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Transactions on Engineering and Computing Sciences - Vol. 12, No. 1
Publication Date: February 25, 2024
DOI:10.14738/tecs.121.16136.
Gordon, L. A. (2024). Technology and an Organization’s Business Model. Transactions on Engineering and Computing Sciences,
12(1). 39-46.
Services for Science and Education – United Kingdom
Technology and an Organization’s Business Model
Lawrence A. Gordon
University of Maryland’s Smith School of Business and
University of Maryland Institute of Advanced Computer Studies
INTRODUCTION
The contemporary view of the interconnected digital world began to take shape in the mid- 1990s with the commercialization of the Internet.
1 In the early years of the 21st Century, social
media companies started to surface.2 The use of computers and the Internet, combined with
social media, have substantially changed the way most companies conduct business when
compared to the way business was conducted prior the mid-1990s. The effective execution of
this changed business model is based on digital interconnections among computer-based
communication systems.
The primary objective of this article is to argue that the business model of contemporary
organizations needs to embrace four additional technological developments. These
developments are what I have referred to as the ABCD of technology (Gordon, 2018). The
acronym ABCD stands for Artificial Intelligence (A), Blockchain (B), Cybersecurity (C), and Data
Analytics (D). These four aspects of technology are having a major impact on the way business
is being conducted throughout the world. Although each one of these aspects of modern
technology can play an independent role in facilitating an organization’s success, there are also
important interactive effects among these components of technology.
The remainder of this paper proceeds as follows. The next, and second, section provides a brief
discussion of what is meant by a business model and how computers and the Internet, as well as
social media, have already substantially changed the way most companies design and
operationalize their business model. The third section of the paper discusses the impact of the
ABCD of technology on a firm’s business model. The fourth, and final, section of the paper
provides some concluding comments.
THE CHANGING BUSINESS MODEL
At a strategic level, an organization’s business model consists of setting its overall objectives,
as well as the strategy it employs for achieving those objectives. The way an organization
measures the degree to which it is achieving its objectives, as well as the way an organization
manages its risk and finances its operations, are also part of an organization’s overall business
model. In the final analysis, a successful business model needs to be designed to facilitate an
organization’s ability to create value for its stakeholders. For private sector organizations,
1
In mid-1990s companies conducting business via the Internet began registering domain names with dotcom in their
URL (Uniform Resource Locator).
2
For example, LinkedIn was launched in 2003, Facebook became open to the public in 2004, YouTube began in 2005,
and Instagram was launched in 2010.
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revenues, profits, and stock market returns are important performance metrics for assessing
whether the firm is creating value for its stakeholders.3
At an operational (or tactical) level, a business model needs to include specifying the
organization’s target market (or markets) and different ways of successfully securing
customers (i.e., generating revenues) from the target market. Specifying the company’s
approach to market penetration also needs to be part of a firm’s business model.
4 A business
model should also consider the plans and costs associated with the production and distribution
of the firm’s products.
5
Prior to the mid-1990s, the activities associated with implementing an organization’s business
model focused on utilizing brick-and-motor physical facilities, where employees would work
and produce products. Physical facilities were also the most common place for organizations to
conduct in-person business with their target customers. Penetrating an organization’s target
market was largely accomplished via marketing activities that were handled by media
organizations that made extensive use of print, radio, and TV advertising. Economic success for
a private sector firm was traditionally measured in terms of the organization’s growth of
revenues, and/or profits, and/or stockholders’ value. Managing an organization’s risk was
commonly focused on operational and financial risk management.
Since the mid-1990s, there have been substantial changes to the way most companies
operationalize their business model. Online marketing and sales, digital purchasing
transactions, and online financial transactions, are now key components of every organization’s
business model. Virtual work arrangements for employees are also common in today’s digital
environment (especially since the COVID-19 pandemic). In addition, automation has replaced
many jobs that were labor-intense and, in turn, has increased the efficiency of many operations
by reducing the costs associated with producing and distributing physical products and
services. At the same time, service industries, relative to industries that produce physical goods,
have become a much larger share of economies around the world.
