Business Architecture & Consultancy

Most important skills for: a) Entry-Level IT Hire b) Mid-Level IT Hire (BIM) c) Executive-Level Hire (CIO)

a) Technical Knowledge b) Collaboration/Teamwork c) Change Management

Define IT Sourcing.

"*Transfer of process or function* which is typically *not a core competence* of the enterprise, to an organisation that has *expertise in that area*, allowing the enterprise to *focus on its core competencies*."

What are "Smart Business Networks"?

"...An IT-enabled platform for dynamically linking different businesses having different 'capabilities' to build a 'networked business enterprise' with innovative business strategies for competing in the changing markets and environmental conditions..."

What is a business model?

"A business model describes how an organisation manages incomes & costs through the structural arrangement of its activities."

Define the term "IT Savvy"

"IT savvy refers to the planned, ongoing use of a set of interlocking business practices and competencies that collectively derive superior value from IT investments" Tech savvy companies can implement tech faster & drive more value from tech investments

What is IT governance?

"The capacity exercised by the board, executives, and IT management to control the implementation of IT strategy and to govern the use of the key assets of the organisation using mechanisms that enable business and IT executives to formulate aligning policies and procedures."

Define "Modular Manufacturing"?

*Breaking up* the value chain into independent modules and finding the *best source* for each.

What levels of product complexity & process simplification are necessary to achieve the "complexity sweet spot"? What happens here?

*Complexity sweet spot:* high product complexity, high process simplification

Strong IT-Business Relationships: Improving the IT-Business Relationship

*Fix the way the CIO communicates about IT* - transparency about performance / roles / value - show how well IT delivers value for money - changing the way investment decisions are made and assessing the returns that projects deliver

2 "Levels" of Strategic Alignment

*Intellectual*: planning aspects & content (strategy, plans, operations, processes, structure, planning methodologies) *Social*: people, values, communications, mutual understanding (Wu et al. 2014) focuses on the former.

What is "Rewarded Complexity"? What is "Unrewarded Complexity"?

*Rewarded Complexity:* Locally relevant products, integrated solutions - truly satisfying customer needs - creating an integrated approach *Unrewarded Complexity:* non-standardised processes (that should be standardised)

What do the "what" and "how" in successful digital transformation refer to?

*What*: Digital Capabilities *How*: Leadership Capabilities

The Digital Master Framework: name & define each quadrant

- *Beginners*: management sceptical of the business value of advanced digital technologies, may be carrying out some experiments, immature digital culture (DC: low, LC: low) - *Fashionistas*: many advanced digital features, no overarching vision, underdeveloped coordination, digital culture may exist in silos (DC: high, LC: low) - *Conservatives*: overarching digital vision (but may be underdeveloped), few advanced digital features (though traditional digital capabilities may be mature), strong digital governance across silos, active steps to build skills & culture (DC: low, LC: high) - *Digital Masters*: strong overarching digital vision, excellent governance across silos, many digital initiatives generating business value, strong digital culture (DC: high, LC: high)

Describe the components of an IT Portfolio, as discussed in the lecture.

- *New*: a) IT Programs - groupings of projects linked to business goals; b) IT Projects - set of activities creating outcomes ta budget and a timetable - *Sustaining*: ongoing spending to keep current systems running - *IT Functions*: ongoing activities (e.g. operations, maintenance, planning, development, sourcing, security, & test) - feeds into *new* & *sustaining*

Survey Results & Discussion: different levels of analysis

- *Respondent-Level:* where people submitted scores - *Company-/Group-Level:* scores are averaged for people within the company - *IT vs. Business-Level:* Average between the different respondents within organisation

Building Digital Skills: Two-Pronged Arms Race for Digital Skills

- All aspiring digital masters are *chasing the same technical skills* - But, also *business professionals* will increasingly need to be *comfortable with digital tools & technologies*

What are the key points for the following article: How Smart, Connected Products are Transforming Competition (Porter & Heppelmann 2014)

- Article discusses how smart & connected products/services will influence competitive advantage (with 5 forces & value chain) - *"The New Technology Stack":* --> *Product Cloud:* smart product applications, rules/analytics engine, application platform, product data database --> *Connectivity:* network communication (i.e. between product & cloud) --> *Product:* product software, product hardware --> Identity & security, External information sources, Integration with business systems - Cycle: Smart Product & Services Offering > Capabilities > New Technology Stack / Digitised Platform > 5 Forces Shaping Industry Competition > 10 New Strategic Choices - 10 implications for strategy (next card - soz if you randomised it lol)

