Digital Strategy & Governance
Introduction & Context
IT Digital Strategy Roadmap:
EGIT keeps the business-IT alignment in check steer people in right
direction, keep budget in control, and have technology do what it should
=> By having good management controls!
IT value:
Internal – intangible: knowledge management system more
internal knowledge transfer
Internal – tangible: ERP system increased efficiency & reduced
costs
External – intangible: creating new website more brand awareness
External – tangible: build e-commerce website more sales
Best-practice guidelines:
What comes before IT-value? Innovation is NOT necessary, IT-business
alignment is!
Invest in IT that aligns with the business strategy & business operating
models
EGIT:
= Integral part of corporate governance Board is accountable!
= definition & implementation of processes, structures, and relational
mechanisms that enable both business and IT stakeholders to execute
their responsibilities in support of business/IT alignment & the creation and
protection of IT business value
,Business /IT alignment:
= Fit & integration among business strategy, IT strategy, business
structures and IT structures 2 questions: ‘How well does the business
align with the IT?’ and ‘How
well does the IT align with
the business?’
Described in Strategic
Alignment Model:
Strategic fit: IT strategy should be articulated in terms of an external
domain (= how the firm is positioned in the IT marketplace) and an
internal domain (=How the IT infrastructure should be configured and
managed (Business-oriented))
Functional integration: Strategic integration is the business and IT strategy
link, reflecting the external components important for many firms as IT has
emerged as a source of strategic advantage, Operational integration is the
internal domain and deals with the link between organisational
infrastructure and processes and the IT infrastructure and processes
Alignment Challenge:
Expression barriers: from a lack of direction in terms of business strategy
or other issues with senior management behaviour
Specification barriers: from a lack of involvement of IT in strategy
development, where business and IT strategy are developed in isolation
Implementation barriers: from the organisation’s existing IT portfolio,
where there are technical, political or financial constraints on existing
infrastructure
IT/Business value:
= aimed at understanding how and to what extent the use of IT
contributes to organizational performance IT governance should be
about controlling the use of IT in a way that ensures the achievement of IT
business value
Difficult to measure this value, especially for intangible things like
customer satisfaction Business value hierarchy by Weil: Dilution the
,higher in the hierarchy, so more difficult to measure the impact of an IT
investment in the top of the hierarchy
It in itself will not generate IT business value, as value from IT will only
be realized if both IT and business are involved
Transformation approaches in digital mastery:
Fashionistas
Digital masters
Beginners
Conservatives
Types of companies:
Beginners: really traditional; no IT to the detriment of the customers
Fashionistas: not that good either, pushing for crazy innovative IT
without it being well thought out
Conservatives: full focus on stability, etc. No power anymore to
innovate, so will not move up in the market
Digital masters: achieve the highest returns from IT investments, so
organizations that seek to realize value from IT investments should
focus on increasing both their digital and leadership capabilities ,
which aligns with the premise that EGIT enables the realization of
value
Transformation approaches to digital mastery:
Pathway 1: Focus first on operational efficiency, move through
industrialized to digital mastery Standardize and integrate the
business processes first, then leverage the platform on which you
can innovate
Pathway 2: Focus first on Customer Experience, move through
Integrated experience to digital mastery In very competitive
markets, they will want to be the first to release apps, VR, AI etc and
then look at the operational side => Risk is that you can’t get it right
afterwards
Pathway 3: Iterative improvement to reach digital mastery in small
steps Each investment has influence on both customer and
, operational, while complying with architecture (Very good way to do
it)
Pathway 4: Greenfield development, move to digital mastery in 1 go
First they create a future digital persona for digital natives (= new
type of client in 20 years) and build an application for this persona,
most of the times it’s a whole different company (Very risky, you
cannot build upon current IT)
Digital transformation is not only IT, both innovation and stability are
needed you need a combination of digital and leadership capabilities to
succeed in today’s digital business environment, to become digital
masters.
Digital capabilities = use of technology to change the way the company
interacts with customers, internal processes or their business model
Leadership capabilities = creating the necessary conditions required to
drive the transformation, including the transformation vision, governance
model, necessary information technology and business relationships to
produce the results and engage the employees in the journey.