Another change in the way many companies currently operationalize their business model is in
terms of how they measure economic success and consider risk. Economic sustainability (i.e.,
economic growth, while minimizing the externalities portion of social costs), has replaced the
traditional (i.e., prior to the mid-1990s) approach to measuring economic success in many
private sector organizations.6 A more comprehensive (or holistic) view of managing risk has
3 Although the basic ideas expressed in this paper about a business model apply to all types of organizations, the focus
in this paper is on private sector organizations.
4 Market penetration refers to the share of the total market doing business with a particular firm.
5 Products include physical products, as well services.
6
In economics, social costs are equal to the sum of private costs (i.e., costs borne by the those creating an economic
transaction) and externalities (i.e., spillover costs borne by those having no control over the economic transaction).
Economic sustainability is a term used to explicitly recognize the fact that economic growth should not cause
irreversible harm to the environment and/or society at large. The concept of economic sustainability is consistent
with, although not identical to, recent developments related to ESG (environmental, social, and governance) that has
become popular in several countries.
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Gordon, L. A. (2024). Technology and an Organization’s Business Model. Transactions on Engineering and Computing Sciences, 12(1). 39-46.
URL: http://dx.doi.org/10.14738/tecs.121.16136
also become common, often under the umbrella of ERM (enterprise risk management)
7. In
today’s interconnected digital environment, ERM needs to incorporate cybersecurity risk
management alongside the other more traditional types of risk (e.g., financial risk, operational
risk, compliance risk, etc.).
The above changes to the way companies design and operationalize their business model have
been driven, in large part, by computers, the Internet, and social media. In fact, computer- related technological developments have already significantly transformed the landscape for
conducting business in today’s interconnected digital environment. However, there are at least
four computer-related technological developments that are creating a new wave of desirable
changes in the business model for contemporary businesses. These latest developments are the
ABCD of technology. Individually, and collectively, these technological developments have
important implications for the way firms should change their business model to be successful
and, in turn, create value for their stakeholders.
THE ABCD OF TECHNOLOGY AND A FIRM’S BUSINESS MODEL
The term technology is usually used to refer to tools or machines used to accomplish a practical
task. In today’s computer-based environment, the non-physical nature of computers (i.e.,
computer software) is also considered a key aspect of technology.
It is well known that societies and organizations that have technological superiority have an
advantage over less technologically advanced competitors.8 One of the most important ways to
gain technological superiority over competitors in today’s digital environment is via computer- related technologies. As noted in the Introduction section of this article, there are four relatively
new computer-related technologies that, if properly integrated into an organization’s business
model, have the potential for creating value for an organization via technological superiority.
These developments are the ABCD of technology.
The acronym ABCD was initially introduced in an article on the impact of technology on
contemporary accounting by Gordon (2018). The articles by Glen et al. (2018-2019) and
Wetklow (2023) provide insightful applications of the ABCD of technology perspective to
financial management. The current article builds upon the above noted earlier papers that
focused on the importance of the ABCD of technology to accounting and financial management.
This article, however, takes a broader perspective and argues that, in today’s interconnected
digital environment, organizations need to revamp their business model to embrace the ABCD
of technology. A discussion of the potential impact of each one of these technologies on a firm’s
business model is provided below.
Artificial intelligence (usually referred to as AI) refers to the idea that machines (especially
computers) can learn to perform tasks which require intelligence. These tasks are often
associated with a human being’s ability to conduct deductive and inductive reasoning, solve
7
For example, see COSO (2017).
8 The importance of technology to societies goes back at least as far as the stone age (e.g., see:
https://en.wikipedia.org/wiki/History_of_technology).
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problems, and make predictions. Traditionally, such tasks were considered the sole domain of
human beings. Although the modern-day view of AI dates back to the mid-1950s, to reach its
real potential AI required computers that could store vast amounts of data and process that
data at speeds far beyond what was available at the time when AI was first being developed.
