Web 2.0, technology and business risks

Written by Nik Mohd Hasyudeen Yusoff

Monday, 18 May 2009 22:18

MOST of us today have heard about Web 2.0 or are involved in one way or another with technological tools based on the concept. Simply, it is about using multiple technological platforms from handphones, laptops and other means to perform functions and activities to serve both personal and business needs.

With technology, the Internet and more ways to access the World Wide Web, businesses are now able to offer more services and values to their consumers while the expectations from consumers keep changing as they have more opportunities to state their preferences and to choose from.

The level of interactions between organisations and their customers and stakeholders have certainly increased significantly through higher utilisation of technology. Internet banking is just one example.

Another interesting development is the competition between blogs and traditional media in winning loyalty from audiences. Even our prime minister has his own blog to ensure that the people understand his thoughts and activities in pursuing the 1Malaysia agenda and provide feedback to him.

The way forward is about co-creation — efforts at creating value through interaction between suppliers of products and services and their customers. Now, it is a two-way street instead of consumers being offered products or services which the suppliers thought appropriate to be sold.

But technological platform aside, the issue that would be pertinent to entrepreneurs and those running organisations would be how far this phenomenon would shape the future of their businesses and organisations? What would be the risks to businesses and organisations by ignoring the development in technology?

If we take the definition that risk as anything which prevents businesses and organisations from achieving their strategic objectives, then risks could come from multiple directions.

The first would be the ability of competitors to provide better and more cost-effective products or services by leveraging on technology.

If a business which has a large market share does not anticipate the competition or fails to respond to the changing landscape fast enough, their market dominance would be challenged.

Technology can also reshape the landscape of industries where certain products or services would be obsolete in double-quick time.

A lot of businesses are now facing the problems of rapid shortening of the shelf life of the products they sell. The level of innovation and time taken to transfer ideas into commercially-viable products is getting shorter.

The two factors identified above result in another risk — how to select a technology which can help in winning in the market place while at the same time provide appropriate level of returns before the technology itself becomes obsolete? When investment in technology is high and the lifespan of the technology is uncertain, making the choice between technologies would be critical.

Technology could also contribute to the sustainability of the environment — a factor that is becoming important for all enterprises. Under the pressure of society which demands strict enforcement on environmental protection, using technologies that are not environment friendly may result in the enterprise being pushed out of business.

Given that Web 2.0 enables the society to express themselves about unhealthy practices of specific enterprise, this risk is clear and present to recalcitrant enterprises.

Apart from embracing technology, enterprises and organisations need also to re-evaluate their business models and be clear how additional value is delivered to customers.

For example, how would the present workers react if the introduction of technology requires the business to operate differently? Are the present protocols, processes and procedures still relevant?

Given the complexity of the business environment, business modelling has become more critical in developing sustainable ways of running enterprises.

This is clearly demonstrated in the airline industry where the players are competing by offering different value propositions in targeting customers when the substance of their work is moving people from point A to point B! Different value propositions would result in the airlines deploying different types of aircraft.

However, being too fascinated with bringing new technology into business without linking it to value creation and the ability to monetise products and services could also mean risking the enterprise. Remember the dotcom bubble?

Technology would also create challenge for accountants in identifying their fair value in the preparation of financial statements.

In a market where consumer preferences keep changing — a facet that ultimately determines the demand and pricing of goods or services — the value of the underlying technology and other assets used to produce those products need to be reviewed more frequently as well.

Like it or not, Web 2.0 and other new technologies have certainly changed the way we think, the way we run our affairs and redefined our expectations from enterprises and organisations of which we are stakeholders.

Doing nothing would certainly be risky for those enterprises and organisations. On the other hand, embracing technology without understanding the end game could be equally fatal.

Nik Hasyudeen is the president of the Malaysian Institute of Accountants. He can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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Last Updated on Monday, 18 May 2009 22:19

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