Technology Audit Grid for Egyptian SMEs

Technology Auditi i yridseM.iE idgMM.rD

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?

Mostly products Products and Mostly services Others
services

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

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
2010 Capital Goods
20 Industrials 2020 Commercial & Professional Services
2030 Transportation
2510 Automobiles and Components
2520 Consumer Durables and Apparel
25 Consumer Discretionary 2530 Consumer Services
2540 Media
2550 Retailing
3010 Food & Staples Retailing
30 Consumer Staples 3020 Food, Beverage & Tobacco
3030 Household & Personal Products
3510 Health Care Equipment & Services
35 Health Care
3520 Pharmaceuticals, Biotechnology & Life Sciences
4010 Banks
4020 Diversified Financials
40 Financials
4030 Insurance
4040 Real Estate
4510 Software & Services
45 Information Technology 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?

Enough number of Enough number of Enough number of Inadequate number of
employees and employees employees employees according to
specialists according to according to the according to the the norms
the norms norms - low norms - high rate
number of turnover
specialists

2 - Does company have offered continuous training program to the
personnel?

External training Internal training Number and No training programs
programs - all programs - all categories of the
employees participating employees employees
participating participating

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3 - Does company have a Quality Control Department and which
technique used?

Existence of Quality Existence of Existence of Quality No Quality Control
Control Department Quality Control Control Department Department
Department Mostly products
Applied quality control Applied quality control returned because of
techniques satisfy on Applied quality techniques satisfy quality control
total product control partially on product problems
specifications techniques satisfy specifications
on basic
specifications Often products
Never products returned because of
returned because of Rarely products quality control
quality control returned because problems
problems of quality control
problems

4- Does company produce product according to specific Standards,
which type?
International Legislation Company Clients

5-What is the expected duration of competitive advantages of
company products?
No risk of No risk of No risk of Risk of obsolescence
obsolescence of obsolescence for obsolescence for in next 3 years
technology for next 7 next 5 years next 3 years
years

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6- Does the company have a dedicated innovation or R&D budget?
Existence of an R&D Existence of an Existence of an No R&D Department
Department R&D Department R&D Department
with budget allocated with budget with no allocated
resources allocated % of the budget for new
revenue product

7- Specify the sources of the applied technology.

Internal R&D in Internal R&D R&D contracted to Purchase of know-how
collaboration with other external
Institutions organizations

8- Over the last three years, did company introduce any new or
significantly different processes to production operations?

Significant changes/ N/A Minor changes/ No changes/
disruptions in disruptions in disruptions in
production processes or production production processes or
in organization models processes or in in company models
organization
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 R&D team has N/A Uncertain
next generation of technology resources required to
work on next
generation of
technology

10- What is company strategy plan for modernization of the
equipment and technology?
Each 5 years Each 10 years Each 15 years Non

11- What percentage of company's sales revenue is accounted for
new products/services launched within the last three years?
50 % 30 % 10 % 0%

12- Over the last three years did company introduce Innovative
products?

New product in the New product in a Improvement / Non
international market local market modification of
not related to existing not related to existing product
products existing products with additional
technical services
/support

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13- What percentage of company's turnover is accounted for by
products/services launched within the last three years?
50 % 30 % 10 % 0%

14-Does company have a risk-taking attitude toward investing in
novel ideas and participation in financed R&D projects?

Company actively Insufficient Lack of information There is no interest
participates in related technical concerning R&D
projects assistance for the programs, i.e. call
proposals, of proposals, etc
weakness in
finding capable
partners to
organize a viable
cooperation

15- What is patent’s exclusivity owned by company?
Total geographical and Geographical or fields of Limited exclusivity N/A
fields of use exclusivity use exclusivity

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16- Does company invest in the new technology?
Yes, and either expensive N/A Yes, but inexpensive and oN
or not easily installed easily installed

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?
Domestic and export Export orientated Domestic N/A
oriented oriented only

19- What is percentage of the increase in market share of the
company within the last three years?
50 % 30 % 10 % 0%

20- Does company penetrate all possible channels, customer groups,
and regions with new products and services?
Always following Delay in using the Never using the N/A
strong aggressive available channels available channels
market strategy

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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 the productivity Improve business
of the technological factors competitiveness

Technology audit
(TI)

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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 5 Enough number Enough Enough number of Inadequate
policy evaluate of employees and number of employees number of
the status specialists employees according to the employees
according to the according to norms - high rate according to the
norms the norms - turnover norms
low number of
specialists

2- Continuous 5 External training Internal Number and No training
training program programs - all training categories of the programs
to the personnel employees programs - all employees
participating employees participating
participating

3- Quality 10 Existence of Existence of Existence of No Quality
Control Quality Control Quality Quality Control Control
Department Department Control Department Department
Department Mostly products
Applied quality Applied quality returned because
control techniques Applied quality control techniques of quality
satisfy on total control satisfy partially on control
product techniques product problems
specifications satisfy on basic specifications
specifications
Often products
Never products Rarely returned because
products
returned because of quality control
returned
of quality control problems
because of
problems
quality control
problems
4- Produce 5 International Legislation Company Clients
product
according to
specific
Standards