Benefits of clear mission & vision statements

- Clarity of purpose among all managers & employees - Basis & direction for all other strategic planning activities - Sense of shared expectations - Sense of worth & intent for all stakeholders - Presents an organised organisation worthy of support - Achieve higher organisational performance

5 performance areas in the IT Business Value Assessment

1) Supplier Relations 2) Production & Operations 3) Product & Service Enhancement 4) Marketing & Sales 5) Customer Relations

Key takeaways regarding "Creating a Compelling Customer Experience"

- Design the customer experience from the *outside in* (what does the customer really need) - Create *reach* & *customer engagement* - *Meshing physical & digital* experiences in new ways - *Customer expectations*

Building Digital Skills: How Digital Masters are Building Skills

- Digital masters *accelerate and create a gap* (skills in social media, mobile, analytics) - Also higher skills in *digital leadership* - *Cross-functional collaboration*

Similarities: Digital Mastery vs Operating Model

- Focus on IT & management alignment - Implementation/journey requires company-wide efforts & time - Allow managers to establish common ground and understanding for company objectives

Key steps to Driving Value From Your IT Portfolio

- Identify current & previous year's portfolio - Understand IT asset class performance & benchmarks for your business - Understand & track your organisation's IT savvy (only invest in IT classes if you have digital capabilities) - Balance the portfolio for alignment and risk-return profile (and ensure that the process is transparent) - Re-weight portfolios annually and whenever major changes occur - Incorporate the IT portfolio approach into the IT governance framework - Learn from post-implementation review and formal training

Strong IT-Business Relationships: Creating Dual-Speed IT

- Integrate IT into business with *digital units* (one part supports traditional IT needs, other takes on challenge of operating at digital speed with business) - Accenture's 4 key pillars to multi-speed capabilities: 1) *Architecture* 2) *Software engineering practices* 3) *Cloud infrastructure* 4) *Technology governance*

Key points on Modularisation

- Key element of most successful business models - Not just about the goods: *business processes* are also outsourced independently & globally - Each customer gets its own specific "path" in the global network, customised to that particular order - This is becoming the *dominant business model logic*

What are the key points for the following article: "No Time to Waste: The Role of Timing and Complementarity of Alignment Practices in Creating Business Value in IT Projects" (van Heck, 2014)

- Looks at how to *realign the business* in such a way that *business people take responsibility for IT projects* & how to *create business value with IT projects* - Focuses on the "*project-level*": must be alignment in each project, not just in the organisation or sub-unit - IT & business alignment is both a *top-down (rational designs)* AND a *bottom-up (emergent processes)* - Business value creation in IT projects necessitates a high level of alignment practices *already in the early phases* of the project (ramping up in later phases has not been sufficient)

Principal Professional Lens

- Not dealing with an "agent", but a *professional agent* (PA) - Contracts are *ineffective* - PAs have too much *tacit knowledge* (cannot be codified) - Other mechanisms (restraint opportunists through dependence on mutual efforts, obligations, additional control mechanisms): --> *Self-Control (Altruism)*: consultant is self-motivated to work --> *Community Control*: consultant is working with a group of experts, can potentially be criticised by community --> *Bureaucratic Control (Internal Control)*: within consulting firm (internal audit) --> *Client Control (Third-Party Control)*: client hires another consultancy firm to check on first consultant - PPL is *socially oriented*

Differences: Digital Mastery vs Operating Model

- Optimal quadrant in DM, no optimal OM - DM tool tells you how to achieve business & IT alignment whereas OM requires alignment to fully reap benefits - DM has a capability focus while OMs have a process (standardisation) and information (integration) focus

Main takeaways for the IT Resources / IT Portfolio article

- Overall investments are not precise enough to determine the impact of IT (this is because you also need to have digital capabilities) - IT assets link purpose of IT with strategic direction (cost leaders invest in transactional to automate processes, innovative leaders invest in strategic IT) - Competencies & skills are complementary to IT assets & value creation - Different IT assets drive different types of firm performance - Dynamic and iterative process to balance & adjust IT assets

