technology audit grid for egyptian sme’s by magdy el messiry

yridseM.iE idgMM.rDiiTechnology Audit

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GUIDELINE

FOR

TECHNOLOGY AUDIT GRID FOR EGYPTIAN SMES

By

Professor Dr. Magdi EL Messiry International Innovation & Technology Transfer Expert

Faculty of Engineering

Alexandria University

January 2012


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Preface

The primary purpose of a technology audit is to create an accurate list of all of the technology-

related equipment and programs owned or operated by an organization. There are three areas of

focus for a technology audit: production line, technology, human resources infrastructure. A

technology audit typically is completed once per year as part of the organization's year-end

procedures. The data collected during a technology audit is used to create a snapshot of the

current level of technology benchmark. For financial statements, equipment valuations can be

updated based on the auditing results. The other use for this data is to create benchmarks for

long-term and short-term technology plans. Technical audits can cover a wide variety of reviews

relating to business practices. Companies use audits as an objective review of business and

operational activities. Auditors will use a checklist that outlines the specific activities which they

must follow when conducting audits.

The first step required to complete a technology audit is to create an technology index for your

company and secondly try to study how you can improve your index through the internal or

external auditing.

The objective of the document is a preliminary audit of the organization in order to survey its

needs for technology audit.

Dr. Magdi EL Messiry

2012


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Contents

Technology Audit Grid for Egyptian SMES Using “Start” …………… 3

1. Introduction

2. Self-evaluation audit

3. Why Perform a Technology Audit?

4. Technology Index Calculation According to START

“Transferability Score” (T Score)

5. Expected results

Questionnaire Template Design …….…………………………………..… 7

1. General Company Data

2. Questionnaire

Calculation of the Technology index TI …………………………………. 17

4. Evaluation Matrix of the Technology index TI

Case Study …………………………………………………………………. 23

Calculation of Company Technology Index

Analysis of the situation in the company

Technical Report


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PART I

Technology Audit Grid for Egyptian SMES Using

“START”


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TECHNOLOGY AUDIT GRID FOR EGYPTIAN SMES USING “START”

1. Introduction

Technology audit is a method of investigation aiming at the evaluation of the

following;

(a) Technological capacity,

(b) Procedures,

(c) Different needs of SME,

(d) Competitive capacity.

Furthermore, it is a method of identifying the strength and weakness of the

company through the characterization and general assessment of the company

basic know-how (marketing, management, finance, human resources, etc.). It is a

process of analysis, which leads to concrete proposals (the action plan) for the

company to improve itself.

Usually the technology audit is carried out by external consultants in close

collaboration with the manager and personnel of the company. It is based on the

structure: data collection - analysis - synthesis - report.

It should be stressed that the technology audit itself cannot solve fundamental

problems, provide immediate benefit, rectify faults and be a substitute for

organizational difficulties. It is a continuous process.

2. Self-evaluation audit

Self-evaluation audit suggests developing Technology Audit Grid for Egyptian

SMEs, using the START (criteria, weights, range of possible answers, ratings)

multi-criteria decision approach.


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The objective of this guide is to give a company technology indicators that

describe how company is operating.

For that purpose, the Technological Index (TI) is developed. This Index is

designed to indicate the capabilities of a company for developing innovative

product of various types, and therefore requires the information on some

parameters of different elements and strategy implemented in the production chain.

Questionnaire was designed taking into consideration the following main points

that describe the soundness and practices in the company under the study;

A. Human Resources

B. Quality Techniques

C. R&D - Product Development

D. Production Operation

E. Marketing / Sales

3. Why Perform a Technology Audit?

An SME should perform an audit in order;

to generate income (or more income) for the technology driven organizations

from their available technology,

to improve the productivity of the technological factors,

to improve business competitiveness,

to assess current capabilities before making expensive changes,

to learn how to optimize the use of current technology.

Therefore, it is vital for any company to perform a Technology Audit (Internal,

External, and Continuous Audit). This proposed Guide can be considered as one of

the forms of the company Continuous Audit.

