2015-04 Digital Executive Community Proceedings

DIGITAL EXECUTIVE COMMUNITY

DIGITAL TRENDS: OUTLOOK 2016IT Roles & Evolution

PROCEEDINGS

Digital Executive Community 24th & 27th April 2015

Index

Introduction ....................................................................................................................................................... 2

Meeting Minutes ............................................................................................................................................... 3

Executive Summary ......................................................................................................................................... 13

Innovation Trends Presentation and Introduction to the Topic.................................................................. 13

Keynote Speech ............................................................................................................................................... 16

Digital Trends Outlook 2016: IT Roles & Evolution ..................................................................................... 16

Selected Contributions ................................................................................................................................ 32


2

Introduction

The Document: The BTO Proceedings is an output created and distributed in order to divulgate

the researchs results, presented and discussed during the Digital Executive Community events. The

document is display in a suitable format that makes the consultation of contents agile and rapid

and it consists of four main areas:

(1) Meeting Minutes a brief of the day, containing the main parts of the discussion and the

relevant ideas emerged from the meeting;

(2) Executive Summary the introduction to the topic, with a small summary of the proceedings,

made by BTO Researchers;

(3) Keynote Speech an overview of the two Conferences held by Professor Tobias Kretschmer;

(4) Selected Contributions a BTO re-elaboration of the Scientific Research on the topic discussed.

Purposes and goals: BTO Proceedings offer an overview of the contents discussed during the BTO

Digital Executive Community, highlighting the most important aspects and underlining the starting

point of the research.

Abstract: During the BTO Digital Executive Community, the topic focused on some of the most

considerable IT-based sources of competitive advantage for companies in many industries. In

particular, a relevant topic was discussed:

Digital Trends: Outlook 2016 IT Roles & Evolution The need to identify Global Digital Trends is

strategic to improve the business agility for future competitive challenges, enabling growth and

innovation. In particular, the role of the IT is becoming even more important in comparison with the

past and is becoming a pivotal key leveraging Business Issues and creating opportunities for other

CxO. IT-as-a-service (ITaaS) is a high priority for CIOs as they look to shake off the traditional view of

their departments as costly and inefficient parts of their businesses.

The meeting has taken place in two different sessions (Rome, April 24th and Milan, April 27th) with the

scientific contribution of Prof. Tobias Kretschmer, Professor of Management and Head of the

Institute for Strategy, Technology and Organization at Munich School of Management, Ludwig-

Maximilians-Universitt Mnchen.


3

Meeting Minutes

Subject DIGITAL TRENDS: OUTLOOK 2016 IT Roles & Evolution

FIRST SESSION

ROME

Date 24/04/2015 Start 10.00 End 13.00

Place Hotel Quirinale Rome

Hosts

Tobias Kretschmer (Ludwig-Maximilians-Universitt)

Florenzo Marra (BTO)

Andrada Comanac (BTO) Tommaso Cenci (BTO)

Luca Parravicini (BTO) Massimo Bellini (BTO)

Fabrizio Conte (BTO) Francesca Oberti (BTO)

Francesca Donelli (BTO)

Guests

Vincenzo Pensa (ACI) Alessandro Banci (ACI)

Mauro Abbattista (Autostrade per lItalia) Marco Pavonio (Dexia Crediop)

Massimo Morgagni (Dexia Crediop) Nicola Reina (Enel)

Giovanni Pepicelli (Enel) Ettore Di Lena (Enel)

Matilde Tizio (Enel) Sandro Tucci (Eurovita Assicurazioni)

Marco Iacomussi (Finmeccanica) Andrea Lalli (GTECH)

Stefano Nocentini (Poste Italiane) Rosanna Lisco (Poste Italiane)

Alberto Alberini (Poste Vita) Maurizio Irlando (Telecom Italia IT)

Gabriele Sirovich (Trenitalia) Fabrizio Casali (Unilever)


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Introduction and Meeting Opening

The meeting has been opened with the introductive speech of Andrada Comanac, Research

Manager at BTO Research, who showed the Digital Executive Communitys evolution, the

internalization of the project and the program for 2015. She explained the agenda of the day and

introduced the research topics, in order to give a brief overview of the day.

Digital Trends: Overview

Tommaso Cenci, Research Manager at BTO Research, talked about the digital trends and the

market dynamics evolution for Digital Companies. In particular, Mr. Cenci illustrated the

importance of focusing on the business change management, considering the processes and

services evolution, and the adoption of new technologies, new organizational culture and ICT

structure. Then BTO Collection, within academic articles selected by the research team was

shown. The BTO Collections articles describe the technological trends evolution, the complexity

reduction, and digital services approach and even explain how technological capabilities

development could have a positive impact on organizational performance.