Survey Results & Discussion: findings

- People understood how the survey worked - Larger dispersion of results among business people in 2016 - IT people were more similar & consistent with their answers - Smaller companies don't fit the frameworks as well as larger firms - From *leadership side*, companies differed on: cross-silo coordination, common KPIs, governance definition - From *digital side*: automation of core processes, integrated view of key operational & customer information - Why was there such a problem with aligning the incentives? Limitation of the framework, may be other incentives at play - *IT people rate highly*: mobilising quadrant (of compass), link between operations & customer interface (digital), co-creation (leadership), IT unit performance meets needs (leadership) - *Business people rate highly*: all other quadrants esp. sustaining (of compass), integrated view of operational & customer information (digital), analytics for better operational decisions (digital), common vision of senior & middle management (leadership), investment in skills (leadership)

Strong IT-Business Relationships: Causes of Poor IT-Business Relationships

- Personality differences (CIO & CEO) - Business orientation of CIO - Technology orientation of CEO - Delivery capability of IT

Principal Agent Theory

- Principal (client) hires agent to perform an action - Both want to *individually maximise their utility* - *Contracts* that balance risk & cost can be used to *minimise opportunism* by reducing information asymmetry (contracts codify how much is paid & what is delivered) - Other mechanisms (contract costs too high / contracts are incomplete): --> *Signalling* --> *Screening* --> *Monitoring* (Process) --> *Metering* (Outcome) - PAT is *legally oriented* (codified, contextual)

What is the "Triple Bottom Line"?

- Society / People - Environment / Planet - Profit

What are the key points for the following article: "How Information Technology Governance Mechanisms and Strategic Alignment Influence Organisational Performance: Insights from a Matched Survey of Business & IT Managers" (Wu et al. 2014)

- Takes a *resource-based view*: how are the digital capabilities & IT resources organised & shared? Who is responsible for them? If done adequately, it will influence strategic alignment - "*IT Governance Mechanisms* > *IS Strategic Alignment* > *Organisational Performance*" - *IT Governance Mechanisms*: a) Decision-Making *Structure*, b) Formal *Process*, c) *Communication Approach* - *IS Strategic Alignment*: a) Product Strategic Alignment, b) Quality Strategic Alignment, c) Market Strategic Alignment - *Organisational Performance*: a) Financial Returns, b) Operational Excellence, c) Customer Perspective - *Control Variables*: Firm size (alignment is more difficult in larger organisations) & industry type

Key takeaways regarding "Exploiting the Power of Core Operations (Processes)"

- Usually focused on *efficiency gains, safety, environment, technical, others* - *Upfront investments* are necessary, pay off over time - Creates *competitive advantage* that is hard to copy - *Operating Model* (Integration vs Standardisation)

Key points on Smart Business Networks, Clouds, Platforms, Ecosystms

- Value resides increasingly *outside* the organisation - The value for the orchestrator is not in the product, but in the *innovation* and *collaboration opportunities* that they are creating in the network - In essence, it's from product-orientation to *service-orientation*, and not from one firm but from a *network of firms* - This is a key component of new business models, as business networks are becoming a way of *developing new business models* that you are not able to develop yourself - Network orchestration becomes a *key capability*

Importance of Governance (3 Points)

1) Separation of Ownership & Management 2) Corporate Failures & Scandals 3) Increased Accountability to Wider Stakeholder Interests --> from a legal perspective: shareholders --> also to society: environment

Types of Strategic Change

1) *Adaption* (NC: Incremental, EC: Realignment) --> constant process 2) *Reconstruction* / "Turnaround" (NC: Big Bang, EC: Realignment) --> business model & strategy stay the same, but fundamental changes happen quickly 3) *Evolution* (NC: Incremental, EC: Transformation) --> fundamental change, done slowly --> mostly occurs when management can predict how a market will develop 4) *Revolution* (NC: Big Bang, EC: Transformation) --> fundamental change, done quickly --> rethink business model & strategy NC = Nature of Change EC = Extent of Change NB: See notes for visual representation

The Transformation Compass: Sustain the Digital Transformation

1) *Build Foundation Skills* - Orchestrate your skills build-up (hiring, training, partnering, acquiring, incubating) - Build your digital platform - Develop a close IT-business relationship 2) *Align Incentives & Rewards* - Start on top - Smooth end-to-end operations - Make sure rewards are more than financial - Extend reward structures beyond your corporate boundary 3) *Measure, Monitor, & Iterate* - Managing your strategic scorecard (KPIs: financial, customer experience, operational processes, organisational capabilities) - Drive the initiative-level business case and related KPIs - Connect top-down and initiative-level measures - Develop an iterative review process

