THE BUSINESS-TECHNOLOGY RELATIONSHIP
IN INDUSTRIAL DEVELOPMENT
Lyonell Fliss
Lyonell Fliss & Associates
ABSTRACT
This is a continuation of the paper “The concept of integration in industrial development” presented
by the author at the Regional African Project Management Conference in 1999.
Within the general concept of integration of the major factors involved in industrial development,
the relationship between business and technology is bearing a particular significance as it is
substantially affecting the total performance of every industrial project.
Based on the general background of integration, this paper is analyzing the business-technology
interaction, the advantages and conflicts created by this relationship and introduces the concept of
sharing leadership between these two major contributing factors to industrial development.
For those involved in industrial projects, the business-technology relationship is a subject of
permanent actuality, which should be openly discussed in spite of the large spectrum of opinions,
some of them being controversial.
Author’s intention is to explore avenues leading to a balanced business-technology relationship,
creating thus the conditions for promoting innovation aimed to maximizing project performance at
short or long term.
1.
INTRODUCTION
Industrialization spreading around the world as part of the general globalization process is a result
of the common interests of politico-economical factors. In spite of all the controversy that this
process is raising, industrialization at global and local levels is unstoppable, contributing not only to
prosperity and progress but to reducing the gap between the developing and developed worlds. All
this is becoming feasible and profitable only due to the continuous progress of technology in all its
fields but particularly in information, communication and transportation.
The particular relationship between business and technology which is at the core of industrial
development deserves to be discussed with the aim of finding a balanced solution for the benefit of
industry at large.
2.
BACKGROUND
Industry is one of the fields of human activity where through processing raw materials more
valuable goods are produced with the purpose of satisfying societies material needs and creating
wealth.
In our paper we refer only to the process industry which creates material goods through organised
technological processes, generally in large quantities, opposed to today’s common usage of the term
“industry” for activities of large proportions aimed to generate money through services such as:
tourism, banking, insurance or entertainment “industries”.
Paper presented at African Rhythm Project Management Conference
Hosted by: Project Management Institute of South Africa (PMISA): www.pmisa.org.za
22 – 24 April 2002, Johannesburg, South Africa
ISBN Number: 0-620-28853-1
The term “process industry” should include the extraction sector (mining, oil and gas) which is
transforming natural reserves into raw materials for the primary processes.
Industrialization or the action of developing industry on a large scale, generally at regional or
national level has a great importance for the economic growth of the country with its positive results
in creating general wealth and employment together with the offspin social improvement effects.
Where new industries are created in undeveloped areas, new settlements are built to accommodate
industrial personnel and entrepreneurs are attracted by opportunities to serve the new industries and
their relatively high income people. The positive effect of industrial development may expand even
further as it may encourage development of general infrastructure of the area, such as
transportation, water and power supply, which in turn may attract development of other sectors of
economy. We can see that in addition to being a provider of growth and employment on its own
interest, industrialization generally has catalytic effects on many other socio-economic aspects of a
Region or of the whole Country.
Maputo industrial corridor is a clear example of an infrastructure development created along a
cluster of industries, which in time is expected to attract additional industrial and urban
development.
3.
INDUSTRIAL DEVELOPMENTS
Within the industrialization process taking place at regional or national scale, individual industrial
developments can be created by benefiting from the basic conditions already in place and by
particular opportunities.
Generally speaking, four major factors are contributing to industrial development and their
contributions and motivations are the following:
TABLE 1
Contributor
Investor
Developer
Local Population
Government
Contribution
Capital
Technology
Labour
Infrastructure, Natural
resources, Legislation
Motivation
Profit
Profit and reputation
Employment, welfare
Taxation
This is a rather simplistic description of the industrial development scenario, because contributors
may play more than one role and they may have additional contributions and motivations, for
example, the investor may be at the same time his own developer or government may also become
an investor. With privatization, government may be involved in partnership with private investors,
or simply may sell land or infrastructure assets to them. The developer may also become a partner
in investment by taking some equities in the development.
The integration of the contributing factors to a typical industrial development may be
diagrammatically represented as in Figure 1:
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a. PHASE 1 – DEVELOPMENT
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b. PHASE 2 - PRODUCTION
It becomes quite clear that due to the important roles each of these four main factors play, in the
process of industrial development, co-operation and accommodation of each other’s requirements
are essential for the success of the projects.
INTEGRATION at industrial development level means that all four major factors operate as an
integrated team, aiming to create a plant to produce at designed output capacity and quality, within
the planned investment cost and construction schedule. Within this integrated framework, initiative
and innovation could be encouraged, and thus performance expectations could be exceeded.
4.
THE BUSINESS –TECHNOLOGY RELATIONSHIP
It was proved that, where Business and Technology engaged in an industrial project co-operate and
continuously consult with each other, the resulting effect is increased profits, together with further
business and technological opportunities, which would satisfy the aims of both parties.