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5- Competitive 5 No risk of No risk of No risk of Risk of
advantages of obsolescence of obsolescence obsolescence for obsolescence in
your products technology for for next 5 years next 3 years next 3 years
next 7 years

6- Dedicated 2.5 Existence of an Existence of an Existence of an No R&D
innovation or R&D Department R&D R&D Department Department
R&D budget with budget Department with no allocated
allocated with budget budget for new
resources allocated % of product
the revenue

7- Sources of 2.5 Internal R&D in Internal R&D R&D contracted to Purchase of
the applied collaboration external know-how
technology with other organizations
Institutions

8- Introduce any 10 Significant N/A No changes/
new or changes/ disruptions in
significantly disruptions in Minor changes/ production
different production disruptions in processes or in
processes processes or in production company
organization processes or in models
models organization
models

9- R&D team 10% R&D team R&D team has N/A Uncertain
have the already working resources
capacity to on next required to
develop generation of work on next
improvements technology generation of
technology
10- Company 5% Each 5 years Each 10 Each 15 years Non
strategy plan for years
modernization
of the
equipment and
technology
11-Percentage 5% 50 % 30 % 10 % 0%
of your
company's sales
revenue is
accounted for
new products

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12-Introduce 5 New product in New product in Improvement / Non
Innovative the international a local market modification of
i iproducts market not related to existing product
not related to existing with additional
existing products products technical services
/support

13- Percentage 5i5 50 % 30 % 10 % 0%
of your
company's
turnover is
accounted for by
new products

14- Have a risk- 5i5 Company Insufficient Lack of There is no
taking attitude actively technical information interest
toward investing participates in assistance for concerning R&D
in novel ideas related projects the proposals, programs, i.e. call
weakness in of proposals, etc
finding capable
partners to
organize a
viable
cooperation
15- Patents 5i5 Total Geographical Limited N/A
exclusivity geographical and or fields of use exclusivity
owned by your fields of use exclusivity
company exclusivity

16- Company 5i5 Yes, and either N/A Yes, but oN i
invest in the expensive or not inexpensive and
new technology easily installed easily installed

17- How the 5i5 Frequently few times never N/A
Competitors are
copy your
product
introductions

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18- Describe the 5i5 Domestic and Export N/A
focus of your export oriented orientated Domestic oriented
business only

19- Percentage 5i5 50 % 30 % 10 % 0%
of the increase
in market share
of the company

20- Company 5i5 Always following Delay in using N/A
penetrate all strong aggressive the available Never using the
possible market strategy channels available channels
channels,
customer groups

Total Weight 100%

i
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i
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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 Fairly Somewhat Low (0)
(10) High Low (2)
(6)
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 weigh weight
Criteria/Value
(xi) t (yi) (Ti )
1- Employing policy evaluate the status 5 10 5
2- Continuous training program to the personnel 5 6 3
3- Quality Control Department 10 6 6
4- Produce product according to specific Standards 5 2 1
5- Competitive advantages of your products 5 10 5
6- Dedicated innovation or R&D budget 2.5 0 0
7- Sources of the applied technology 2.5 6 1.5
8- Introduction of any new or significantly different processes 10 2 2
9- R&D team have the capacity to develop improvements
7.5 10 7.5
10- Company strategy plan for modernization of the equipment
and technology 5 6 3
11-Percentage of your company's sales revenue is accounted for
new products 5 0 0
12-Introduce Innovative products
5 10 5
13- Percentage of your company's turnover is accounted for by
new products 5 10 5
14- Have a risk-taking attitude toward investing in novel ideas
7.5 6 4.5
15- Patents exclusivity owned by your company
2.5 2 5
16- Company invest in the new technology
2.5 6 1.5
17- How the Competitors are copy your product introductions
2.5 6 1.5

18- Describe the focus of your business
2.5 10 2.5
19- Percentage of the increase in market share of the company
7.5 2 1.5
20- Company penetrate all possible channels, customer groups 2.5 10 2.5
Total Weights 100 120 58.5

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2. Analysis of the situation in the company
18
Human Resources
16
14
Quality
12
10 R&D
8
6 inovation
4
Marketing / Sales
2
0

i Figure (1)

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 Max (TI) value Percentage of the
of tech. index max value %
TI
A. Human Resources 8 10 80

B. Quality 12 22.5 53.3

C. R&D - Product 14 30.0 46.67
Development
D. Innovation in 16.5 22.5 73.3

Production Operation

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 1- Build a secured relation with
R&D
 Customers
2- Brain-storming to generate new ideas  Competitors
 Other companies
3- Use of market surveys and  Suppliers
benchmarking practices  Universities
 Consultants
4- Systematic monitoring of the
customers satisfaction 2- Collaboration with external Research
fund
5-Exchange between marketing and
technology departments 3- Build a department for; Intellectual
Property Management, and Ideas Storage
6-Specific marketing activities for and Selection
innovations

7- Use of public external funding sources

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