Digital Transformation Strategies

TLDR: In this paper, the authors propose a digital transformation strategy that serves as a central concept to integrate the entire coordination, prioritization, and implementation of digital transformations within a firm, which can be used to coordinate and prioritize the many independent threads of digital transformation.

Abstract: In recent years, firms in almost all industries have conducted a number of initiatives to explore new digital technologies and to exploit their benefits. This frequently involves transformations of key business operations and affects products and processes, as well as organizational structures and management concepts. Companies need to establish management practices to govern these complex transformations. An important approach is to formulate a digital transformation strategy that serves as a central concept to integrate the entire coordination, prioritization, and implementation of digital transformations within a firm. The exploitation and integration of digital technologies often affect large parts of companies and even go beyond their borders, by impacting products, business processes, sales channels, and supply chains. Potential benefits of digitization are manifold and include increases in sales or productivity, innovations in value creation, as well as novel forms of interaction with customers, among others. As a result, entire business models can be reshaped or replaced (Downes and Nunes 2013). Owing to this wide scope and the far-reaching consequences, digital transformation strategies seek to coordinate and prioritize the many independent threads of digital transformation. To account for their company-spanning characteristics, digital transformation strategies cut across other business strategies and should be aligned with them (Fig. 1). While there are various concepts of IT strategies (Teubner 2013), these mostly define the current and the future operational activities, the necessary application systems and infrastructures, and the adequate organizational and financial framework for providing IT to carry out business operations within a company. Hence, IT strategies usually focus on the management of the IT infrastructure within a firm, with rather limited impact on driving innovations in business development. To some degree, this restricts the product-centric and customer-centric opportunities that arise from new digital technologies, which often cross firms’ borders. Further, IT strategies present systemcentric road maps to the future uses of technologies in a firm, but they do not necessarily account for the transformation of products, processes, and structural aspects that go along with the integration of technologies. Digital transformation strategies take on a different perspective and pursue different goals. Coming from a business-centric perspective, these strategies focus on the transformation of products, processes, and organizational aspects owing to new technologies. Their scope is more broadly designed and explicitly includes digital activities at the interface with or fully on the side of customers, such as Accepted after one revision by Prof. Dr. Sinz.