IT Roles & Evolution: Keynote Speech

The whole speech of Prof. Tobias Kretschmer, Professor of Management at Ludwig-Maximilians-

Universitt Mnchen, underlined the main topics to consider for comprehending digital trends.

During the keynote speech, the Professor explained the new nature of the IT-as-a-Service and

gave tips and food for thought thanks to his academic experience in IT Management and

Strategy, and thanks to the inputs given by attendees during the meeting.

Initially, Prof. Tobias Kretschmer showed technologies, IT environment and market dynamics

evolution happened during last years, explaining the main business opportunities related to the

application of an effective technology management. He explained, in particular, how the

intelligent network has an impact on organizations, business opportunities, potential partnership

and interaction among different industries.

Later, Prof. Kretschmer talked about the importance of ambidexterity and of using market data

and information in order to obtain competitive advantage. Data can lead to a successful change

and they can define the future of Digitization, he said.

At a later stage, the meeting focused on the right environments importance for changing. Digital

technologies are driving market dynamics and companies business models, helping new agile

players to compete in the market. Different market dynamics cannot be faced just adopting new

technologies in managing old activities, but the real challenge is to balance traditional business

practices with the new opportunities offered by technology.


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Prof. Kretschmer proposed a focus on the cost reduction issue, thanks to the possible use of

digital technologies. Although Digitization fastness and convenience are different in each

industry, competitive advantage cannot be given by hardware, but through a differentiation

oriented service.

The theory of Prof. Kretschmer was confirmed thanks to many case studies used to explain how

today, in an organization, not only a Vertical Fit, but also an Horizontal Fit can lead to a

competitive advantage. In these terms, the coherence between business model, organizational

structure and IT is so much important and it could be reached even with information sharing in

business units and lines.

A particular attention was given to the difference between Exploration and Exploitation,

considering implications of both the approaches, like the necessity of more or less decision-

control.

In the closing, Prof. Kretschmer highlighted the role of Digitization as the key to allow a major

knowledge about customers, enabling the creation of innovative services based on data, granting

more and more customization and added value thanks to the IT lever.

Discussion Details

The participation allowed a debate about managerial items, considering different points of view and thanks to the presence of many industries exponents.

Maurizio Irlando, Digital Channels Transformation & Customer Experience Manager and

Head of Software Architectures at Telecom Italia Information Technology Mr. Irlando

said that among the investments priorities to be considered by Telecom Italia in this

period, there are such important activities in Customer Big Data, Customer Experience

and IT in general. He confirmed also that this kind of innovations require an

organizational and knowledge change. Mr. Irlando underlined the importance of Big Data

in the Operation Management making easier trouble shooting processes. In conclusion,

he announced that the company is introducing the use of cloud technology in all

corporate departments (Marketing and Finance, above all) and this change may have

impacts in terms of organizational procedures and processes.

Stefano Nocentini, Services Integration at Poste Italiane Mr. Nocentini focused on the

difference between business and internal digital trends. He pointed out four industries

more and more affected from the digitalization: insurance banks, commercial banks,

transports and public administrations. After that, he spoke about digital trends in Poste

Italiane. First of all, the company is investing in the usage of cloud technology in order to

optimize the existing IT processes. Additionally, Poste Italiane is providing his post-men

with electronic devices to improve delivery efficiency. In conclusion, the company is

going to simplify the processes to guarantee a better service experience for the

customers, making the use of distribution channels even less complex.


6

Giovanni Pepicelli, Global ICT and Innovation Program Manager at Enel As Innovation

Manager, Mr. Pepicelli confirmed the importance of innovation in IT and technology in

business. He invited other participants not to consider technology as the most important

thing, because it should be seen just as a basis point: the real important thing is the

transformation of an idea that is obtained by the technology to the best solution. In the

past years, Enel made investments in social cloud, analytics and mobile but today they

are focusing on emerging trends such as Home Services and Smart Cities. He concluded

his intervention saying that the company is going to invest in Virtual Reality with a low

cost technology.

Andrea Lalli, HR Systems Italy Manager at Gtech Mr. Lalli said that the item of IT Roles

and Evolution is important for Gtech, as the company is facing a structural change. In

merging all IT environments as a unique corporate, data center consolidation and

software development optimization capabilities will play a broader role. A very

interesting point, in his opinion, is how the remote work will change. Keeping in contact

with the US market, for instance, he noticed that software development opportunities

are different and fragmented and it is not easy to integrate external contributes with

internal ones.

