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Summary Lecture Notes Theories of Digital Business
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DB Summary Lecture / Video NotesTable of Contents
Week 1: Setting the Stage ............................................................................................................................... 2
Week 1: Digital Strategy .................................................................................................................................. 3
Week 2: IT Governance ................................................................................................................................... 8
Week 2: Internetworking for managers ........................................................................................................16
Week 3: Process Innovation: System’s development ...................................................................................21
Week 3: Managing IT initiatives ....................................................................................................................28
Week 4: Digital transformation and change..................................................................................................32
Week 4: Digital Technologies – AI & Robotics ...............................................................................................36
Week 5: Digital Technologies – Big Data and Analytics .................................................................................37
Week 5: Digital Process – Process Modelling ................................................................................................39
Week 6: Social Media, Crowdsourcing, P2P & Blockchain ............................................................................43
Week 6: Wrap-Up ............................................................................................. Error! Bookmark not defined.
Course outline
Setting the stage
1. Digital Strategy
a. Using digital technology for strategic advantage.
b. IT Governance
2. ICT-enabled process innovation
a. Information system’s development
b. Managing IT initiatives
c. Digital transformation (change management)
d. Process modelling
3. Enabling theories
a. (Inter)networking
Wrap-up
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,Week 1A: Setting the Stage
Changes happen in 3 areas.
1. Changes in technologies and big data
- Beyond smaller, faster and cheaper.
2. Changes in software architecture
- IT is about business (process) architecture.
- Focus on what, not how: you can design what you want and you can implement it right away since the logic is
already created. There is a fundamental shift, you can get the job done and it enables us to find ecosystems in
organizations.
- Flexibility and speed are king: the competitive advantage is not having modular designs, but constructing new
things with your building blocks. What does it enable us to do? You have to be quick and build and kill bridges,
constantly changing your products.
➔ You need to be faster than someone else. If you’re faster you can be different and you can charge a little bit
more. If you’re late, you can only compete on price.
3. Changes in how organizations work
- Speed: cycle time reduction.
- Disappearing boundaries
a. Within firm: no more silos, globalization.
b. Between firms: supply chain management, partnering.
- Global business networks: dis-aggregation, consolidation, focus on core, virtual organization and outsourcing.
ICT and business/industry redefinition. →
Evolutionary transformations: levels 1 and 2, can generate
significant benefits:
1. Localization exploitation: IT can be used to simply automate
an existing isolated task.
2. Internal integration: IT can be used to link and integrate a
number of tasks.
Revolutionary transformation: levels 3, 4 and 5, can generate more
significant benefits:
3. Business process redesign: streamlining and reorganizing
internal processes (and not simply just linking them).
4. Business network redesign: extends level 3 beyond the boundaries of the organization to involve suppliers and
buyers.
5. Business scope redefinition: describes most radical transformation, where the entire business scope is redefined.
Digital business: trends and issues. Create the change rather than be affected. We spend a lot of time on IT but we can’t
seem to get it right.
Biggest concerns in 2019 of IT management and of IT leaders:
1. Security / cyber security / privacy.
2. Alignment of IT with the business.
3. Data analytics / data management.
4. Digital transformation.
5. Compliance and regulations.
6. Cloud / cloud computing
Business & IT alignment has been in the top three of concerns for 15 years and we still can’t get it right. Also, flexibility
and business change are major issues and security and privacy issues are currently a new big concern.
The largest investments are in analytics/big data, ERP systems, security and privacy and in software development /
maintenance.
2
,Week 1B: Digital Strategy
The alignment between IT and strategy does not seem to advance as quickly as wanted. Quickness is the key in order to
keep up with the competition. Therefore, corporations are increasingly breaking down barriers between organizations.
E.g., different marketing for different tweaked models.
A hype – from an overhype to disillusion, is a curve. When it’s on neutral level, we know how the technology works and
how to deal with it. When you’re working with hypes you need to know that this is happing so you know how to react to
it (block chain, replacement by robots etc.). When the new technology is sliding down the hype curve is it really tough
how to deal with it (cloud computing, social media, e-mail).
➔ The hype cycle can help companies develop their strategies to see the technologies sliding over the curve.
Many IT innovations follow the 'hype-cycle' (made popular by Gartner).
