{"id":176,"date":"2019-08-01T11:39:17","date_gmt":"2019-08-01T09:39:17","guid":{"rendered":"http:\/\/niehage.de\/dba\/?p=176"},"modified":"2020-08-20T09:41:57","modified_gmt":"2020-08-20T07:41:57","slug":"digitalization-and-business-transformation-disambiguation","status":"publish","type":"post","link":"http:\/\/niehage.de\/dba\/2019\/08\/01\/digitalization-and-business-transformation-disambiguation\/","title":{"rendered":"Digitalization and Business Transformation: Disambiguation"},"content":{"rendered":"\n<p>Reis et. al (2018)\ndid a systematic literature evaluation related to digital transformation using\nthe peer-reviewed database of the&nbsp;\nInstitute of Scientific Information \u2013 Web of Science (ISI).<\/p>\n\n\n\n<p>The search with the\nterm \u201cdigitalization\u201d resulted in over 2000 documents and to be able to filter\nthe most important research topics, they also analyzed the keywords cited. This\nrevealed that the terms related are Digital Transformation, Digitalization,\nManagement, Internet of Things, Internet, Strategy, Government, Industry 4.0,\nInnovation, Technology, Enterprise Architecture, Competitive Advantage,\nInformation-Technology, Systems, Educational Technology, Digital Business.&nbsp;(Reis, et al. 2018, 415f.)&nbsp; <\/p>\n\n\n\n<p>They reviewed more\nthan 200 articles and discovered that the number of published papers had been\nsignificantly increased after 2014, the most contributors are the USA with 21%,\nfollowed by Germany 19% and China 5%. Based on their analysis the terms\n\u201cDigital Transformation\u201d and \u201cDigitalization\u201d will be used similar. Both\napplying to \u201cservices, processes and organizational structures throughout\ninformation technology (IT) \/ information systems (IS) and web-based enablers\u201d.\n(Reis, et al. 2018, 416)<\/p>\n\n\n\n<p>Reis et al. found various definitions of digital transformation, which can be categorized containing three elements: (1) Technological, (2) Organizational, (3) Social. <br>Digital transformation is based on the use of digital technologies, it requires a change of organizational processes or new business models and it is influencing the human life, e.g. enhancing the customer experience. (Reis, et  al. 2018, 417f.)<\/p>\n\n\n\n<p>While Reis et al. see\nthat \u201cDigitalization\u201d and \u201cDigital Transformation\u201d are used similar, Savi\u0107 (2019) assert that\n\u201cDigitization\u201d and \u201cDigitalization\u201d were used almost interchangeable. He tries\nto give a definition of the terms due to the \u201cpractical need that humans have\nto communicate clearly and to be properly understood. [\u2026] confusion still\nexists about the meaning, scope and use of these terms\u201d (Savi\u0107 2019, 37)<\/p>\n\n\n\n<ul><li>Digitization: Converting from analog to digital\nformat<\/li><li>Digitalization: Automating business processes<\/li><li>Digital Transformation: Creating a digital\ncompany<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" width=\"853\" height=\"364\" src=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure1.jpg\" alt=\"\" class=\"wp-image-177\" srcset=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure1.jpg 853w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure1-300x128.jpg 300w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure1-768x328.jpg 768w\" sizes=\"(max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 1362px) 62vw, 840px\" \/><figcaption> Figure 1: Digitization, digitalization, and digital transformation reviewed through five facets: focus, goal, activity, tools, and challenges, with examples of each; adopted from (Savi\u0107 2019, 37) <\/figcaption><\/figure>\n\n\n\n<p>Venkatraman described\nalready in 1994 in a paper the five levels of \u201cIT enabled Business\nTransformation: From Automation to Business Scope Redefinition\u201d (Venkatraman 1994).&nbsp; It starts from a basic one for \u201cLocalized\nExploitation\u201d of IT functionalities, which is what Savi\u0107 calls digitization. The next ones are \u201cInternal Integration\u201d and\n\u201cBusiness Process Redesign\u201d, analog Savi\u0107\u2019s\ndigitalization. And goes to \u201cBusiness Network Redesign\u201d and \u201cBusiness Scope\nRedefinition\u201d, what matches with Savi\u0107\u2019s digital\ntransformation. According to Venkatraman the reason for business process\nredesign can be the exploitation of IT functionalities for the reason to \u201cseek\nefficiency\u201d by automation or to \u201cenhance capabilities, which aims to create\nstrategic capabilities for future competition\u201d (Venkatraman\n 1994, 85).