The Transformation Compass: Framing the Digital Challenge

1) *Building Awareness* - Involve senior leaders in "digital" discussion - Understand scale & pace of the digital impact - Foster awareness through experience - Build a coalition of supporters 2) *Know Your Starting Point* - Mastery level - Transformation roadmap - Strategic assets (physical, competencies, intangible, data) 3) *Craft a Vision & Align Top Team* - Digital vision (identifying strategic assets, creating transformative ambitions, defining a clear intent & outcome) - Top management alignment (engage top management)

What are the 3 Funding Mechanisms?

1) *Central Investments:* investments that are important across the whole company - owned by central function - cross-functional 2) *Local Investment:* implementation of smaller IT projects (e.g. for one division) - specific beneficiary - consider global rollout 3) *Partner-Supported Investments:* investments driven by partnerships, partner with an external company - collaboration-based effort - licenses, showcases, etc.

What are the 4 Alignment Practices identified in (van Heck, 2014)?

1) *Communication*: domain & technical knowledge need to be communicated; communication facilitates knowledge integration (NB: *classic knowledge-decision separation problem*) 2) *Shared Understanding*: absorptive capacity by some shared prior knowledge 3) *Management Commitment*: necessary for management to understand the strategic potential of IT; also necessary to convince lower-level employees to commit to change 4) *IT Investment Evaluation*: evaluating IT investments at different stages of a project is a mature alignment practice and concerns frequent & formal IT assessments and review 5) *Complementarity*: alignment practices complement each other (increasing on practice increases the value of doing more of the other practice); it is important to design alignment practices systematically rather than in isolation

3 ways Digital Technology can be used to engage employees

1) *Connect the organisation* --> push the vision through all available channels --> allows employees to communicate & to hear their opinions 2) *Encourage open conversations* --> need role models on executive level --> *Digital Champions*: people that support the change & know how to use the technology (should be positioned strategically in the org.) 3) *Crowdsourcing your own employees* --> leverage the ideas of everyone (not just innovation dpt.)

4 Types of Operating Models

1) *Coordination*: Unique business units with a need to know each other's transactions (high BPI, low BPS) 2) *Diversification*: Independent business units with different customers and expertise (low BPI, low BPS) 3) *Unification*: Single business with global process standards and global data access (high BPI, high BPS) 4) *Replication*: Independent but similar business units sharing best practice (low BPI, high BPS)

2 Main Purposes of Governance

1) *Coordination*: prioritising, synchronising, aligning 2) *Sharing*: using common capabilities & resources

The end customer designs the (virtual) organisation and value chain. Explain the process.

1) *Customer Demand*: customer indicates which product components they would like by choosing the *product modules* 2) They are thereby essentially also selecting the *process modules* that will produce the product modules around the world 3) *Core Firm* is the orchestrator of all these modules (and suppliers of the models) that will then provide the end product to the customer NB: not every product module involves every process module NB: It is a *customer-driven process*

The end customer designs the (virtual) software value chain. Explain the process.

1) *Customer Demands* 2) *Software Product Modules* (essentially selecting *software process modules*) 3) *Core Firm* is the orchestrator and will then provide the end product to the customer NB: It is a *customer-driven process*

How to operationalise & measure IT governance? (3 Points)

1) Structures 2) Processes 3) Relational Mechanisms/Communication Approach

Why do employees often show resistance towards change? (4 Reasons)

1) *Digital Divide*: large organisations have high heterogeneity of employees (millennials vs older generation in terms of familiarity with tech) 2) *More Transparency* 3) *Loss of Power & Responsibility*: automation of tasks means some people may lose their responsibility 4) *Inertia & Learning Costs*

2 Types of Knowledge

1) *Explicit*: codified, accessible, learnable 2) *Tacit*: deeply embedded in skills, gained through practice & application of knowledge (i.e. experience)

What are the 4 Funding Models? Which IT asset class(es) does each relate to?

