Rimol Gartner. Gartner, Inc. To learn more, visit gartner. Learn More. Press Release Newsroom. Share this:. Newsroom View all press releases. About Gartner Gartner, Inc. This knowledge can vary continuously over time. It can range from the initial glimmerings of how a basic phenomenon can be applied to the solution of a practical problem to an end product, device, or production machine in a mature operating system.
Even in the latter case, the performance characteristics of any machine, product, or operating system are normally improved in small, continuous increments over time. Moreover, a given technology generally includes a variety of competing devices, each with a distinctive balance of performance and economic characteristics which appeals only to certain people. Finally, of course, a specific process or product in a technology may also fulfill quite divergent needs and perform very dissimilar functions for its various owners.
In short, virtually any technology has a wide and relatively continuous range of characteristics in various applications over a given time period. For example:. The fuel cell, which develops electrical energy directly from chemical sources, is often thought of as a single technology. While a great deal of fundamental work is still directed toward finding improved membrane materials, catalysts, and fuel reagents, some fuel cells are already providing power in space applications.
Individual fuel cells will slowly penetrate other fields as their peculiar economic and technical characteristics improve and as they become marginally attractive in each application in comparison to other fuel cells and competing energy conversion devices. But the balance of physical and economic characteristics which makes fuel cells successful in one application, like space, may not be at all the same as that balance which enables penetration of other fields, like mining equipment or individual power packages for the home.
Except in immediate direct extrapolations of present techniques, it is futile for the forecaster to predict the precise nature and form of the technology which will dominate a specific future application.
He can make probability statements about what performance characteristics a particular class of technology will be able to provide by certain future dates. And he can analyze the potential implications of having these technical-economic capacities available by the projected dates. In many respects, technological forecasts can be considered as being quite similar to market or economic forecasts. Any sophisticated manager would not expect market forecasts to predict the precise size or characteristics of individual markets with decimal accuracy.
He would know that the probability of predicting the exact dollars-and-cents value of a future market is virtually zero. To illustrate, here is such a forecast:. The chances are better than 8 in 10 that U. A crash program might advance the manufacturing date to , but major economic or military crises would probably delay its production indefinitely. The power plant for the SST will probably develop over 60, pounds of thrust and require new technological advances in high-temperature materials, cooling systems, and control of engine dynamics and noise.
By the SST will probably force conventional jets out of first-class travel on hops of over 1, miles where route structures are favorable.
Such should be the objectives of any forecasting activity. Forecasts—no matter how accurate—are useless unless they eventually influence action. And this article will emphasize the pragmatic aspects of both making technological forecasts and getting them used by managers.
A variety of techniques have been developed for technological forecasting. As in all other forecasting methodologies, the most effective are based on careful analyses of past experience combined with the insights of competent and imaginative people. Each requires observation and measurement of underlying data, trends, and interactions. And each is subject to its own inherent data errors and the natural limitations of its human interpreters.
In this sense technological forecasts are no better—and no worse—than their economic, market, or financial counterparts. Within these understood limits, let us assess some of the more useful and widespread technological forecasting techniques and see how the information they produce can influence management decisions.
The classification system I will use is admittedly somewhat arbitrary, since the differences among techniques are not always clear-cut. In any event, the various methods should generally be used in combinations in order to stimulate imaginative analysis, introduce added objectivity, and make sure that all relevant technological flows are considered. Several recent studies have suggested that clearly perceived demand—not excess technological capacity—tends to be the primary force stimulating technological change.
Otherwise it remains a capacity and never becomes a functioning reality. Consequently, if one can identify important future needs which would be inadequately met by current technologies, he has an excellent starting point for analyzing prospective technological advances. If an anticipated demand is strong enough, it will generally call forth the human and physical resources necessary to attack its technological problems. Once stimulated and adequately supported, human imagination is likely to solve these problems unless prevented by physical laws or by institutional barriers.
And even institutions may change if demand is strong enough. Such studies can often help to outline the nature and extent of future technological needs. Many studies have utilized such data to estimate total energy or food needs, communications channel requirements, traffic control demands, depletion of natural resources, and so forth.
Sometimes these analyses can define not only the magnitude of future demands but also the performance specifications a device or system must achieve if it is to solve a particular problem. One could specify for a future traffic control system the probable density of vehicles automobiles or aircraft within major centers, the traffic inflows and outflows likely to impinge on these centers, the probable external variations such as weather and crises affecting the system, and the essential performance and cost criteria a successful system would need to meet a decade from now.