9
Today, however, computers can store more than one terabyte of data and process billions of
instructions (super computers can process trillions of instructions) per second.10 As a result, AI
has become one of the fastest growing fields of study, with new developments surfacing at an
exponential rate. Many organizations currently use machine learning (ML) models, which are a
subset of AI models, to facilitate a variety of business decisions.
The computer algorithms developed via AI models can simulate the way human beings solve
problems and make decisions concerning the various components of an organization’s business
model. For example, AI is being used to develop new products, explore new target markets and
marketing strategies, address and predict customer concerns, and assess various capital
structure issues. 11 AI also has the potential for improving the way a firm assesses its
performance and manages its risk.
12 In addition, it is commonly argued that AI can improve the
quality of life for employees of a company by eliminating the need to focus on mundane tasks.
AI also has the potential for improving the quality of life for society at large (e.g., in terms of
healthcare, environmental concerns, etc.).13 More generally, AI is rapidly becoming a key driver
of economic efficiency and sustainability for many organizations operating in today’s
interconnected digital world. In sum, AI is clearly changing the way organizations
operationalize their business model, as well as address strategic issues.
Blockchain refers to a decentralized ledger consisting of blocks of transactions that are
distributed among the members of the blockchain. The blocks in the blockchain are connected
by a system of unique encrypted links (called hash function links). Information in a blockchain
becomes available to all members of the blockchain at the time of being posted. Changing
information in a block is extremely difficult because it requires a majority of the parties to
transactions in subsequent blocks within the chain to accept the change. The data associated
with the transactions in each block of the blockchain are also encrypted. Thus, a large
blockchain is usually more secure than a traditional centralized ledger system, thereby
resulting in a reduction of cyber risk.
A private blockchain is limited to specific members. A central authority controls the
membership and the rights of each member. Private blockchains have already gained
popularity in many businesses and are changing the way firms operationalize their business
model. This latter point is especially true among supply-chain partners. Smart contracts, for
9
For an interesting discussion of the history of AI, see: https://en.wikipedia.org/wiki/History_of_artificial_intelligence.
10 One terabyte of data is equal to 1000 gigabytes of data. A gigabyte of data is equal to around one billion bytes of
data, where a byte of data is equal to eight binary digits long.
11 ML techniques involve a process whereby computers develop algorithms (i.e., programs) based on large sets of
empirical data (i.e., training data).
12 For an interesting discussion on how AI can help an enterprise manage its risk, see COSO (2017).
13 For a balanced discussion of the main pros and cons of AI for society, the reader is referred to the article by
ProCon.org at: https://www.procon.org/headlines/artificial-intelligence-ai-top-3-pros-and-cons/.
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Gordon, L. A. (2024). Technology and an Organization’s Business Model. Transactions on Engineering and Computing Sciences, 12(1). 39-46.
URL: http://dx.doi.org/10.14738/tecs.121.16136
example, between supply-chain partners that are based on private blockchains provide the
partners to the contracts added transparency and security. In addition, the self-executing
aspect of smart contracts means that intermediaries are eliminated. The elimination of
intermediaries changes the way a business operates (i.e., it changes a firm’s business model)
and makes the transactions more efficient than traditional contracts.
Unlike a private blockchain, a public blockchain is open to the public and there is no central
authority controlling the blockchain. Most cryptocurrencies transactions, for example, are
facilitated via a public blockchain. The challenges associated with public blockchains (e.g., lack
of regulations, concern for privacy, and problems associated with the interoperability of
various computer hardware and software systems), have impeded the widescale use of public
blockchains.
Although data in a large blockchain is usually considered more secure than data in a traditional
centralized ledger system, there are some potential disadvantages of using blockchains. These
disadvantages include the fact that it is difficult to make corrections or adjustments to the data
in the blockchain. Furthermore, due to the verification process among all the nodes of a
blockchain, the processing speed of a blockchain may be slower than a centralized database.