1) *Foundational:* funded centrally (infrastructure & transactional) 2) *Maintenance:* keep business running, regulatory & compliance influence (infrastructure & transactional) 3) *ROI-Driven:* project-based, target KPI improvements (transactional, informational, strategic) 4) *Early Stage Innovation:* speculative nature, portfolio approach (strategic)

3 Types of Transactions

1) *Hierarchy*: transactions within the firm (means of comm.: routines; flexibility: low) 2) *Network*: transactions with business network partners (relational; medium) 3) *Market*: transactions with market partners (prices; high)

4 Types of Asset Classes

1) *Infrastructure Investments:* used to enter new markets and products; create a competitive advantage 2) *Transactional Investments:* automates and cuts costs per unit 3) *Informational Investments:* information for managing, accounting, and reporting (internally & externally) 4) *Strategic Investments:* supports entry into new markets, new products, or capability development

4 CSR Perspectives

1) *Laissez-Faire View*: business' sole purpose is to generate profits; responsible towards stakeholders 2) *Enlightened Self-Interest*: social action makes good business interest; responsible towards more general group of stakeholders 3) *Forum for Stakeholder Interaction*: incorporation of interests from multiple stakeholders; not only financial performance indicators 4) *Shapers of Society*: financial considerations are secondary; aiming at changing society

Typology of Information Asymmetry (4 Types)

1) *Low-Low*: established/recurring relationship 2) *Consultant Adv.*: experienced consultant, novice client, new relationships 3) *Client Adv.*: client is a former consultant & knows consultant's approach 4) *High-High*: new consulting relationships

2 Types of Developments (in relation to competition among digitised & cloud platforms)

1) *Physical* development (product/service) 2) *Digital* development (cloud platforms)

4 Types of Business Models

1) *Products*: products, components, consumables 2) *Systems*: interconnected products and (embedded) software, PLUS system integration, installation, and commissioning 3) *Software*: a) Software as a Product (SaaP) - design excellence; b) Software as a Service (SaaS) - delivery excellence 4) *Services*: a) Lifecycle services - premium, value, performance; b) Professional services - performance consulting, experience design, education

What are the Drivers of Workforce?

1) *Purpose* (how an employee sees their role in the org.) 2) *Identity* (what is their role?) 3) *Mastery* (do they have the capabilities to deal with the change?) If the change influences one of these aspects, there will be some resistance

Archetypes of Business Model Reinvention (5 Types)

1) *Reinventing industries* (AirBnB) 2) *Substituting products and services* (iTunes store replacing physical) 3) *Creating new digital business* (Phillip's digital platform - moving away from product company to including hardware software services) 4) *Reconfiguring value delivery models* (providing added services directly to end customer e.g. Volvo) 5) *Rethinking value proposition* (ING offering mobile banking app, soon we will have mobile payment)

The Business Case Approach

1) *Requirement Identification* 2) *Existing Solution Check* 3) *New Solution Business Case Development*: a) describe a gap that the requirement fills; b) analyse alternative solutions; c) cost-benefit analysis; d) ROI calculation (NPV) 4) *Business Case Evaluation* 5) *Business Case Approval*: a) strategic value; b) business value; c) technology value 6) *Solution Implementation* 7) *Post-Implementation Review*

4 Types of Business Processes (relates to "Business Process Redesign")

1) *Sequence* of processes (pay process, produce process) 2) *Digitisation* of processes (use of online payment) 3) *Orientation* of processes (supply vs demand) 4) *Monetisation* of processes (pay per usage vs pay for ownership)

Digital Governance Mechanisms (3 Types)

1) *Shared Digital Units*: essentially IT service dpts. that provide a service to all different dpts. in the organisation - *Sharing*: Resources, Infrastructure - *Benefits*: Economies of scale, Economies of scope - *Challenges*: Service catalog, Structure & positioning, Coordination with local unit leaders 2) *Governance Committees*: a group of heterogeneous employees (because you want different perspectives of new tech) - *Coordination*: Decision-making & policies - *Benefits*: Standards, Policies, Resource optimisation, Adoption of trends - *Challenges*: Often unable to fully lead & enforce standards & policies 3) *Digital Leadership Roles*: people that act as role models, make sure the vision is communicated & established in the right way - *Coordination*: Cross-unit influence - *Sharing*: Encouraging use of digital resources - *Benefits*: Shared digital vision, Culture change, Compliance - *Challenges*: Responsibility & authority, Coordination costs

The Transformation Compass: Mobilise the Organisation

1) *Signal Your Ambitions* - Signal - Explain benefits - Use all channels 2) *Earn the Right to Engage* - Top management role models - Co-creation of transformation - Identify your Digital Champions - Identify quick wins 3) *Set New Behaviours and Evolve Culture* - Make visible changes to work practices - Encourage adoption, not deployment - Learn to fail - Institutionalise new work practices