Such studies can provide specific targets for current development or applied research programs. Demographic and sociological analyses can readily show how certain problems—for instance, air pollution or waste disposal—will become completely intolerable if present ratios of population and affluence continue. They can also point out opportunities which are likely to result from population and economic pressures on a limited resource base.
To illustrate:. But the mere identification of such problems and opportunities is of little significance. To be useful, the analyses must indicate the rate at which these underlying demand factors will become strong enough to overcome the social rigidities, political inertias, and ingrained consumption habits which always inhibit change.
Public opinion and price pressures will undoubtedly induce use of the best available technologies long before ultimate extremes are reached. Accordingly, the forecaster must weigh the force of these pressures, the feasibility and rate of potential technical progress, the possibility of changes in institutional resistances, and the probable future marginal preferences of the society.
Only from such analyses can he arrive at realistic estimates as to when new technologies will actually fulfill identified needs.
And it was precisely such analyses which influenced Bell Laboratories to support development programs leading to mechanical dialing, carrier systems, and interruptive switching on transoceanic telephone calls. But for most companies such studies provide only initial guidelines.
More detailed analyses are required to specify needs in greater depth. These are used to predict the conditions under which a new technology will be needed and the probability of this event occurring. If shale oil mining, retorting, and transportation costs can be reduced so that shale crude at the refinery costs less than other crude sources. If shale oil permits the refinery to produce an output mix of sufficiently greater value than other hydrocarbon sources.
If international hydrocarbon finding, lifting, and transportation costs exceed certain levels. Each oil company can calculate the points at which each of these events would affect its operations. Although no one contingency may justify research, development, or other actions, the combined probabilities and impacts of several contingencies might.
Potentialities of various shale mining and liquifaction processes can be assessed by analyzing trends in technical progress and by forecasting the probability that each will overcome specific remaining barrier problems. Then the final forecast can predict:. The performance requirements any solution must meet if it is to be successful under various conditions. How rapidly present technical advances—and the vulnerability of anticipated roadblocks—indicate that shale can substitute for other resources under specific circumstances.
These help management isolate latent demands for which new technological solutions will be needed or feasible. Often fields easily identified by demographic analyses or by simple observation of human needs become heavily overworked by business and government technical groups. Companies therefore have an incentive to seek fields where they can establish strong technological positions by unique entry and development.
An example will illustrate one interesting approach:. For example, it sends small teams of marketing and technical people into hospitals to analyze the functional characteristics of each object in the room.
The teams then try to define the precise operating characteristics which would enable chemical substances to provide the same—or improved—functions at a similar or lower cost.
The teams also try to identify needs the hospital personnel feel are not adequately handled by present products. And they attempt to project what new problems the hospital will encounter as it expands and updates its facilities for future patient care.
Most techniques for identifying opportunities are essentially extensions of marketing research methodologies, and as such they present no real conceptual problems. But, unfortunately, traditional marketing research courses in universities or industry offer almost no help in developing needed skills.
Companies wanting such skills now must develop them essentially through trial-and-error methods. As time passes, individual companies may become more willing to share their experiences. A body of more formalized technique undoubtedly will emerge and will work its way into marketing research training. In the meantime, companies are developing a variety of other techniques for analyzing both the opportunities and the threats presented by new technologies.
One of the more interesting of these methods is to push a known apparatus or phenomenon to its theoretical limits and then to try to visualize its potential implications. Lasers have an ultimate potential of concentrating extremely high power levels billions of watts per square centimeter and delivering this energy great distances through transparent media. In screening applications which might require such energy levels, one soon considers the possibility of broadcasting directly from a synchronous communications satellite to home or commercial antennas on earth.
To be commercially attractive such a system would, of course, need to operate regardless of weather conditions and to be reasonably efficient in its conversion of laser energy into broadcast power. If clouds prevent reliable laser transmissions from earth to the satellite, a Boeing or C5A type aircraft could be sent above the cloud layer with a laser aboard.
If the technologies implicit in this concept can be realized, a whole new approach to broadcasting could emerge, with enormous impact on the communications, home appliance, and entertainment fields. The real forecasting problem in this case is to estimate when political considerations might allow the system to be utilized.
At the time new phenomena are discovered, it is often useful to ask how they might affect the company if they were developed to their theoretical limits.