The above challenges and disadvantages notwithstanding, blockchain technology is clearly
changing the way organizations operationalize their business model.
Cybersecurity refers to the protection of information that is accessed or transmitted via
computer networks (including the Internet). As discussed by Gordon (2018, pp. 11-12),
“Cybersecurity is concerned with the protection of information accessed and transmitted over
the Internet and other computer networks. The primary objectives of cybersecurity are to
protect the confidentiality, integrity, and availability (often referred to as CIA) of information.
Protecting the confidentiality of information essentially means protecting private information
from those that are not authorized to see or use the information. Protecting the integrity of
information essentially means protecting the accuracy, reliability, and validity of information.
Protecting the availability of information essentially means making sure that information is
available to authorized users on a timely basis. Two other objectives of cybersecurity that are
often considered a subset of availability are authentication and nonrepudiation. Authentication
refers to the notion that information has been made available to an authorized user whose
identity has been authenticated. Nonrepudiation refers to the notion that an authorized user’s
identity cannot be repudiated.”
Cybersecurity risk is a fundamental concern to all computer-based information networks.
Indeed, the number of cyber breaches affecting organizations in today’s interconnected digital
environment has been growing at an exponential rate over the last few decades (Gordon et al.,
2011). In essence, cybersecurity is like an invisible thread that holds our digital interconnected
communication systems together. The invisible nature of cybersecurity does, however, become
quite visible when a cyber-breach occurs. As Gordon (2022, p. 74) noted: “Although largely
invisible, once a major cyber breach occurs the lack of cybersecurity quickly becomes visible.”
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Cybersecurity plays a significant role in the way successful organizations operationalize their
business model in today’s interconnected digital world. Indeed, cybersecurity can be thought
of as the glue that connects all aspects of computer-based technologies. Without cybersecurity,
cyber breaches would be ubiquitous and, in turn, cause major problems for a firm’s sales,
production of goods and services, as well as the distribution of those goods and services. Recent
studies have shown that the potential for cybersecurity breaches has become one of the, if not
the, most important risk factors confronting organizations (e.g., see Allianz, 2023). Thus,
cybersecurity risk management, which plays a pivotal role in preventing devastating cyber
breaches that could threaten the overall financial and economic sustainability of a firm, is now
a topic of the upmost concern to corporate senior executives and Board of Directors. Given the
growing importance in the way cybersecurity has directly affected a firm’s business model, it is
critical for firms to determine the appropriate amount to spend on cybersecurity-related
activities.14
Data analytics refers to the process of analyzing and drawing inferences from large sets of
empirical data. The goal underlying the process of data analytics is to gain insight from these
large data sets that would otherwise go unnoticed. As Richardson et al. (2021, p. 4) point out,
“...effective Data Analytics provides a way to search through large structured and unstructured
data to discover unknown patterns or relationships.” Accountants and statisticians have been
analyzing and drawing inferences from data sets for centuries. However, the amount of data
available in today’s digital environment, and the developments related to high-speed
computers that have huge memory and storage capacity, have changed the nature of data
analytics. In addition, sophisticated visualization software is also part of the modern view of
data analytics. Thus, the contemporary approach to data analytics is based on the analysis of
very large data sets (often referred to as big data) via high-speed computers that incorporate
sophisticated statistical analyses and advanced visualization software. Machine learning
models are also often used in the contemporary view of data analytics.
Effective utilization of data analytics changes the way decisions related to an organization’s
business model are made, as well as the strategy used to achieve the firm’s overall objectives.
For example, data analytics is particularly useful in analyzing target markets, developing
marketing strategies, and predicting the changing needs of customers. Data analytics can also
improve the operational efficiency associated with producing products and services, as well as
in terms of analyzing distribution channels. Data analytics can also play an important role in
analyzing issues related to a firm’s performance measures, enterprise risk management, and
capital structure issues. Thus, data analytics is clearly changing the way organizations
operationalize their business model and create value for their stakeholders.