Introduction & Context
IT Digital Strategy Roadmap:
EGIT keeps the business-IT alignment in check steer people in right
direction, keep budget in control, and have technology do what it should
=> By having good management controls!
IT value:
Internal – intangible: knowledge management system more
internal knowledge transfer
Internal – tangible: ERP system increased efficiency & reduced
costs
External – intangible: creating new website more brand awareness
External – tangible: build e-commerce website more sales
Best-practice guidelines:
What comes before IT-value? Innovation is NOT necessary, IT-business
alignment is!
Invest in IT that aligns with the business strategy & business operating
models
EGIT:
= Integral part of corporate governance Board is accountable!
= definition & implementation of processes, structures, and relational
mechanisms that enable both business and IT stakeholders to execute
their responsibilities in support of business/IT alignment & the creation and
protection of IT business value
,Business /IT alignment:
= Fit & integration among business strategy, IT strategy, business
structures and IT structures 2 questions: ‘How well does the business
align with the IT?’ and ‘How
well does the IT align with
the business?’
Described in Strategic
Alignment Model:
Strategic fit: IT strategy should be articulated in terms of an external
domain (= how the firm is positioned in the IT marketplace) and an
internal domain (=How the IT infrastructure should be configured and
managed (Business-oriented))
Functional integration: Strategic integration is the business and IT strategy
link, reflecting the external components important for many firms as IT has
emerged as a source of strategic advantage, Operational integration is the
internal domain and deals with the link between organisational
infrastructure and processes and the IT infrastructure and processes
Alignment Challenge:
Expression barriers: from a lack of direction in terms of business strategy
or other issues with senior management behaviour
Specification barriers: from a lack of involvement of IT in strategy
development, where business and IT strategy are developed in isolation
Implementation barriers: from the organisation’s existing IT portfolio,
where there are technical, political or financial constraints on existing
infrastructure
IT/Business value:
= aimed at understanding how and to what extent the use of IT
contributes to organizational performance IT governance should be
about controlling the use of IT in a way that ensures the achievement of IT
business value
Difficult to measure this value, especially for intangible things like
customer satisfaction Business value hierarchy by Weil: Dilution the
,higher in the hierarchy, so more difficult to measure the impact of an IT
investment in the top of the hierarchy
It in itself will not generate IT business value, as value from IT will only
be realized if both IT and business are involved
Transformation approaches in digital mastery:
Fashionistas
Digital masters
Beginners
Conservatives
Types of companies:
Beginners: really traditional; no IT to the detriment of the customers
Fashionistas: not that good either, pushing for crazy innovative IT
without it being well thought out
Conservatives: full focus on stability, etc. No power anymore to
innovate, so will not move up in the market
Digital masters: achieve the highest returns from IT investments, so
organizations that seek to realize value from IT investments should
focus on increasing both their digital and leadership capabilities ,
which aligns with the premise that EGIT enables the realization of
value
Transformation approaches to digital mastery:
Pathway 1: Focus first on operational efficiency, move through
industrialized to digital mastery Standardize and integrate the
business processes first, then leverage the platform on which you
can innovate
Pathway 2: Focus first on Customer Experience, move through
Integrated experience to digital mastery In very competitive
markets, they will want to be the first to release apps, VR, AI etc and
then look at the operational side => Risk is that you can’t get it right
afterwards
Pathway 3: Iterative improvement to reach digital mastery in small
steps Each investment has influence on both customer and
, operational, while complying with architecture (Very good way to do
it)
Pathway 4: Greenfield development, move to digital mastery in 1 go
First they create a future digital persona for digital natives (= new
type of client in 20 years) and build an application for this persona,
most of the times it’s a whole different company (Very risky, you
cannot build upon current IT)
Digital transformation is not only IT, both innovation and stability are
needed you need a combination of digital and leadership capabilities to
succeed in today’s digital business environment, to become digital
masters.
Digital capabilities = use of technology to change the way the company
interacts with customers, internal processes or their business model
Leadership capabilities = creating the necessary conditions required to
drive the transformation, including the transformation vision, governance
model, necessary information technology and business relationships to
produce the results and engage the employees in the journey.