4. Technology Index Calculation According to START

“Transferability Score” (T Score)

START makes it possible to compute a “Transferability score” (T Score), by adding,

for the twenty criteria, the products: weight of criterion x value.

Transferability score in this work range from 0 and 100. Using this score, and

suitable thresholds, one can arrive at decision-making rules; for instance: “Any


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Egyptian company whose Technology Index ( TI ) has a T Score of less than 60,

should try to work on improving the score through thorough study of the

recommendations given by the program at the end of the run.

Customization: START can be customized by changing the weights of the criteria or

by substituting criteria for more specific to certain sectors of the company field of

activity.

5. Expected results

In conclusion, the questionnaire provided should be online as a tool developed to

assist Egyptian SME companies (the company size may vary between 10 - 250

employees), to grow and develop their businesses in world of knowledge economy.

It will provide company with objective measure of its capability and will also

advice on the best practice pointers indicating areas for potential improvement. On

the basis of the value of (TI) the company is recommended to perform either

internal or external audit.


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PART II

Questionnaire Template Design


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1. General Company Data

A- How would you describe the size of your organization?

Micro-business 1-10

Small 10-50

Medium 50-250

Large 250-1000

Very Large >1000

B- How would you describe the output of your business?

C- How would you describe the status of your business?

Mostly products

Products and

services

Mostly services Others

Independent

Subsidiary

Public Others


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D- In what sector does your business operate?

Code Sector Sub code Industry Groups

10 Energy 1010 Energy

15 Materials 1510 Materials

20 Industrials

2010 Capital Goods

2020 Commercial & Professional Services

2030 Transportation

25 Consumer Discretionary

2510 Automobiles and Components

2520 Consumer Durables and Apparel

2530 Consumer Services

2540 Media

2550 Retailing

30 Consumer Staples

3010 Food & Staples Retailing

3020 Food, Beverage & Tobacco

3030 Household & Personal Products

35 Health Care 3510 Health Care Equipment & Services

3520 Pharmaceuticals, Biotechnology & Life Sciences

40 Financials

4010 Banks

4020 Diversified Financials

4030 Insurance

4040 Real Estate

45 Information Technology

4510 Software & Services

4520 Technology Hardware & Equipment

4530 Semiconductors & Semiconductor Equipment

50 Telecommunication Services 5010 Telecommunication Services

55 Utilities 5510 Utilities


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E- Personal Data

General Information

Company Name…….………………………………………………………

Legal Status ………………………………………………………………..

Sector ……………………………………………………………………….

Address ………………………………………………………………………

Tel. ………………………… fax ………………………………………….

e-mail ………….……………………………………………………………

Responsible Person………….……………………………………………………….

Position ………………………………………………………………………

Date …………………………………………………………………………


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2. Questionnaire

Please Answer by Putting [X] sign in the Box

1 - Does the company have an employing policy evaluate the status?

2 - Does company have offered continuous training program to the

personnel?

Enough number of

employees and

specialists according to

the norms

Enough number of

employees

according to the

norms - low

number of

specialists

Enough number of

employees

according to the

norms - high rate

turnover

Inadequate number of

employees according to

the norms

External training

programs - all

employees participating

Internal training

programs - all

employees

participating

Number and

categories of the

employees

participating

No training programs


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3 - Does company have a Quality Control Department and which

technique used?

4- Does company produce product according to specific Standards,

which type?

5-What is the expected duration of competitive advantages of

company products?

No risk of

obsolescence of

technology for next 7

years

No risk of

obsolescence for

next 5 years

No risk of

obsolescence for

next 3 years

Risk of obsolescence

in next 3 years

Existence of Quality

Control Department

Applied quality control

techniques satisfy on

total product

specifications

Never products

returned because of

quality control

problems

Existence of

Quality Control

Department

Applied quality

control

techniques satisfy

on basic

specifications

Rarely products

returned because

of quality control

problems

Existence of Quality

Control Department

Applied quality control

techniques satisfy

partially on product

specifications

Often products

returned because of

quality control

problems

No Quality Control

Department

Mostly products

returned because of

quality control

problems

International Legislation Company

Clients


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6- Does the company have a dedicated innovation or R&D budget?

