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To What Extent Can We Classify A Business As A "Technology Company?"

Nov 22

An organization is considered to be in the digital technology sector if it provides or heavily relies on a digital technical service, product, platform, or hardware. However, if you do some investigating, you will find that different people have different ideas about what a "tech firm" actually is.

Today, it's all the rage for companies to project an image of technological sophistication. The very mention of the term conjures images of beer pong, bean bags, and millennials. It's a way to appear innovative without actually putting in the work.


Raising Capital Like A High-Tech Startup

The coworking company WeWork raises capital in much the same way that a tech startup would. With SoftBank's $4.4 billion investment, it became a unicorn, or a "startup" with a valuation of over $1 billion.

Unicorns, in contrast to WeWork, are often located in "technology, mobile technology, and information technology." WeWork is a perfect example of how labeling a business as a technology company can lead to investment opportunities otherwise unavailable to traditional facility management companies.

In 2012, investor and former Twitter engineer Alex Payne pondered, "Is a firm that has staff people with 'programming' or'engineer' in their titles a technological company?"


Just what are the distinctions between technological and nontechnological means of accomplishing goals?

About 600 of Sainsbury's employees are involved in digital and tech-related roles; one of the company's primary hubs is in Manchester. Conversely, Sainsbury's is a household name in the retail industry.

Why, therefore, do so many businesses pretend to be IT firms while not meeting the criteria?

Companies that rely heavily on technology are often misidentified as tech firms. This is primarily attributable to the huge value added by taking this approach to company description.

According to a study conducted in 1999 and titled "A by any other name," businesses that added a ".com" to the end of their name saw a temporary increase in their stock price during the dotcom boom that occurred between 1997 and 2001. Despite not needing extensive internet access, the company still reaped financial benefits from its digital integration.

Though much has changed since the dotcom heyday, many companies' practices remain remarkably consistent. Several Northern English technology companies were polled to learn their definition of a technology company.


That Includes Any Corporation Of Significant Size

According to Sarat Pediredla, CEO of the Newcastle-based Hedgehog Lab technology consultancy, "today's business world relies on technology - so much so that I would argue every big firm might now be categorized as a tech company."

In our case, the rationale for classifying our company as a technology firm is simple. Technology development is central to our business and where our expertise lies.

Yet, "the term may be employed in a far larger meaning." For instance, coworking spaces like WeWork were created so that people in the IT industry could actually get work done. It will not lease space to any businesses in the retail or manufacturing sectors. Certainly, this is a significant part of the market.

Since WeWork caters mostly to the IT industry, this has led some to label it as a technology firm. They utilize technology quite extensively too. Is it the same thing, though, to be associated with the tech business and to actually be a tech company? Should WeWork be considered an integral element of this system?


When The Offering Is An Electronic Gadget

Some companies argue that the fact that technology itself is the product should serve as the basis for a definition. The product might be hardware like an iPhone or software like IBM's Watson artificial intelligence system. The software can be anything from a music streaming service like Spotify to an enterprise database system like Oracle.


The Market Is Flooded With "Technology As A Service"

Similarly to how Uber's software platform and infrastructure have disrupted the taxi industry, technology might be provided as a service.

According to David Coveney, director of the Liverpool-based digital agency Interconnect IT, "a genuine tech firm generates new technology." It doesn't mean that it'll be offered for sale to anybody else. Products like Uber, which uses and creates technology to make it easier for customers to reserve taxis, may use such elements. Possible parallels might be drawn to Google, which is always experimenting with various forms of its search algorithm.

However, technology isn't limited to computer programs; it may also take the form of physical objects, such as new appliances for the kitchen. Paper is a technological medium. One category of technology is glass. Glass is made by Corning, thus it's clear that they're a technology company. However, the glass manufacturer that serves my area does not specialize in technology. It's just glass that they supply.

As an illustration, consider the question of whether or not Uber is a technology business or a taxi service. Even Airbnb has to answer the issue of whether it is a hotel or a software company (it would like to say the latter).

How a company is managed and governed can be profoundly affected by the response.


Dependence On Technology

Even if a company does have some sort of software platform, that doesn't make them technically "tech."

Jamie Hinton, CEO of Sheffield-based IT consultancy Razor, says, "We feel the solution is extremely obvious." If the company would fail without the technology it developed, we would call it a technology company.

If you just buy and use someone else's technology without making any changes, it doesn't matter. You are not a technology company at this time. An organization may only be considered a technology company if it has created groundbreaking technology that no one else can match.

Neither selling technology nor providing it as a service is required. If the role of technology in your business and the lives of your customers has become integral, you may need to decide whether you are primarily a firm in X industry or a tech company that also happens to be in X industry. "You may be holding the secret to your next level of growth in your hands by just shifting the way you're focusing on things."

As a result, it makes sense that ridesharing and lodging establishments like Airbnb and Uber are considered technology companies. They are distinguished by the non-technological industries they have disrupted using software platforms they have developed.

According to James Brookes, Head of Projects at Manchester-based startup consultancy The Startup Factory, "a technology firm or startup is a company that, without its technology or their technology partner, would cease to be able to function properly."


Tech world


Businesses That Put A Premium On Technological Advancement

There are other businesses that have shifted focus to the technology sector after formerly operating elsewhere.

Online car marketplace Auto Trader, situated in Manchester, was formerly a print magazine of the same name. Their success shows that traditional businesses can survive and even thrive in the face of disruptive innovations like digital publishing.

"I increasingly don't think of IT organizations in terms of what they do, but how they do it," says Alison Ross, Customer Experience and Operations Director at Auto Trader. Companies as diverse as automakers, banks, and retailers can today be classified as "tech companies" (or should be).

It's shorthand for a certain business culture and strategy, the author explains, one that emphasizes teamwork, creativity, dedication to a higher cause, and a commitment to core principles.

As the UK Managing Director of digital agency Valtech, Phil Hall concurs.

Tech companies, by definition, leverage technology to differentiate themselves in the marketplace.

"At Valtech, we believe that the most successful technology companies are those that consistently prioritize meeting the needs of its users and customers while also leveraging technology to create exceptional experiences."


Culture And Value In Relation To Technological Development

Many people sum up the companies in the technology sector by saying they are driven by the norms and principles of their field.

Doris, an IT staffing service, quotes its PR and Marketing coordinator Amy Gornall as saying, "A really 'tech' business is one that will never stop learning." It's headed by a diverse group of people who are committed to making the future easier, more enjoyable, and more promising for the next generation.

"They're also businesses (like Doris) that couldn't have been created without technology or that owe their own existence to some technical innovation." Otherwise, given the current climate, every business would be a technology business.