Sandro Tucci, Chief Operating Officer at Eurovita Assicurazioni Mr. Tucci highlighted

that digital trends impacting life insurance market in two ways. The first aspect that has

to be considered is the change of consumer habits; customers are supposed to interact

with the company in a digital manner and these needs are often opposed to regulatory

requirements. Another aspect involves the B2B market. In managing relations with other

banks, Eurovita Assicurazioni is working on electronics communication and electronic

signature of contracts. Finally, the need of digital operations in this industry seems to be

ambidextrous and crucial across channels.

Nicola Reina, BRM Innovation at Enel As conclusive speech, Mr. Reina highlighted the

concept of exploit and explore the innovation, in order to find the right solution for the

customers needs.

Final Remarks and Key Findings

The presentation of Prof. Kretschmer and the following discussion with the participants, allows

us to understand some take-home points from the meeting.

Primarily, the event underlined the importance of learning by failing and the relevance of doing

pilot projects in order to manage the failing and to enable the business to control the change.

Moreover, the meeting underlined the fact that there is a new knowledge about the customers

from which a lot of data driven opportunities could be caught.

In order to do that, creating a fit between organizational structure and IT is crucial.


7

SECOND SESSION

MILAN

Date 27/04/2015 Start 14.00 End 17.00

Place Spazio Visconti by BTO Milan

Hosts

Tobias Kretschmer (Ludwig-Maximilians-Universitt)

Vincenzo Morabito (BTO)

Florenzo Marra (BTO) Giovanni Roberto (BTO)

Andrada Comanac (BTO) Tommaso Cenci (BTO)

Alessandro De Pace (BTO) Francesco Magro (BTO)

Massimo Bellini (BTO) Luca Parravicini (BTO)

Martino Scanziani (BTO) Giulia Galimberti (BTO)

Fabrizio Manzo (BTO) Fabrizio Conte (BTO)

Arianna Zago (BTO) Miguel Miranda (BTO)

Adrien Chatillon (BTO) Valeria Lorenzi (BTO)

Francesca Donelli (BTO) Francesca Oberti (BTO)

Roberta Rossi (BTO) Marianna Corsello (BTO)


8

Guests

Maurizio Albari (AlmaViva) Marco Tempra (Banca Popolare di Sondrio)

Simone Macelloni (Cardif Assicurazioni) Simone Lovati (Cerved Group)

Marco Ternelli (Credem Credito Emiliano) Paolo Calvi (Credem Credito Emiliano)

Luciano Bartoli (Credemtel) Enrico Baldisserri (Credemtel)

Cristina Porzio (Deutsche Bank) Christian Altomare (Deutsche Bank)

Davide Carteri (Deutsche Bank) Gianluca Giovannetti (Gruppo Amadori)

Francesco Frau (H3G) Fabrizio Brasca (H3G)

Susanna Nardi (Intesa SanPaolo) Marco Valioni (ICBPI)

Maurizio Romanese (Labelux) Ruggero Platolino (Luxottica Group)

Luciano Guglielmi (Mondadori)

Gianluigi Farinetti (Oerlikon Graziano)

Paola Benatti (Pernod Ricard Italia)

Alberto Vaghi (Pernod Ricard Italia)

Domenico Solano (Philips Italia)

Pierluca Riminucci (Prada)

Ugo Salvi (Saipem)

Giovanni Ferretti (Seat PG)

Alberta Gammicchia (Seat PG)

Eric Boson (Sial)

Paolo Spelta (UBI Banca)

Graziano Tosi (UniCredit)

Livio Barbu Bogdan (UniCredit)

Marco Zaccanti (Unipol SAI Assicurazioni)

Mauro Frassetto (Veneto Banca)

Marcello Viti (Vodafone)

Reinhold Grassl (Volkswagen Group Italia)


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Introduction and Meeting Opening

The meeting has been opened with the intervention of Prof. Vincenzo Morabito, Associate

Professor at Luigi Bocconi University in Milan, and Scientific Coordinator of BTO Research.

Professor Morabito introduced the day with a brief talk, explaining with gratitude how today BTO

Research is among the most relevant realities that provide and organize executive meetings for

IT managers in the European context. He reminded the participant that the aim of this type of

events is to give participants the best content and knowledge from the Academia, and to receive

a feedback from the best professionals on the market, in order to give important starting points

for the execution of the innovation.

Digital Trends: Overview

Andrada Comanac, Research Manager at BTO Research, introduces the main topics of the

Community events, with particular focus on the Digital Executive Communitys evolution, the

internalization of the project and the agenda for 2015. She explained the program of the day and

introduced the research topics.

