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Stages in Digital Business Transformation

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Full research paper presentation at Mediterranean Conference on Information Systems (MCIS) - September 2016

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Stages in Digital Business Transformation

  1. 1. Sabine Berghaus MCIS, 06.09.2016 Stages in Digital Business Transformation Results from an Empirical Maturity Study
  2. 2. 2 Problem statement • Digital innovation can be perceived as threatening and involves transformational changes.(Yoo et al. 2010) • Companies struggle with recognizing and understanding the impact and chances of digitalization. (Matt et al. 2015; Carlo, Lyytinen & Rose 2012) • To initiate a digital transformation program, managers need to understand the current status and capabilities of their organization.
  3. 3. 3 What are typical transformation stages and what does this tell us about how organizations prioritized different courses of action?
  4. 4. 4 Digital Maturity Model Digital Maturity Model consisting of 9 dimensions1. Online survey with 60 items and 5-point Likert scale. 1) Berghaus, S., Back, A.: Gestaltungsbereiche der Digitalen Transformation von Unternehmen: Entwicklung eines Reifegradmodells. Die Unternehmung. 70, 98–123 (2016).
  5. 5. 5 Calculation of Maturity Stages • Usage of Rasch algorithm: Depending on the answers of all participants (N=547 participants / 417 companies) a metric is calculated for each item, that represents the difficulty. • Using cluster analysis we group items of similar difficulty into the five maturity stages. easy difficult Item 1 (I1) Item 2 (I2) Item 60 (I60)
  6. 6. 6 Findings Stage 1 – Promote & Support Examples for items in this stage:  Digital transformation as continual strategic change project.  High value of digital business in overall strategy.  Top management recognizes the importance of digital business.  IT department ensures relevant digital technologies. Stage 1: Organizations promote digital transformation within the organization and support respective projects by providing ressources and infrastructure.
  7. 7. 7 Findings Stage 2 – Create & Build Stage 2: Organizations experiment with digital innovation in both internal processes as well as product offerings. Examples for items in this stage:  Systematically evaluating potential in new technologies.  Promote digital innovation.  New digital ideas or business models implemented.  Regularly check core processes for improvements.
  8. 8. 8 Findings Stage 3 – Commit to transform Examples for items in this stage:  Digital expertise as core component to develop employees.  Organizational ability to react quickly to changes.  Partner network for digitization activities.  Automate routine processes.  Readiness to take risk with existing business. Stage 3: Transformation of company culture and organizational structure accompanied by a systematic transformation management.
  9. 9. 9 Findings Stage 4 – User-centered & elaborated processes Examples for items in this stage:  Customers included in the development of new product ideas.  Digital content designed according to individual user‘s situation.  Periodically review transformation goals.  Data analysis results guide possible actions and strategic decisions. Stage 4: Focus on customer needs by personalizing customer experience as well as improving internal processes.
  10. 10. 10 Findings Stage 5 – Data-driven enterprise Examples for items in this stage:  Transformation goals are defined measurably.  Customer and interaction data collated across different channels  Expenditure planning for communication based on media usage.  Real-time data analysis. Stage 5: Collection, analysis and sense-making of cusotmer data in business processes.
  11. 11. 11 Calculating maturity scores for organizations Point maturity score Overall fulfilment of items Cluster maturity score Sequential fulfilment of items in the clusters. Overall maturity score Average of point maturity and cluster maturity score
  12. 12. 12 Distribution of overall maturity scores Maturity stage 1 Maturity stage 2 Maturity stage 3 Maturity stage 4 Maturity stage 5
  13. 13. 13 Analysis within the dimensions 37% 51% 45% 46% 56%41% 47% 47% 47%
  14. 14. 14 Discussion & Contribution What can we learn from low maturity stages? Digital commitment an affinity among employees are important prerequisites that often preexist within the workforce. What does the overall order of items tell us? Digital transformation seems to be intuitively managed rather than strategically planned. What can we learn from high maturity stages? The use of digital data requires more strategic collaboration between IT and business -> facilitate networked collaboration in the company.
  15. 15. 15 Thank you! Feedback? Sabine Berghaus Research Associate Chair Prof. Dr. Andrea Back LinkedIn: @stadtnomadin