1. After the introduction expectations are quickly becoming unrealistically high.
2. Once people realize this, the expectation (perceived value) changes from hype to disillusion.
3. Real developments (is a straight line from the left side to the upper right side of the graph) are typically different from
the hype and disillusion and it is important for managers to understand both real and perceived importance.
4. The X-axis in the chart shows the development of the e-business hype over time (with the 'New Economy' perceived
as replacing the 'Old Economy' in the late 1990's, and the disillusion represented by the burst of the dot-com bubble
in 2001), the terms at the top of the Y-axis show various concepts related to IT that have gone (or are going) through a
similar hype-cycle at different points in time.
This chart shows Gartner's hype cycle for emerging
technologies as published in mid 2017. By now
eCommerce, particularly in industries such as travel,
are well into the ‘plateau of productivity’, but new
technologies continue to emerge and market
research firms such as Gartner predict their future
path through the ‘hype cycle’ to help companies
develop their strategies.
5 Phases of the Hype Cycle
1. Technology Trigger
- A technology breakthrough kicks off - proof-of-
concept media interest trigger publicity
- no usable products exist and commercial growth is
unproven
2. Peak of Inflated Expectations
- number of success stories due to early publicity, sometimes some scores of failures
- some companies take action, some don’t
3. Trough of Disillusionment
- interest declines as experiments/implementations fail to deliver
- investment only continues if the providers improve their products to the satisfaction of early adopters
4. Slope of Enlightenment
- how the technology helps the enterprise takes form + widely understood
- 2nd and 3rd generation products appear
- pilots are funded by more enterprises, but conservative companies remain cautious
5. Plateau of Productivity
- mainstream adoption
- criteria for providers’ growth are more clearly defined
- technology’s broad market applicability and relevance are paying off
IT fuels the disappearance of boundaries and creates a new ‘open’ playing field, transforming industries, companies,
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, supply chains, and the way we work, communicate, socialize etc. IT can help us to make generate new strategies and can
be the driver – understanding is needed.
Value Propositions and Business Models
How can IT influence your strategy? How can IT
make a difference or support what your
organization is trying to do? Why do some
businesses work and others don’t?
It’s important to understand how the different
models in the videos are dealing with IT and are
influenced by IT.
Business model canvas: compete on business
model.
What we do is looking at the customer profile
that wants to do a particular customer job and is
experiencing a pain for which we are offering
our products and services that hopefully relieve
those pains and bring some extra gains.
Start with something to offer (value proposition, more is possible) to the customers (customer segments). Value
propositions and customer segments are connected through customer relationships and channels. Channels can be either
online or offline. Customer relationships can be about loyalty points or learning costs or anything that brings you back into
a particular platform. This leads to revenue streams and show which prices are captured in the business model. Key
activities are the activities that are included, and key partners can help you with taking these activities. In order to make it
you need key resources and a clear cost structure.
➔ Thus, in order to fulfil our value propositions we need key partners, key activities and key resources. They all bring
in costs and as long as those costs are lower than the revenue, we will make a profit.
Business Model ‘levers’: buttons you can press in order to
make a difference. Map yourself and map others and decide
where and how you would like to move. Strategy, business
models and value propositions and how they can influence
each other.
Disappearing Boundaries
All the organization is now between an organization and its
partners and we look at the whole supply chain instead of just
at the organization. Know what is ahead and behind you is
very important.
Bullwhip effect: a small fluctuation can lead to huge
fluctuations at the other side of the supply chain. If there is
transparency on the supply chain, everybody can optimize their inventory much better. The manufacturer will see that
there are only extra orders because there are some more people at the beach, so he can product just a bit more beers
instead of a whole bunch more.
The value chain within the organization can also be done at the supply chain when you look outside. At different levels,
disappearing boundaries, is what this perspective is all about. Taking out players in the supply chain can decrease add-on
costs.
You need to understand how to look at IT innovations in their context from different perspectives and understand how
you can identify ways to link and align strategy with IT.
Need for speed: the left hand knows what the right hand is doing. It goes so fast that you have to innovate every day.
Competitors can copy things in one day.
1. From Islands to Enterprise Resource Planning (ERP)
Historically people have always looked for the ‘best of breed’ applications (pyramid), where the "best" system for a
specific isolated function within a single department was built and used. This came at the expense of integration.
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