7- Specify the sources of the applied technology.

8- Over the last three years, did company introduce any new or

significantly different processes to production operations?

Existence of an R&D

Department

with budget allocated

resources

Existence of an

R&D Department

with budget

allocated % of the

revenue

Existence of an

R&D Department

with no allocated

budget for new

product

No R&D Department

Internal R&D in

collaboration with other

Institutions

Internal R&D R&D contracted to

external

organizations

Purchase of know-how

Significant changes/

disruptions in

production processes or

in organization models

N/A Minor changes/

disruptions in

production

processes or in

organization

models

No changes/

disruptions in

production processes or

in company models


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9- Does company R&D team have the capacity to develop

improvements for products or technology?

R&D team already working on

next generation of technology

R&D team has

resources required to

work on next

generation of

technology

N/A Uncertain

10- What is company strategy plan for modernization of the

equipment and technology?

11- What percentage of company's sales revenue is accounted for

new products/services launched within the last three years?

12- Over the last three years did company introduce Innovative

products?

Each 5 years Each 10 years Each 15 years Non

50 % 30 % 10 %

0%

New product in the

international market

not related to existing

products

New product in a

local market

not related to

existing products

Improvement /

modification of

existing product

with additional

technical services

/support

Non


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13- What percentage of company's turnover is accounted for by

products/services launched within the last three years?

14-Does company have a risk-taking attitude toward investing in

novel ideas and participation in financed R&D projects?

15- What is patent’s exclusivity owned by company?

Total geographical and

fields of use exclusivity

Geographical or fields of

use exclusivity

Limited exclusivity N/A

50 % 30 % 10 %

0%

Company actively

participates in related

projects

Insufficient

technical

assistance for the

proposals,

weakness in

finding capable

partners to

organize a viable

cooperation

Lack of information

concerning R&D

programs, i.e. call

of proposals, etc

There is no interest


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16- Does company invest in the new technology?

Yes, and either expensive

or not easily installed

N/A Yes, but inexpensive and

easily installed

oN

17- Evaluate how frequent the competitors copy company’s product

introductions.

Frequently Few Times Never N/A

18- How would you describe the focus of company business?

19- What is percentage of the increase in market share of the

company within the last three years?

20- Does company penetrate all possible channels, customer groups,

and regions with new products and services?

Domestic and export

oriented

Export orientated

Domestic

oriented only

N/A

50 % 30 % 10 %

0%

Always following

strong aggressive

market strategy

Delay in using the

available channels

Never using the

available channels

N/A


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PART III

Calculation of Technology Index (TI)


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The company is invited to choose the right answer of the different questions.

For the calculation of the Technology Index, each answer will give weight between

(0- 10). However, the weight of each criteria is assumed according to expert

expertise and depending upon the nature of the business the company deal with.

Then a matrix is formed as illustrated in Table (1).

Improve business

competitiveness

Technology audit (TI)

Improve the productivity

of the technological factors


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Table (1)

Evaluation Matrix of the Technology index TI

Criteria/Value Weight

%

High (10) Fairly High (6) Somewhat Low (2) Low (0)

