Warehouse Technology When to Invest in Warehouse Technology

As warehouse digitalization gains traction, several doubts and queries surround it. Is it the right time to adopt warehouse technology? Would it bring a value or competitive advantage to the business? Are there any risks associated with adopting this new technology? Is this technology mature enough?

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Fortunately, all these questions can be answered by using three simple frameworks that depict the natural evolution of technology, help us manage the risks associated with adopting new technology, and explain the pros/cons of adopting technology at different points in time. These frameworks are The S-Curve of Innovation, the Technology Adoption Life Cycle, and the Hype Cycle.

Here are these three frameworks that will guide you as to when and how to invest in technology for your warehouse.

1. The S-Curve of Innovation

The S-curve is one of the major concepts that explains the life cycle of technological innovations. Understanding the concept can enable you to determine the maturity level of a specific technology. In other words, it helps you assess whether the technology in question is new, mature, or declining.

The S-curve shows a technology’s performance in relation to the time it takes to evolve. Any technological innovation goes through four performance stages, and this curve helps decision-makers ascertain the technology’s position in the market and its viability for their organization.

 

Phase Name	Characteristics
Phase 1	Ferment	The first stage; when the technology is totally new Slow evolution, characterized by high rate of innovation, research & development Tough competition
Phase 2	Takeoff	The technology displays the ability to overcome a significant obstacle, or has been able to satisfy a major demand in the market Adopted by an early majority of consumers Marked by rapid improvements Manages to cross the chasm of death, which marks a milestone (explained in a later section)
Phase 3	Maturity	The general public adopts the technology Strong competition across few large players Sales usually reach the physical limit. Product becomes standardized. Low or very small innovation at this stage.
Phase 4	Discontinuity	Customers start abandoning the technology and moving to a new solution. New innovation attracts the innovative consumers. Birth of a new technology life cycle, and thus a new curve known as Disruptive Innovation.

Relevance of the S-Curve

In essence, this curve is important to discern if a warehouse technology is about to get displaced and whether it is the right time to adopt it. Here is where one needs to take a call for opportunity vs. risk.

As market trends suggest, the acquisition of more than 16% of potential markets makes success and growth very likely, and that happens in the takeoff stage.

For a warehouse considering adopting a technology, the best time is during the takeoff stage. The essence of this stage is rapid innovation and growth. This stage grants access to rapid product improvements, valuable updates/upgrades, and terrific customer service.

On the other hand, while the maturity stage may sound safer and like a good time to adopt because the innovation is at its peak, it also poses the risk that the technology will soon be obsolete (entering into the discontinuity stage). Worse off is adopting a technology about to exit for obvious reasons. The mantra is “you snooze, you lose.”

This curve affects your IT decision by informing you with the extent of risk involved and if it is too early, too late, or just the right time to embrace a technology.

 

2. The Technology Adoption Life Cycle

This concept, as Everett M. Rogers explains it, is based on identifying the personality traits of adopters in relation to accepting a new innovation. It is a sociological model that aptly applies to a wide range of technologies and innovations. With the help of demographic or psychological groups, it explains the adoption pattern.

There are 5 adopter groups, each exhibiting traits characteristic of the others. Roger describes this graphically with this Bell Curve.

 

Category Name	Characteristics
Group 1	Innovators – 2.5%	The earliest (in the ferment stage) and the youngest class of adopters These thought leaders have extremely high social standing, financial fluidity, and education, which makes them very much open to risk Even if the innovation fails, they can absorb the loss and learn from the experience
Group 2	Early Adopters – 13.5%	The next group to adopt Also a fairly young group, well-educated, with reasonably high reputation and sound financial standing Fairly open to change and risk, but more discrete than the innovators Also characterized by thought leadership If the technology crosses this point, it is said to have crossed the chasm*
Group 3	Early Majority – 34%	Inspired by innovators and the early adopters to embrace the innovation The process of adoption is much longer than that of the previous two groups Innovation is in the takeoff phase now, so there is maximum value addition Hardly any thought leadership; but this adoption matters to maintaining a decent status However, they do enjoy the benefits before the technology matures
Group 4	Late Majority – 34%	Very late to adopt an innovation despite the conspicuous benefits enjoyed by the previous three groups Below average status, little financial ease, and very little thought leadership By the time this group adopts an innovation, the technology is about to reach the maturity phase
Group 5	Laggards – 16%	This group is the last one to adopt any innovation Characterized by people with an aversion to change No thought leadership; low social standing; and almost no financial fluidity By the time they adopt an innovation, the technology is on the discontinuity phase

The chasm* of death is the transition between capturing the early adopters and the early majority.