<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" width=\"1024\" height=\"577\" src=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure2-1024x577.jpg\" alt=\"\" class=\"wp-image-178\" srcset=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure2-1024x577.jpg 1024w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure2-300x169.jpg 300w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure2-768x432.jpg 768w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure2.jpg 1133w\" sizes=\"(max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 1362px) 62vw, 840px\" \/><figcaption>Figure 2: Alternatives Approaches to Business Process Redesign, adopted from (Venkatraman 1994, 85) <\/figcaption><\/figure>\n\n\n\n<p>Exploiting technology\nis \u201cimportant strategically, because evolution [\u2026] brings with it changes in\nthe source of competition.\u201d (Porter 1979, 144). Porter (1979) explains that before\nyou create a business strategy, you first have to identify the company\u00b4s\nstrengths and weaknesses by assessing the five forces affecting competition in\nthe related industry: the power of the buyers, the power of the suppliers, the\nthreat of new entrants, the threat of substitute products, and the rivalry\namong existing competitors. Then the company can plan&nbsp; how to position to defend against the\ncompetitive forces, how to influence the balance of the forces, and how to anticipate\n\u201cshifts in the factors underlying the forces and responding to them, with the\nhope of exploiting change by choosing a strategy appropriate for the new\ncompetitive balance before opponents recognize it\u201d (Porter 1979, 143) <\/p>\n\n\n\n<p>Porter has identified\nover the time three shifts in IT functionality change: (1) \u201cHow Information\nGives You Competitive Advantage\u201d (Porter and Millar 1985), (2) \u201cStrategy and\nthe Internet\u201d (Porter 2001), (3) \u201cHow Smart, Connected\nProducts Are Transforming Competition\u201d (Porter and Heppelmann 2014)<\/p>\n\n\n\n<p>In (1) and (2) the\ncompetitive advantages had been coming from increased efficiencies along the\nvalue chain processes, which Savi\u0107 calls\ndigitalization. But in (3) the competitive advantage is the \u201cchanging nature of\nproducts [which] is disrupting value chains and forcing companies to rethink\nnearly everything they do, from how they conceive, design, and source products;\nto how they manufacture, operate, and service them; to how they build and\nsecure the necessary IT infrastructure\u201d (Porter and Heppelmann 2014, 65). This is following\nthe definition of digital transformation from Savi\u0107.<\/p>\n\n\n\n<p>On the contrary to\nPorter, Carr (2003) argues in his\narticle \u201cIT Doesn\u00b4t Matter\u201d that the competitive advantage vanishes over time.\nFor first movers it will mean huge investments, while later capacities are\nincreasing and leading to falling prices and commoditization. Kane, Palmer et\nal. (2015) conclude that rather\nfocusing on technological opportunities, companies should focus to use\ntechnologies to achieve strategic goals. One of their findings from the 2015\ndigital business global executive study and research project is that \u201cnearly\n90% of respondents say that business transformation is a directive of their digital\nstrategies\u201d (Kane, Palmer, et al. 2015, 6)<\/p>\n\n\n\n<p>Muzyka, Koning and\nChurchill (1995) use a definition for\nbusiness transformation created during a conference convened by the Corporate\nRenewing Center at INSEAD: \u201cA fundamental change in organizational logic, which\nresulted in or was caused by a fundamental shift in behaviors\u201d &nbsp;(Muzyka, Koning and Churchill 1995, 348).<\/p>\n\n\n\n<p>\u201cDigital\ntransformation is a more complex type of technology enabled business\ntransformation\u201d (Ismael, Khater and Zaki 2017, 6). The authors of this\nstudy reviewed and consolidated the actual knowledge found in the literature.\nThey identified in the discussions about digital strategy key decision areas\nand synthesized them with the frameworks found into one guiding framework. In\nthe following they analyzed the rational behind the context, content and the\nprocesses of content formulation and strategy implementation of digital\ntransformation.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" width=\"1015\" height=\"570\" src=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure3.jpg\" alt=\"\" class=\"wp-image-179\" srcset=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure3.jpg 1015w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure3-300x168.jpg 300w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure3-768x431.jpg 768w\" sizes=\"(max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 1362px) 62vw, 840px\" \/><figcaption> Figure 3: Literature Synthesis Framework,&nbsp;(Ismael, Khater and Zaki 2017, 8) <\/figcaption><\/figure>\n\n\n\n<p>A digital\ntransformation strategy, or digital strategy, has far reaching consequences and\nneed to coordinate and prioritize the different dimensions of digital\ntransformation. It should