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Technology Acquisition

BUSINESS INFORMATION SYSTEMS | with MR. GABRIEL KAPUMPE |

Session Overview
Introduction & Aims

Technology Acquisition Defined

Approaches to Acquiring Technology Assets

Factors Influencing the Acquisition Option

Activities & Case Studies

Summary & Reflection

Introduction 1
Why Technology Acquisition Matters
70%
• Technology is a critical driver of competitive of firms cite tech acquisition as top strategic
priority
advantage in modern organizations.
• Firms must decide how to obtain technology
— whether to build it, buy it, or partner for $3.4T
it.
spent globally on enterprise technology in 2023
• Wrong acquisition decisions can be costly,
slow growth, or expose firms to risk.
• This unit equips students with frameworks to 60%
make informed, strategic technology of technology projects fail due to poor acquisition
decisions. planning

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Aim & Objectives

AIM
To explore the various ways in which organisations acquire technology and evaluate
the strategic factors that influence acquisition decisions.

By the end of this unit, you will be able to:

1 Define technology acquisition and explain its strategic importance to organizations.

2 Identify and compare the major approaches to acquiring technology assets.

3 Analyse the internal and external factors that influence technology acquisition choices.

4 Apply acquisition frameworks to real-world organizational scenarios.

5 Evaluate the advantages and limitations of each acquisition approach.

Reflection

“Think about an organisation you are familiar with — your university,

a company you've worked for, or a well-known brand.
How do they use technology? Did they build it themselves, purchase
a product, or hire external experts?
Share your thoughts. We will revisit your reflections at the end of this
session.

Technology Acquisition Defined 2

Definition
"Technology acquisition is the process by which an organisation obtains access to technology
capabilities, knowledge, or assets — through internal development or external sources — to
support its strategic objectives."

WHAT HOW WHY

Technology assets:
The acquisition mechanism: Strategic rationale:
hardware, software,
buy, build, borrow, partner, efficiency, innovation,
patents, know-how,
or license market positioning
processes

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What Counts as a Technology Asset?

Hardware Software IP & Patents

Servers, sensors, manufacturing Enterprise systems, applications, Registered inventions, trade

equipment, robotics algorithms, AI models secrets, copyrights, designs

Human Capital Processes Alliances

Manufacturing methods,
Skilled engineers, researchers, Joint ventures, licensing
operational procedures,
technical expertise arrangements, tech partnerships
workflows

Approaches to Acquiring Technology Assets

Organisations have multiple pathways to access the technology they need.

Internal R&D Purchase / Procurement Licensing Joint Venture Acquisition / M&A Open Innovation

◄ Internal Control External Partnership ►

Internal R&D Purchase / Procurement Licensing

Organisation develops technology in-house.
Buy technology off-the-shelf or on contract. Pay royalties for the right to use someone
Full ownership, high cost, time-intensive. Best
Faster and cheaper than R&D. Suitable for else's technology without ownership transfer.
when capability is core and proprietary
non-core or widely available technologies. Balances access with cost.
advantage is critical.

Joint Venture Acquisition / M&A Open Innovation

Purchase another company to gain its
Two or more firms collaborate to co-develop Leverage external knowledge from
technology, talent, or IP. Fastest path to
or share technology. Shares cost and risk but customers, startups, universities. Low cost,
major capability but high cost and integration
requires trust and coordination. broad reach, less control over outcomes.
risk.

Approach 1: Internal R&D 3

Advantages Disadvantages Best Suited For

• High cost and time

• Core strategic technologies
• Full IP ownership
• Risk of failure or
• Unique product features
• Tailored to specific needs obsolescence
• Regulated industries
• Builds internal capability • Requires skilled talent
• Long technology cycles
• Long-term competitive moat • Slow time-to-market
• Firms with strong R&D
• Secrecy maintained • Not suitable for all
capacity
technologies

Case Example: Apple develops its own chips (M-series) in-house to gain performance and integration advantages over competitors.

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Approaches 2 & 3: Purchase and Licensing

Purchase / Procurement Licensing

What it involves: What it involves:

Buying an existing, off-the-shelf technology product or Paying a licensor royalties or fees for the right to use
commissioning custom development from a vendor. technology. Ownership stays with the licensor; the
Ownership transfers to the buyer. licensee gains use rights.

When to use: When to use:

• Technology is widely available and standardised • Technology is protected by patents or IP

• Speed of deployment is critical • Purchase cost is prohibitive
• Internal capability to build is absent • Technology needed for a limited period

Example: Smartphone makers licensing

Example: Purchasing ERP software (SAP, Oracle).
Qualcomm's baseband chip IP.

