Digital Transformation Management

2x2 matrix: cost strategy (low cost vs uniqueness) and competitive scope (broad vs narrow market)

3 types:

• Cost leadership (low cost / broad market)
• Differentiation (uniqueness / broad market)
• Focus strategy (narrow market, can have both cost strategies)

Need for clear positioning, otherwise stuck in the middle

Critiziced: Neglects dynamic evolution and negates co-existence of strategy

•An organization’s ability to be aligned and efficient in  its management of today’s business demands while  simultaneously being adaptive to changes in the  environment (Raisch and Birkinshaw 2008)

•Ability to simultaneously pursue both incremental and  discontinuous innovation (Tushman and O’Reilly 1996)

Defender:

• follows a more stable strategy

• focuses on a predictable market

• stresses operational efficiency and economies of scale

• has a greater fixed-asset intensity

• is conservative regarding change

Prospector:

• continuously seeks new opportunities

• heavily invests in product R&D and innovation

• creates change in the market

• seeks flexibility in technology

• often lacks controls and operational efficiency

Analyzers:

• Simultaneously minimizes risk  while maximizing opportunities

• Stable core products while seeking new opportunities

• Follows the prospectors, but does not refuse change

Reactor:

• has no clear strategy

•The degree of fit and integration among business strategy, IT strategy, business infrastructure, and IT infrastructure (Henderson and Venkatraman 1993)

•The degree to which the mission, objectives, and plans contained in the business  strategy are shared and supported by the IT strategy (Reich and Benbasat 1996)

Elements: Business strategy and business infrastructure / IT strategy and IT infrastructure

SAM model can be used to understand the needs of other domains when changes to the strategy occur.

4 alignment perspectives / approaches for alignment

1. Strategy execution (IT as an expense) --> Driver is the business (└)

• Business Strategy is the  driver of both Business and  IT Infrastructures

• Priority to improve  business processes,  focus on changing  business infrastructure.

• IT focus is on application  development, driven by  need to support business  infrastructure

2. Technology transformation (Business strategy drives the need to develop the IT Strategy) --> Driver is the business (┐)

• IT strategy needs to define  technologies integral to  business strategy

• Focus is aligning IT  strategy and IT  infrastructure

3. Competitive potential (IT enables strategic opportunities) --> Driver is IT strategy (┌)

• IT strategy and infrastructure are aligned

• IT drives the business. IT strategy necessary to build distinctive core competency

• Business infrastructure needs to evolve to fit new business opportunities enabled by IT

4. Service level perspective (providing IT services) --> Driver is IT strategy (┘)

• Information is a core product or service

• Business strategy and IT  strategy may be aligned

• Focus is to provide IT services for the business that have the potential to enable business infrastructure by fitting IT  infrastructure to IT strategy

IS strategy types:

• IS for efficiency (--> Defenders, as primary focus on cost advantages)
  • Use IS for operational support, internal efficiencies
  • IT being slow, the cow
• IS for flexibility (--> Prospectors, as focus on quick reaction to market needs)
  • Use IS to support the companies markets and product sales, flexibility and quick strategic decisions
  • IT being the horse, fast, but bit expensive
• IS for comprehensiveness (--> Analyzers, as focus on knowledge about competitors to make the best decisions)
  • Use IS to enable comprehensive decisions and quick responses, to gather information

Assumption of the model is that only if the IT strategy fits the business strategy, then alignment is created which results in high business performance.

2 types of digital strategies

• Customer engagement strategy
  • easy for customers to enquire, order, pay and receive support
• Digitized solution strategy
  • reformulates a companies value proposition by innovating products, services and data

Operational backbone (--> link to IS for efficiency)

• the  technology and capabilities that  ensure the efficiency, scalability,  reliability, quality and predictability of  core operations

Digital services platform (--> link to IS for flexibility)

• the  technology and capabilities that  facilitate rapid development and  implementation of digital innovations

Portfolio

• collection of projects and programs, wider perspective
• grouped to facilitate effective management and facilitate prioritization of investments
• businss scope that adapts to strategic goals of an organisation in order to meet strategic business objectives
• ongoing duration

Program

• several related projects
• strategic intention
• wider scope that directly implements selected strategic goals
• improving organization performance
• mid-term duration

Project

• temporary endeavor
• Time, budget, and scope constraints
• specified scope with well-defined work results
• short-to mid-term durations

Reason: to do something new, better or faster

Main idea of portfolio management is to filter project ideas to make sure that the best ideas are selected