regarding the assets and technologies developed by the joint venture;
  • joint ventures can be increasingly trying and difficult to manage over the long term as business needs evolve and the interests of the joint venturers diverge;
  • joint ventures are often set up with a focus on strategic upside, with insufficient attention on how the day-to-day aspects of the company will be managed; and
  • disputes between joint ventures can be notoriously difficult to resolve.

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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