1- Employing

policy evaluate

the status

5 Enough number

of employees and

specialists

according to the

norms

Enough

number of

employees

according to

the norms -

low number of

specialists

Enough number of

employees

according to the

norms - high rate

turnover

Inadequate

number of

employees

according to the

norms

2- Continuous

training program

to the personnel

5 External training

programs - all

employees

participating

Internal

training

programs - all

employees

participating

Number and

categories of the

employees

participating

No training

programs

3- Quality

Control

Department

10 Existence of

Quality Control

Department

Applied quality

control techniques

satisfy on total

product

specifications

Never products

returned because

of quality control

problems

Existence of

Quality

Control

Department

Applied quality

control

techniques

satisfy on basic

specifications

Rarely

products

returned

because of

quality control

problems

Existence of

Quality Control

Department

Applied quality

control techniques

satisfy partially on

product

specifications

Often products

returned because

of quality control

problems

No Quality

Control

Department

Mostly products

returned because

of quality

control

problems

4- Produce

product

according to

specific

Standards

5 International Legislation Company

Clients


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5- Competitive

advantages of

your products

5 No risk of

obsolescence of

technology for

next 7 years

No risk of

obsolescence

for next 5 years

No risk of

obsolescence for

next 3 years

Risk of

obsolescence in

next 3 years

6- Dedicated

innovation or

R&D budget

2.5 Existence of an

R&D Department

with budget

allocated

resources

Existence of an

R&D

Department

with budget

allocated % of

the revenue

Existence of an

R&D Department

with no allocated

budget for new

product

No R&D

Department

7- Sources of

the applied

technology

2.5 Internal R&D in

collaboration

with other

Institutions

Internal R&D R&D contracted to

external

organizations

Purchase of

know-how

8- Introduce any

new or

significantly

different

processes

10 Significant

changes/

disruptions in

production

processes or in

organization

models

N/A

Minor changes/

disruptions in

production

processes or in

organization

models

No changes/

disruptions in

production

processes or in

company

models

9- R&D team

have the

capacity to

develop

improvements

10% R&D team

already working

on next

generation of

technology

R&D team has

resources

required to

work on next

generation of

technology

N/A Uncertain

10- Company

strategy plan for

modernization

of the

equipment and

technology

5% Each 5 years Each 10

years

Each 15 years Non

11-Percentage

of your

company's sales

revenue is

accounted for

new products

5% 50 % 30 % 10 %

0%


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12-Introduce

Innovative

productsii

5 New product in

the international

market

not related to

existing products

New product in

a local market

not related to

existing

products

Improvement /

modification of

existing product

with additional

technical services

/support

Non

13- Percentage

of your

company's

turnover is

accounted for by

new products

5i5 50 % 30 % 10 %

0%

14- Have a risk-

taking attitude

toward investing

in novel ideas

5i5 Company

actively

participates in

related projects

Insufficient

technical

assistance for

the proposals,

weakness in

finding capable

partners to

organize a

viable

cooperation

Lack of

information

concerning R&D

programs, i.e. call

of proposals, etc

There is no

interest

15- Patents

exclusivity

owned by your

company

5i5 Total

geographical and

fields of use

exclusivity

Geographical

or fields of use

exclusivity

Limited

exclusivity

N/A

16- Company

invest in the

new technology

5i5 Yes, and either

expensive or not

easily installed

N/A Yes, but

inexpensive and

easily installed

oN i

17- How the

Competitors are

copy your

product

introductions

5i5 Frequently few times

never N/A


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18- Describe the

focus of your

business

5i5 Domestic and

export oriented

Export

orientated

Domestic oriented

only

N/A

19- Percentage

of the increase

in market share

of the company

5i5 50 % 30 % 10 %

0%

20- Company

penetrate all

possible

channels,

customer groups

5i5 Always following

strong aggressive

market strategy

Delay in using

the available

channels

Never using the

available channels

N/A

Total Weight 100%

i

i

i

i

i

i

i

i

i

i

i

i

i

i

i

i

i

i

i


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PART IV

Case Study


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1. Calculation of Company Technology Index

The results of questionnaire for a certain company is analyzed and given in

Table (2). The percentage weight of each criteria will be given by an expert in the

field of the company activity and added to Table (2) in order to calculate

TECHNOLOGY INDEX of this company.