The above four aspects of technology (i.e., the ABCD of technology) are changing the business
model for many companies. In fact, organizations that do not incorporate the ABCD of
14 Ever since the SEC (Securities and Exchange Commission) issued its Disclosure Guidance concerning cybersecurity
risks and cyber incidents (SEC, 2011), the reporting requirements concerning cybersecurity risks and cyber incidents
have been a key concern to firms. Determining the optimal amount that firms should invest in cybersecurity-related
activities is an issue of particular concern in this regard ((e.g., see Gordon and Loeb, 2002).
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technology into their business model are likely to fall prey to technologically superior
competitors.
One way to visualize the impact of AI, blockchain, cybersecurity, and data analytics on the
components of the business model is illustrated in Figure 1. In today’s digital environment,
technological superiority will largely be determined by the successful application of these four
aspects of technology to an organization’s business model.
CONCLUDING COMMENTS
Nobel Laureate Albert Einstein is often credited with having stated that “imagination is more
important than knowledge.”15 The argument underlying this quote is that while knowledge has
limits, imagination has no boundaries. However, imagination and knowledge are typically
inextricably interwoven. Indeed, whereas imagination leads to new knowledge, knowledge is
typically the basis for imagination. Nowhere is this symbiotic relationship between imagination
and knowledge more apparent than in areas related to technology.
The great technological advances over the last three centuries (e.g., steamboat, train,
automobile, telephone, television, airplane, computer, Internet, spaceship, smart phone, etc.)
15 For example, see goodreads.com at: https://www.goodreads.com/quotes/556030-imagination-is-more-important- than-knowledge-for-knowledge-is-limited.
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were all the result of an evolutionary iterative process between imagination and knowledge. It
is this iterative process between knowledge and imagination that has led to today’s
interconnected computer-based digital world. Artificial intelligence, blockchain, cybersecurity
and data analytics are among the latest technological developments resulting from this iterative
process between imagination and knowledge. In future decades, we can anticipate experiencing
equally impactful changes in technology.
As discussed earlier in the paper and illustrated in Figure 1, the goal of a business model is to
facilitate an organization’s ability to create value for its stakeholders. Although not a panacea,
organizations that integrate the ABCD of Technology into their business model have a better
chance of surviving in today’s highly competitive markets. In fact, embracing the ABCD of
Technology may well be a necessary, although not sufficient, condition for firms to enjoy
economic sustainability in today’s interconnected digital economy.
References
Allianz, “Allianz Risk Barometer 2023: Cyber & business interruptions top threats as economic and energy risks
rise,” Jan 17, 2023, (tps://www.allianz.com/en/press/news/studies/230117_Allianz-Risk-Barometer- 2023.html).
COSO (Committee of Sponsoring Organizations of the Treadway Commission), “Enterprise Risk Management
Integrating with Strategy and Performance,” Executive Summary, June 2017 (see:
https://www.coso.org/_files/ugd/3059fc_61ea5985b03c4293960642fdce408eaa.pdf).
Glenn, D. A., J. B. Hill and M. Wetklow, “The ABCDs of Technology and Impacts on Federal Financial Management:
A CFO Community Perspective,” Journal of Government Financial Management, Winer 2018-2019, Vol. 67, No. 4,
pp. 41-47.
Gordon, L. A., “The invisible thread in our digital world,” DATAQUEST, June 2022, pp. 72-74.
Gordon, L.A., “The Impact of Technology on Contemporary Accounting: An ABCD Perspective,” Transactions on
Machine Learning and Artificial Intelligence, Vol. 6, No. 5, 2018, pp. 10-16.
Gordon, L. A. and M. P. Loeb, “The Economics of Information Security Investment,” ACM Transactions on
Information and System Security, November 2002, pp. 438-457.
Richardson, V., K. Terrell, R. Teeter, Data Analytics for Accounting, 2nd Ed., McGraw-Hill, Inc., 2021.
Wetklow, M., “Accounting: The Need for STEAM,” Journal of Government Financial Management, Spring, 2023,
pp. 10-16.