3 Steps for Strategy Development

1) *Strategic Position* 2) *Strategic Choices*: --> a) *Corporate-level strategy*: how to add value to businesses within organisation --> b) *Business-level strategy*: how to compete in particular markets with individual businesses --> c) *Operational strategies*: contributes to corporate- and business-level strategies by means of resources, processes, people 3) *Strategy in actionable insights* NB: this is a *prescriptive approach*. In reality, these elements are not independent, and an *emergent approach* is better (you will be forced to adapt & change by events in your competitive landscape)

The Transformation Compass: Focus Investment

1) *Translate Your Vision into Action* - Define the goals: use a scorecard system - Transformation roadmap: most companies never reach vision as it updates continuously and goals change; use business case to measure performance of goals - Business Case: Costs, Benefits, Timing for Returns (hard to estimate) 2) *Build Your Governance* - Digital governance mechanisms (shared digital units, governance committees, digital leadership roles): process of governance is evolutionary / changing 3) *Fund the Transformation* - Funding Models: foundational investments, maintenance investments, ROI-driven investments, early stage innovation investments - Funding mechanisms: central investments, local investments, partner-supported investments

Top 5 issues between technology & performance.

1) Business/IT Alignment 2) Business Agility 3) IT Time to Market 4) Business Cost Reduction/Controls 5) Business Productivity

Leadership Capabilities address 4 key things. What are they?

1) Crafting a *digital vision* 2) *Engaging the organisation* at scale 3) *Governing* the transformation 4) Building *technology leadership capabilities*

Digital Capabilities address 3 key things. What are they?

1) Creating a *compelling customer experience* 2) Exploiting the *power of core operations* 3) *Reinventing business models*

3 Components of a Strategy Statement

1) Define *fundamental goals* 2) *Scope or domain* of activities 3) Identify particular *competitive advantages* or *capabilities*

3 Operational Paradoxes

1) Either *Standardise or Empower* 2) Either *Control or Innovate* 3) Either *Orchestrate or Unleash* NB: Digitisation says you can do both ;)

Conclusions on (Smart) Business Networks

1) Emerging technologies provide *global connectivity* 2) Competition is *among business networks* 3) *Customer-centric business networks* are among the winners 4) *Key components* are: - Product/process modularisation - Quick connect & disconnect capabilities - Network orchestration - Digitised platform

Kotter's 8-Step Process for Leading Change

1) Establish a *Sense of Urgency* --> this is where the "Digital Master Framework" would be placed (also addresses 3rd stage) 2) Create the *Guiding Coalition* 3) Develop a *Vision & Strategy* 4) *Communicate* the Change Vision 5) *Empower Employees* for Broad-Based Action 6) Generate *Short-Term Wins* 7) *Consolidate Gains & Produce More Change* 8) *Anchor New Approaches* in the Culture *E*very *C*ow *D*evelops *C*urious *E*motions *G*enerally *C*onsidered *A*bnormal

3 Measures of Organisational Performance

1) Financial Returns 2) Operational Excellence 3) Customer Perspective

State the reality for each of the following myths: 1) Digital is primarily about the customer experience 2) Digital primarily matters only to technology or B2C companies 3) Let a thousand flowers bloom; bottom-up activity is the right way to change 4) If we do enough digital initiatives, we will get there 5) Digital transformation will happen despite our IT 6) Digital transformation approach is different for every industry and company 7) In our industry we can wait and see how digital develops

1) Huge opportunities exist also in efficiency, productivity, and employee leverage 2) Opportunities exist in all industries with no exceptions 3) Digital transformation must be led from the top 4) Transformation management intensity is more important for driving overall performance 5) Business/IT relationships are key, and in many companies they must be improved 6) Digital Leaders exhibit a common DNA 7) There are digital leaders outperforming their peers in every industry

3 Important Tools (guidelines) in Crafting Your Digital Vision

1) Identifying *Strategic Assets*: VRIN (valuable, rare, inimitable, non-substitutable) 2) Creating *transformative ambitions*: substitution --> extension --> transformation 3) Define clear *intent* (what needs to change) & *outcome* (what will be the result) *Strategy in action* (no general approach - depends on your situation)