To illustrate with lasers again:. The fact that light in a laser beam has a constant phase relationship led to experiments to discover the implications of this phenomenon. One of the first technologies to appear from such experiments is hologram photography—creation of three-dimensional images in space through controlled interference of single phased light. This technology is now in its infancy, with many problems yet to be solved.
But it is apparent that hologram photographs will contain phase information not available in other photographic techniques. This permits determination of exact point-to-point distances between regions on the object represented.
In addition, one can actually move around a projected hologram image to gain different views, revealing otherwise hidden objects or contours. Such a development is of obvious importance to photographic concerns and a multitude of other display-device users. But, by extrapolating the unique functional characteristics of holograms, one can also see less obvious—but direct—applications in cryptography, multidimensional information storage and display devices, engineering design, communications techniques, and so forth.
One must constantly be on guard against this tendency and check the timing and the reality of his forecasts through the demand assessment techniques noted earlier and the approaches to be described presently. Another way to check the logic of forecasts is to have a group of experts refine their estimates through successive approximations. Without allowing face-to-face confrontation, controlled feedback to the experts identifies areas where they are in reasonable agreement and raises questions where divergent opinions exist.
In later stages, the reasons for more extreme opinions can be fed back to participants to stimulate their imaginations and to ensure proper consideration of all alternatives. After each individual or subgroup has submitted his final forecast, the degree of consensus and range of diversity in the reports can be used as a basis for calculating necessary probability statements in a consolidated forecast.
Technological forecasts must ultimately predict whether technical systems can reach or exceed key levels or parameters of performance by some future date.
The heart of the forecasting process thus is the selection and prediction of these parameters. A recent study suggests that in developing effective parameter forecasts for applied research programs one should:. Select a limited number of performance characteristics one to three which can be quantified and which are significant measures of advance in the area or subarea.
Include ranges as well as most likely values wherever possible in plotting anticipated performance characteristics. Precisely identify the phase of the technological advance to be plotted. For applied research advances, performance levels should normally be plotted at the time technical feasibility is statistically proved in full-scale, full-duration tests. Other phases may be more appropriate for other purposes.
Document the major assumptions used in preparing projections. Assumptions might include the influence of external policy decisions, the expected significance of interactions among selected parameters, interdependencies with other technical areas, the magnitude of breakthroughs required, and so forth. Include a best estimate of the probability of meeting the projection, exceeding it, or falling short, given certain resource commitments.
Many specific techniques have been tested for making parameter analyses within this framework. I shall describe some briefly. One technique helps define the critical performance characteristics expressed quantitatively which will enable one technology to substitute for another in a given class of applications. Because the existing technology and its potential substitute are advancing, the performance requirements to achieve changeover will normally become more severe as time progresses.
When using changeover points to set targets for technical programs, one must be careful to consider the dynamics of this relationship. Equally as vital in applying this approach is selection of the right performance factors for analysis.
But unfortunately traditional thinking often causes analysts to focus on the wrong characteristics. Histories of technology are filled with such errors, but one example from industry should make the point:. A successful manufacturer of piston engines for aircraft ignored the turbojet field because company executives incorrectly thought that engine efficiency and fuel economy militated against jets ever substituting for piston engines in commercial craft.
Such errors can frequently be avoided by looking at an application as a total operating system and asking what factors or ratios most critically affect the acceptability or output of the total system. An ITFM solution will allow a user to automatically maintain information about this type of spend and calculate the future expense stream for the user.
For example, the system should track maintenance contract terms, expected renewal rates, and prepaid flags and automatically create a baseline budget.
In addition, the ITFM solution will be able to interface with a Fixed Asset system and calculate depreciation streams on existing assets. This ensures accuracy and efficiency, as analysts just need to focus on future capital purchases.
A well-oiled IT Finance team will track actuals against specific forecasted items, which is difficult, if not impossible in a corporate planning tool. When variances are provided only at a cost center and account level, many hours are wasted digging through various data sources and matching data within spreadsheets. Quickly understanding drivers of variances and being able to communicate them effectively to business leaders is key. Best-in-class IT budgeting and forecasting gives key stakeholders inside and outside IT critical insights into actual spend that inform effective business decisions.
Because corporate planning tools lack the requisite granularity, they are unable to render these different views, leaving the company in the dark about where IT spend goes.
If your organization struggles to produce multiple views of budget and forecast simultaneously and insight into true drivers of cost, it may be time to consider an ITFM tool. See how an ITFM tool can help your team achieve granularity, real-time actuals, visibility and more by taking a test drive with Nicus. Download eBook and share with colleagues!
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