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Best Practices for Technology Development and Sourcing Transactions

  • Best Practices for Technology Development and Sourcing Transactions-

    Innovation can be achieved through the collaboration model by permitting each party to focus on improving its own core technologies. When acting as a service provider to strategic allies, each collaborator benefits from having a committed and interdependent customer to offset costs to develop improvements to core technologies. When those improvements are made, the service provider entity keeps the economic gains of improved efficiency, and the service provider entity often is free to reuse proprietary technologies for other projects. When acting as a customer of other strategic allies, each collaborator benefits from the technological innovations of other collaborators as the services become more consistent and of higher quality. Along the way, all the collaborators benefit from the revenue generated from the third-party customers of the collaborators.

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Best Practices for Technology Development and Sourcing Transactions

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  • Best Practices for Technology Development and Sourcing Transactions-12

    Innovation can be achieved through the collaboration model by permitting each party to focus on improving its own core technologies. When acting as a service provider to strategic allies, each collaborator benefits from having a committed and interdependent customer to offset costs to develop improvements to core technologies. When those improvements are made, the service provider entity keeps the economic gains of improved efficiency, and the service provider entity often is free to reuse proprietary technologies for other projects. When acting as a customer of other strategic allies, each collaborator benefits from the technological innovations of other collaborators as the services become more consistent and of higher quality. Along the way, all the collaborators benefit from the revenue generated from the third-party customers of the collaborators.

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.