Table (2)

Weight% High

(10)

Fairly

High

(6)

Somewhat

Low (2)

Low (0)

1 5

2 5

3 10

4 5

5 5

6 2.5

7 2.5

8 10

9 10

10 5

11 5

12 5

13 5i5

14 5i5

15 5i5

16 5i5

17 5i5

18 5i5

19 5i5

20 5i5

100%


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Table (3) gives the value of the Technology Index for this company.

Table (3) TECHNOLOGY INDEX ( TI ) (0-100)

weight

(Ti )

weigh

t (yi)

Weight

(xi) Criteria/Value

5

10 5 1- Employing policy evaluate the status

3

6 5 2- Continuous training program to the personnel 6

6 10 3- Quality Control Department

1

2 5 4- Produce product according to specific Standards

5

10 5 5- Competitive advantages of your products

0

0 2.5 6- Dedicated innovation or R&D budget

1.5

6 2.5 7- Sources of the applied technology

2

2 10 8- Introduction of any new or significantly different processes

7.5

10 7.5 9- R&D team have the capacity to develop improvements

3

6 5 10- Company strategy plan for modernization of the equipment

and technology

0

0 5 11-Percentage of your company's sales revenue is accounted for

new products

5

10 5 12-Introduce Innovative products

5

10 5 13- Percentage of your company's turnover is accounted for by

new products

4.5

6 7.5 14- Have a risk-taking attitude toward investing in novel ideas

5

2 2.5 15- Patents exclusivity owned by your company

1.5

6 2.5 16- Company invest in the new technology

1.5

6 2.5 17- How the Competitors are copy your product introductions

2.5

10 2.5 18- Describe the focus of your business

1.5

2 7.5 19- Percentage of the increase in market share of the company

2.5

10 2.5 20- Company penetrate all possible channels, customer groups

58.5

120 100 Total Weights


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2. Analysis of the situation in the company

0

2

4

6

8

10

12

14

16

18Human Resources

Quality

R&D

inovation

Marketing / Sales

Figure (1)i

Company who’s Technology Index (TI) has a T score of less than 60 should try to

work on improving the score through thorough study of the recommendations given

by the program at the end of the run. A breakdown of performance across five core

components of the Technology Index is significant.

Figure (1) illustrates the breakdown of the score for the main activities. Innovation

and R&D activities represent the highest values of score TI. However, if we consider

these values relative to their maximum values in the (TI), as shown in Table (4), the

conclusion will be different.

From Table (4) it is obvious that, except for the company practices in the production

innovation and the human resources, the company needs to improve the following;

Quality Control Department

R&D Department

Marketing Department


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Table (4)

Break down

of tech. index

TI

Max (TI) value Percentage of the

max value %

A. Human Resources 8 10

80

B. Quality 12 22.5

53.3

C. R&D - Product

Development

14 30.0 46.67

D. Innovation in

Production Operation

16.5 22.5 73.3

E. Marketing / Sales 8 15 53.3

Company (TI) Value 58.5 100

3. Technical Report

Company’s score of 58.5 indicates that it is currently near the medium level of

Technology Index scale and potentially at risk of poor market performance. There is

no single, unifying blueprint for successful roadmap. However, the following points

will be helpful in giving some direction as to where an intervention could be most

useful in the company in such case.

Generate the following activities given in Table (5).


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Table (5) Measures Recommended to Improve the Value of TI

Internal Measures

External Measures

1- Team-work to generate new ideas for

R&D

2- Brain-storming to generate new ideas

3- Use of market surveys and

benchmarking practices

4- Systematic monitoring of the

customers satisfaction

5-Exchange between marketing and

technology departments

6-Specific marketing activities for

innovations

7- Use of public external funding sources

1- Build a secured relation with

Customers

Competitors

Other companies

Suppliers

Universities

Consultants

2- Collaboration with external Research

fund

3- Build a department for; Intellectual

Property Management, and Ideas Storage

and Selection

technology audit grid for egyptian sme’s by magdy el messiry

Documents

introduction technology

rdiitechnology audit

g e technology audit

technology index calculation

preliminary audit

selfevaluation audit

technologyrelated equipment

shortterm technology