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Approaches 4 & 5: Joint Ventures & Acquisitions

Joint Venture / Alliance Acquisition / M&A

Two or more firms pool resources to co-develop
Purchasing another firm to gain its technology, talent, and IP.
technology. Neither fully owns the outcome — ownership is
The acquired firm's assets become part of the acquirer.
shared.

Benefits: Benefits:

• Shared investment and risk • Rapid capability acquisition

• Access to complementary knowledge • Acquires talent (acqui-hire)
• Entry into new markets • Eliminates competitor

Risks: Risks:

Loss of control, IP leakage, misaligned goals, governance Very high cost, culture clash, integration failure (70% of
complexity. M&As fail to deliver expected value).

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Approach 6: Open Innovation 4

"Firms can and should use external ideas as well as internal ideas, and internal and
external paths to market, as they look to advance their technology."
— Henry Chesbrough, 2003

Universities & Research Labs Startups & Incubators Customers & Crowdsourcing

Government Programmes Consortia & Industry Groups Open Source Communities

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Comparison of Acquisition Approaches

Approach
Approach Speed
Speed Cost
Cost Control
Control Risk Risk

Internal R&D Slow High Full Medium

Purchase Fast Medium High Low

Licensing Medium Low–Med Partial Low

Joint Venture Medium Shared Shared Medium

M&A Very Fast Very High Full Very High

Open Innovation Variable Low Low Low

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Factors Influencing
the Acquisition Option
Strategic, technical, financial, and environmental considerations

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Internal Factors Influencing Acquisition Choice 5

Financial Resources Internal Capabilities

Firms with strong balance sheets can R&D (Research and

Strong R&D departments support internal development. Firms
Development) and M&A (Mergers and Acquisitions). Cash-
lacking expertise must look externally.
constrained firms lean towards licensing or open innovation.

Strategic Intent Time-to-Market Pressure

If technology is core to strategy, internal control is preferred. Competitive pressure or short product cycles push towards
For peripheral tech, external options reduce cost. faster options like purchase or M&A.

Organisational Culture Risk Appetite

Innovative cultures embrace R&D and open innovation; risk- High-risk tolerance supports internal R&D; conservative firms
averse cultures prefer proven purchased solutions. prefer purchase or licensing for predictability.

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External Factors Influencing Acquisition Choice

Technology Availability Market Competition

If advanced technology is available on the market, purchase or Intense competition favours rapid acquisition via M&A or
licensing saves time and investment. purchase to keep pace with rivals.

Regulatory Environment Industry Standards

Government policies on IP, foreign ownership, or technology Dominant platforms or standards (e.g., cloud ecosystems) may
transfers constrain options in some sectors. force adoption of third-party technology.

Partner Ecosystem Pace of Technological Change

Availability of reliable partners or vendors enables joint Rapidly evolving fields (AI, genomics) make internal R&D
ventures and licensing as viable options. risky—external sourcing keeps firms current.

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Technology Acquisition Decision Framework

1. Strategic Relevance 2. Internal Capability 3. Time Urgency 4. Financial Capacity

Core vs. Non-Core? → Build vs. Buy? → Fast vs. Long-term? → High vs. Low Budget?

Resulting Options by Profile:

Core + Capable + Not Urgent + High Budget → Internal R&D

Core + Not Capable + Urgent + High Budget → Acquisi on (M&A)

Non-Core + Not Capable + Urgent + Any Budget → Purchase / Licensing

Core + Not Capable + Not Urgent + Medium Budget → Joint Venture / Alliance

Any + Open + Exploratory + Low Budget → Open Innovation

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Factors Influencing
the Acquisition Option
Strategic, technical, financial, and environmental considerations

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GROUP ACTIVITIES
THEME:
“Technology Resource Management as a Strategic Determinant of
Organizational Survival and Competitiveness”
________________________________________
CORE DISCUSSION MOTION
“Mismanagement of technology resources is more dangerous to an
organization than financial mismanagement.”
________________________________________
Group Position
Group A Technology mismanagement is the biggest threat
Group B Financial mismanagement is more dangerous
Group C Governance & Human Factors are the real root causes
Group D Technology acquisition strategy determines success
________________________________________

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ANY
QUESTION??

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Summary 7
Technology acquisition is the strategic process by which organisations obtain technology assets to support
1
their goals.

Six key approaches exist: Internal R&D, Purchase, Licensing, Joint Venture, M&A, and Open Innovation —
2
each with distinct trade-offs.

Internal factors such as capability, strategy, risk appetite, and budget shape which approach is most
3
appropriate.

External factors including competition, regulation, market availability, and pace of change further constrain
4
and guide decisions.

A structured decision framework helps managers choose the most appropriate acquisition mode for a given
5
context.

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Thank You!

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