be aligned with other operational or functional\nstrategies. (Hess, et al. 2016)&nbsp;(Matt, Hess und Benlian 2015)<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" width=\"722\" height=\"294\" src=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure4.jpg\" alt=\"\" class=\"wp-image-180\" srcset=\"http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure4.jpg 722w, http:\/\/niehage.de\/dba\/wp-content\/uploads\/2019\/08\/Figure4-300x122.jpg 300w\" sizes=\"(max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 984px) 61vw, (max-width: 1362px) 45vw, 600px\" \/><figcaption>Figure 4: Relation between digital transformation strategy  and other corporate strategies&nbsp;(Matt, Hess und Benlian 2015,  340) <\/figcaption><\/figure>\n\n\n\n<p><strong>Works Cited<\/strong><\/p>\n\n\n\n<p>Carr, N. G.\n(2003, May). IT Doesn\u00b4t Matter. <em>Harvard Business Review<\/em>, pp. 41-49.<\/p>\n\n\n\n<p>Hess, T., Matt, C., Benlian, A., &amp;\nWiesb\u00f6ck, F. (06 2016). Options for Formulating a Digital Transformation Strategy. <em>MIS\nQuarterly Executive<\/em>, S. 123-139.<\/p>\n\n\n\n<p>Ismael, M. H., Khater, M.,\n&amp; Zaki, M. (2017, 11). <em>Digital Business Transformation: What Do We Know\nSo Far?<\/em> Retrieved 07 26, 2019, from University of Cambridge:\nhttps:\/\/cambridgeservicealliance.eng.cam.ac.uk\/resources\/Downloads\/Monthly%20Papers\/2017NovPaper_Mariam.pdf<\/p>\n\n\n\n<p>Kane, G. C., Palmer, D.,\nPhilipps, A. N., Kiron, D., &amp; Buckley, N. (2015). <em>Strategy, not\nTechnology, Drives Digital Transformation.<\/em> MIT Sloan Management Review and\nDeloitte University Press.<\/p>\n\n\n\n<p>Matt, C., Hess, T., &amp;\nBenlian, A. (14. 05 2015). Digital Transformation Strategies. <em>Business &amp;\nInformation Systems Engineering<\/em>, S. 339-343.<\/p>\n\n\n\n<p>Muzyka, D. F., Koning, A. d.,\n&amp; Churchill, N. C. (1995, 12). On Transformation and Adaptation: Building\nthe Entrepreneural Corporation. <em>European Management Journal<\/em>, pp.\n346-362.<\/p>\n\n\n\n<p>Porter, M. E. (1979,\nMarch-April). How competitive forces share strategy. <em>Harvard Business Review<\/em>,\npp. 137-145.<\/p>\n\n\n\n<p>Porter, M. E. (2001, March).\nStrategy and the Internet. <em>Harvard Business Review<\/em>, pp. 62-78.<\/p>\n\n\n\n<p>Porter, M. E., &amp;\nHeppelmann, J. E. (2014, November). How Smart Connected Products Are\nTransforming Competition. <em>Harvard Business Review<\/em>, pp. 64-88.<\/p>\n\n\n\n<p>Porter, M. E., &amp; Millar,\nV. E. (1985, July-August). How Information Gives You Competitive Advantage. <em>Harvard\nBusiness Review<\/em>, pp. 85-103.<\/p>\n\n\n\n<p>Reis, J., Amorim, M., Mel\u00e3o,\nN., &amp; Matos, P. (2018). Digital Transformation: A Literature Review and\nGuidelines for Future Research. In \u00c1. Rocha, H. Adeli, L. P. Reis, &amp; S.\nCostanzo, <em>Trends and advances in information systems and technologies<\/em>\n(pp. 411-421). Cham, Switzerland: Springer.<\/p>\n\n\n\n<p>Savi\u0107, D. (2019, Jan|Feb).\nFrom Digitization, through Digitalization, to Digital Transformation. <em>Online\nSearcher<\/em>, pp. 36-39.<\/p>\n\n\n\n<p>Venkatraman, N. (1994,\nWinter). IT enabled business transformation: From Automation to Business Scope\nRedefinition. <em>Sloan Management\nReview<\/em>, pp. 73-87.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reis et. al (2018) did a systematic literature evaluation related to digital transformation using the peer-reviewed database of the&nbsp; Institute of Scientific Information \u2013 Web of Science (ISI). The search with the term \u201cdigitalization\u201d resulted in over 2000 documents and to be able to filter the most important research topics, they also analyzed the keywords &hellip; <a href=\"http:\/\/niehage.de\/dba\/2019\/08\/01\/digitalization-and-business-transformation-disambiguation\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Digitalization and Business Transformation: Disambiguation&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":187,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[42,7,29],"tags":[33,32,12,31],"_links":{"self":[{"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/posts\/176"}],"collection":[{"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/comments?post=176"}],"version-history":[{"count":4,"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/posts\/176\/revisions"}],"predecessor-version":[{"id":199,"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/posts\/176\/revisions\/199"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/media\/187"}],"wp:attachment":[{"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/media?parent=176"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/categories?post=176"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/niehage.de\/dba\/wp-json\/wp\/v2\/tags?post=176"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}