DBIS Summary Week 1 - Course introduction, Introduction to Digital Business & Innovation, Technology-Centric View of IT in Business, Digital Strategies. Digital Innovation: a product, process, or business model that is perceived as new, requires some significant changes on the part of adopters, and is embodied in or enabled by IT (p.330). (Fichmann, 2014) Moore’s Law -> relatively cheap and increasingly easy-to-use world- wide digital infrastructure. More focus on the individual manager since the barriers that prevented ordinary people from becoming innovators are gone Digital Innovators have an understadning of what has become possible and an outlook on what unmet needs (organizational or societal) can be stilled with that. READINGS Week 1 Carr, N. G. (2003). IT doesn't matter. Educause Review, 38, 24-38. Subtitle: As information technology’s power and ubiquity have grown, its strategic importance has diminished. The way you approach IT investment and management will need to change dramatically. Main Points: Investments in IT have gone up Assumption that with ITs potency and ubiquity also its strategic importance has developed is wrong IT as a commodity invisible for strategy Proprietary technology vs. Infrastructural technology (example is the building of rails) -> infrasctructural technology is more valuable when shared than used in isolation whereas proprietary can be owned by one company (patents etc.)I Infrastructural technology can be proprietary if secured by IP rights, physical limits etc. The window for gaining advantage from an infrastructural technology is open only briefly (after ist buildout all you can gain is a cost advantage) Advancements in Infrastructural technologies are felt on macroeconomic level (so e.g. for a country) but not on individual firm level (e.g for strategic potential of a firm) Is IT an infrasctructure technology? Yes, because it transports data uses great standardization, is highly replicable and shows huge price deflation Web-services (via Internet/cloud) have made this even more possible There is example of firms that used the temporary technical advantage for longer lasting competitiva advantage such as Walmart or Dell. Where is „IT“ on ist phase in the buildout, Carr is arguing closer to the end than beginning (power is outstripping needs, prices is very low, internet has caught up to demand, IT vendors positions as commodity suppliers, investment bubble has burst) What should companies do? o If you see IT as an commodity you need to focus on mitigating the risks of a failure instead focusing on the glorious outlooks of the future o Manage the costs (e.g. why roll out PCs to workforce that only requires email and word) o Follow, don’t lead: wait for the investment as you will get more value (computing power) for your money o Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. V. (2013). Digital business strategy: toward a next generation of insights. MIS Quarterly 37(2). Keywords: Digital business strategy, scope of digital business strategy, scale of digital business strategy, speed of digital business strategy, digital business strategy value creation and capture Main points: So far IT strategy had to be aligned with the Business strategy but was ultimately subordinate (=alignment view) The authors calls for the emergence of a Digital business strategy that is more than a functional strategy Recent drivers for adapted business infrastructures: computing power, global connectiviy through standard protocols (internet/web) -> enable work to be carried out across boundaries of time, distance, and function Its harder to disentagle digital products and services from their underlying IT infrastructure Working defintion of digital business strategy: organizational strategy formulated and executed by leveraging digital resources to create differential value Four key themes are scope, scale, speed of DBS and sources of value creation and capture Scope: many firms realize the potential of digital resources to create new products and services in their scope of business -> using novel digital resources to expand the scope of business strategy (e.g. AWS from Amazon) In a digitally intensive world rethinking is needed from tight supply chain to more losely couples ecosystems Scale: scale has always been important for the profitability of a firm, scale of digital business strategy is distinct and qualitatively different in four areas o Rapid scale up or down due to cloud computing (not only in IT domain but also other areas) o Network effects are becoming a main driver for scale potential in a digitally intensive world (example are mentioned on p. 475) o Strategies for scaling need to incorporate the abundance of data due to the Internet of things etc. o Easier shared digital assets will faciliated partnerships and alliances for scaling (APIs, web services, shared reservation systems etc.) Speed: time or speed was always important but even more so in digital settings – four dimensions o Product launches: in a digital world launches need to be aligned with other players in the ecosystems (e.g. Kindel with Android OS) o Decision making: how do companies invest in using the data make faster and better decisions? o Network orchestration: manages today’s and tomorrows product portfolie o Network formation and adaption: speed of network formation is way faster than in traditional supply chains (e.g. collaboration of Software developers vs. Automotive) Sources of value creation and capture: o Increased value from information: democratization of information, new business models based in information instead of physical assets o Multsided business models: multiside business revenue model are gaining importance o Coordinated business models in networks: cocreate value in networks and share their respective pieces of value (e.g. videogame industry) o Control of digital industry architecture R. Fichman (2012). Distinctive IT Characteristics: Implications for Digital Innovation and Value Creation, Boston College. Bughin, J., Chui, M., & Manyika, J. (2013). Ten IT-enabled business trends for the decade ahead. McKinsey Quarterly, 13(May). Nylén, D., & Holmström, J. (2015). Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation. Business Horizons, 58(1), 57-67. Hopkins, M. S. (2010). IT-DRIVEN INNOVATION-Value Creation, Experiments and Why IT Does Matter. MIT Sloan Management Review, 51(3), 57. Ross, J. W., Beath, C. M., & Sebastian, I. M. (2017). How to Develop a Great Digital Strategy. MIT Sloan Management Review, 58(2), 7.