There are numerous examples of successful co-operation, particularly in the new industries such as
IT, Telecommunications, Automation, etc., which are creating an economic and technological boom
in their fields equivalent to an Industrial Revolution.
At the same time, traditional industries, particularly the heavy industry, slipped in the opposite
direction where Business took control in its hands regarding the decisions for new developments by
considering that profits may be generated mostly by good management and marketing and by using
bought-out, conventional technology.
The reason for such a situation is that Business, through its Project Management component, shows
on many occasions little technical knowledge and even less confidence in the advice it may receive
from its Technological partner, therefore it goes for what seems to be technically safe and proven
even if outdated.
Sometimes this point of view may be justified by the fact that some technical consultants
themselves advocate for conventional technology to be used for various reasons such as time
pressure, commodity to analyze the risks associated with promoting new technologies, or simply
lack of knowledge in new technologies.
The results of such a philosophy are:
•
•
Stagnation of technological progress
Lowering the impact of Technology in decision making which affects in particular its
Engineering component
There is only one way to rectify this situation and this is to prove to Business that employment of
advanced technology does pay, giving thus Business the competitive edge, and to the contrary
outdated technology would create greater losses in due time.
If this message were understood, automatically the position of Technology relative to Business
would be amended for mutual benefit.
Then, the question is: What is required to create a more productive business/technology relationship
in industrial development?
The answer should include the following minimum requirements:
• common understanding by both parties of the technical and commercial requirements of
the contracts
• each of the two parties should understand the needs and priorities of the other with
flexibility in co-operation and firmness in principles
• business and technology should operate in partnership by sharing authority in making
decisions under a broad vision management. In this respect, business should treat
technology as an equal partner rather than a “resource” to be plugged into the project
And what else should be added to the above minimum requirements?
To Business:
• openness to new technologies which should be regarded as opportunities for further
benefits rather than obstacles in achieving the project targets
• permanent consultations with technology
• exploration of new markets and opening of new challenges to technology
• appreciation of the value of quality and innovation in marketing terms
To Technology:
• adhering to modern and reliable technologies but not necessarily to conservative ones
which might be outdated
• bringing in perspective new trends in technology and applying new developments from
other industrial sectors
• adding value to business through innovation in an entrepreneurial manner and
controlling the risk
• supporting business development through exploring new fields of application for
innovative concepts
5.
INNOVATION
Innovation in industrial development is generated in a different manner from say in industry due to
the relatively short duration of projects and uniqueness of each project.
Due to time and budget pressures “ready off the shelf” technical solutions proved on previous
projects are favoured opposed to innovative concepts that may create advantages but are regarded as
risky from time, cost and performance points of view and therefore generally rejected.
The concepts of “fit for purpose” or “adequate technology”, very common in industrial
developments, may not be adequate for the lifespan of an industrial complex and therefore should
be carefully analyzed during the feasibility study stage.
Application of innovative concepts or new technologies in industrial developments become even
more difficult in the case of contractual joint ventures where each partner is mainly interested in
fulfilling his obligations and taking minimum risk and minimum implications in the work of the
others.
It becomes thus obvious that the subject of innovation in industrial development is still in debate
and this is the main reason that the development of process industry is not progressing at the same
pace as other industries where innovation is a vital factor for competitiveness and profitability.
The solution to this problem should be found in convincing the decision making factors of the
owner, developer and contractor of the advantages of innovation and creating an adequate culture
and management of innovation in their organisations.
6.
CONCLUSION
A balanced relationship between business and technology in industrial development should be
beneficial to all the factors involved in industrial projects, producing industrial facilities of superior
performance and increased profits.
Innovation should be regarded as business and technology as an important means for increasing
profit and improving the image of organisations applying it.
However, within the environment of industrial development, innovation may be promoted only if
the owners, developers and contractors create within their organisations a culture conducive to
encouragement of innovation.
7.
1.
2.
REFERENCES
Lyonell Fliss The concept of integration in Industrial Development – Regional African
Project Management Conference ’99.
Lyonell Fliss The engineering of Industrial developments. Romanian Academy Proceedings
Timisoara 1997.
Lyonell Fliss
Lyonell Fliss was born in Romania and graduated at the University of Civil Engineering of
Bucharest Immigrating to South Africa in 1975 he joined Roberts Construction becoming a Chief
Engineer of Engineering Management Services now Engineering Solutions of the Murray and
Roberts Group. At present he is an independent consultant in industrial civil engineering.
During his career he has been involved in the design and construction of major industrial projects in
Europe and Southern Africa. At his initiative it was created the multidisciplinary Industrial
Development Engineering Association (IDEA) promoting engineering innovation, of which he is
Chairman since 1997.