Provide definitions for each of the following: 1) Engaging the organisation at scale 2) Creating a compelling customer experience 3) Exploiting the power of core operations 4) Digital capabilities 5) Leadership capabilities

1) Intensity of electronic communication media for internal & external communications and work practices (IT for Internal & External Communication) 2) Internet-based architectures (i.e. open) for key functions (Internet Use) 3) Percent digitisation of transactions executed with both suppliers & customers (Digital Transactions) 4) Technical & business skills of IT people, IT skills of business people, and ability to hire skilled IT people (Companywide IT Skills) 5) Degree of senior management commitment to IT projects and degree of business unit involvement in IT decisions (Management Involvement)

Effects of stronger transformation management intensity

1) More profitable 2) Higher market valuations

3 Perspectives for Crafting Your Digital Vision

1) Re-envisioning the *Customer Experience* 2) Re-envisioning *Operations* 3) Re-envisioning *Business Models* (defensive / offensive)

What 2 things can IT Sourcing generally achieve?

1) Save on *cost of operation* by acquiring services from service providers that are *more efficient* than if internal resources were used 2) Improve *quality* and *value of operation* by acquiring services from service providers with *best practices* to manage that business activity

General Principles of Smart Business Networks

1) Think in terms of "*customer solutions*" instead of products - redesign backwards the modules that a customer needs - requires a lot of information about the customer 2) Every customer gets their *own (temporary) value chain* - "*Demand Networks*": a value chain in a complex network - requires a lot of information about potential suppliers - requires a lot of coordination efforts among suppliers - use network externalities (++network partners) 3) Being able to *quickly connect* customers and suppliers - IT is not only about the technology but also about trust - technological infrastructure through inter-organisational systems: communication standards & business process standards - social infrastructure through knowledge sharing

The 2 research questions for the IT Resources / IT Portfolio article

1) What types of organisational characteristics explain the variation in the effect of IT investments on firm performance? 2) What is the influence of IT investment types (IT asset classes) on firm performance? Do these IT investment types influence different aspects of firm performance?

10 Implications for Strategy according to (Porter & Heppelmann 2014)

1) Which set of smart, connected *product capabilities* and features should the company pursue? 2) How much functionality should be embedded *in the product* and how much *in the cloud*? 3) Should the company pursue an *open or closed system*? 4) Should the company develop the full set of smart, connected product capabilities and infrastructure *internally or outsource* to vendors and partners? 5) What *data* must the company capture, secure, and analyse to maximise the value of its offering? 6) How does the company *manage ownership and rights* to its product data? 7) Should the company *fully or partially disintermediate* distribution channels or service networks? 8) Should the company *change its business model*? 9) Should the company enter new businesses by *monetising its product data* through selling it to outside parties? 10) Should the company *expand its scope*?

#1 Investment Priority for Businesses

Business Analytics

Operations can be two things. What are they? (Soz, bit vague)

Efficient: thinking about the better utilisation of resources Effective: giving better customer experience, attracting more/different customers

True/False: More computers = higher productivity

False. There is no direct relationship.

Corporate Governance vs Governance

Former focuses on manager accountability, latter focuses on achieving objectives

Technology Hype Cycle (Gartner)

How technology behaves (rise, peak, "trough of disillusionment", climbing slope, plateau)

Which types of business value are associated with which IT assets?

Infrastructure = Higher *Market Value* Transactional = Lower *COGS* Informational = Higher *Profit* Strategic = Higher *Innovation*

Can you drive firm performance by simply investing in an IT asset class?

No. You need the right management & leadership to actually derive value from IT investments.

What is the "Complexity Issue"?

On the one hand, can we make locally relevant products, and increase the complexity since this will be rewarded and generate business value? On the other hand, the unrewarded complexity, how can we standardise where we need to standardise (where complexity adds no greater value)?

Porter's Value Chain: Support Activities

Operations that support the creation of value. - *Firm Infrastructure* - *Human Resource Management* - *Technology Development (R&D)* - *Procurement*

What is Corporate Social Responsibility (CSR)?

The commitment by organisations to "behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large"

Porter's Value Chain: Primary Activities

Those in which materials are purchased, processed into products, and delivered to customers. Each adds value to the product/service. - *Inbound Logistics* (inputs) - *Operations* (manufacturing & testing) - *Marketing & Sales* - *Outbound Logistics* (storage & distribution) - *Service*

What are Network Transactions?

When two parties have *complementary assets* and thus develop a relationship.