 

When an innovation manages to cross this chasm, i.e. acquire more than 16% of consumers, it is believed to have succeeded. Here is where the fate of technology is decided.

Relevance of the Technology Adoption Life Cycle

For companies embracing warehouse digitalization, this cycle provides a clear view of technology adoption in relation to the time and attitude of the adopter.

So, when a company moves ahead to adopt technologies like blockchain, IoT, AGVs, UAVs, etc., it is important to ascertain before adoption where your business will stand in relation to the timeline of adoption of an innovation. This assessment will help you evaluate whether you are too late or too early and/or whether you would be able to obtain any value from the adoption of the desired warehouse technology.

Here is a representation of how the s-curve and the adoption cycle correlate.

The early adopters and early majority groups tend to reap the maximum benefit. While the risk for the former is considerable, the latter reaps the benefits with little or no risk since the innovation has already crossed the chasm of death and is least likely to fail. Undoubtedly, these are two groups that will make the most of warehouse technology by timing.

The innovators may or may not be the ones to reap benefits since the technology bears the maximum risk for this category.

3. The Hype Cycle

The Gartner Hype Cycle of Emerging Technologies is a research methodology created by Gartner, a research and advisory company. The company uses this methodology to trace the stages of the technology life cycle in relation to hype vs. reality. It represents graphically the course of maturity and adoption of an emerging technology or application. It helps find if the technology in question is relevant in a real business scenario and if there are any new opportunities to exploit.

The cycle is a descriptive (not prescriptive) view of the direction a technology or application is expected to evolve over a certain period of time. Practically, it provides insight into if you must or must not adopt a technology.

 

Phase Name	Characteristics
Phase 1	Innovation Trigger	Conceptualization of technology No proven market study; only prototypes exist There is media promotion and sometimes demonstrations
Phase 2	Peak of Inflated Expectations	Implementation of technology by early adopters Lot of publicity but both successes and failures are met Many companies embrace the innovation, others don’t.
Phase 3	Trough of Disillusionment	Flaws and failures along with benefits are discovered Underperformers fail to continue Performers innovate more to address problems and improve the product/solution.
Phase 4	Slope of Enlightenment	Consumers and industry understand the scope and potential benefits An increasing number of companies implement and test it to their needs Second and third generation products may also be released.
Phase 5	Plateau of Productivity	The technology is widely adopted The place and reputation are well established and scope is well-understood Benchmarks are set for assessing providers viability

Here is the latest version from Gartner that presents the anticipated future of emerging innovations in technology, inlcuding technologies relevant to warehousing such as: IoT, Machine Learning and more.

Relevance of the Gartner Hype Cycle

Gartner’s Technology Hype Cycle is widely used by businesses to make decisions regarding technology adoption, optimize tech investments, and improve operational efficiency.

It helps them tell hype from reality, and thus make the right investment in the right technology at the right time.

 

The hype cycle becomes the basis for differentiating between technologies that have only tall claims and no proof, the viable ones, and the ones that may become more promising with time.

Taking this cycle as the basis, the most attractive stage is the Peak of Inflated Expectations, which is likely to allure you with all the hype that surrounds it. Paradoxically, this is not the right stage for embracing technology for the vice of the very hype that is characteristic of it.

Fortunately, the hype does go away during the Trough of Disillusionment. This stage offers itself for large-scale adoption. Since reality has been laid bare, only those producers with substance stay and add value, constantly leading to the Slope of Enlightenment when technology is standardized.

If you are between these two stages before the Plateau of Productivity is reached, the benefits will be the maximum and the best for you.

These three frameworks are the basis for analyzing when adopting a new warehouse technology. They help warehouse managers and other decision-makers make timely decisions, reduce risks, increase return on investment (ROI), and embrace the warehouse’s digital transformation. Today, when warehouses are faced with a gamut of technologies, some of which make sense and others don’t, these frameworks come in handy in educating them about when and how to invest.

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