Tommaso Cenci, Research Consultant at BTO Research, explained the digital trends and the

market dynamics evolution for Digital Companies. In particular, Dr. Cenci illustrated the

importance of focusing on the business change management, considering the processes and

services evolution, and the adoption of new technologies, new organizational culture and ICT

structure. After that, he showed the academic articles selected by the research team and

illustrated within the BTO Collection. The BTO Collections articles describe the technological

trends evolution, the complexity reduction, and the digital services approach. The articles

explain how technological capabilities development has a positive impact on organizational

performance.

IT Roles & Evolution: Keynote Speech

The speech of Prof. Tobias Kretschmer underlined the main topics to consider for comprehending digital trends. He explained the new nature of the IT-as-a-Service and gave food for thought thanks to his academic experience in IT and Strategy, and thanks to the inputs given by attendees during the meeting.

1. Digital Trends Outlook 2016: IT Roles & Evolution

Prof. Tobias Kretschmer showed last technologies, IT environment and market dynamics evolution during last years, explaining the main business opportunities possible through an effective management of technology. In particular, he explained how the intelligent network has an impact on organizations, business opportunities, potential partnership, and interaction among different industries.


10

The Professor introduced the importance of ambidexterity and of using market data and information in order to obtain competitive advantage. Data can lead to a successful change and they can define the future of Digitization he said.

The meeting focused on the environments right importance for changing; digital technologies are driving market dynamics and companies business models, helping new agile players to compete on the market. Different market dynamics cannot be faced just adopting new technologies in managing old activities, but the challenge is to balance traditional business practices with new opportunities offered by technology.

In a second time, Prof. Kretschmer suggested a possibility of cost reduction by using digital technologies. Although Digitization fastness and convenience are different in each industry, competitive advantage cannot be given by hardware, but by a type of service oriented to differentiation.

To strengthen his position, Prof. Kretschmer presented a series of case studies, in order to explain how today the organizations need not only a Vertical Fit, but also a Horizontal Fit to lead to a competitive advantage.

In these terms, the coherence between business model, organizational structure and IT is fundamental and it could be reached thanks to information sharing in business units and lines.

A particular focus was given to the difference between Exploration and Exploitation, considering implications of both the approaches, like the necessity of more or less decision-control.

At the end of the speech, Prof. Kretschmer highlighted the role of Digitization as the key factor that allows a major knowledge about customers, enabling the creation of innovative services based on data, granting more and more customization and added value thanks to the IT.

Discussion Details

Time was given to the discussion of the main speech, giving participant from different industries the opportunity to express their point of view and debate of managerial items.

Pierluca Riminucci, Group Chief Technology Officer at Prada Mr. Riminucci said that

technology is offering many opportunities in retail spaces, especially if it allow companies

to build a relationship with customers. In his opinion, technology is a special key lever

that allows the business to engage customers in the right way and to better understand

what is happening in the market.

Maurizio Romanese, Chief Information Officer at Labelux Mr Romanese answered to

the question In which areas your companies are investing? saying that Labelux has

focused at first in the integration and cooperation. He also said that the company is

investing to enhance online Customer Experience too.


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Luciano Guglielmi, Chief Information Officer at Mondadori Group After a brief

presentation of his company, Mr. Guglielmi said that they are investing in different areas:

from innovation in retail market to the opportunity to publish and introduce E-books on

the market. According to Mr. Guglielmis view, the best way in which an IT Executive can

succeed is, first of all, using the technology lever to innovate and to support businesss

goals. He must not to be afraid to innovate and change. Secondly, the role of an IT

Executive is to help the business to better understand how to use a technology, just

because usually businesses do not know which kind of technology could help them.

Lastly, the IT Executive should be able to see over the wall and to understand as soon

as possible the next steps. Mr. Guglielmi concluded, saying that managers should change

their skills to better meet the innovation in technology.

Reinhold Grassl, Chief Information Officer at Volkswagen Group Italia Mr. Grassl talked

about Digitization, with particular attention to retail. For instance, today Volkswagen is

investing the 25% of the Communication Budget in Digital Communication instead of in

press and newspapers.

Domenico Solano, Mediterranean Cluster IT Director at Philips Mr. Solano share with

the participants that Philips has decided to characterize the company on the Healthcare.

Managing the Big Data means having the key to transform the original company in a

software one, and even if until today the Data are just the 10% of the success factor in

the business, the situation is going to change, and the percentage will certainly grow.

Graziano Tosi, Head of ICT Application Engineering, UniCredit UBIS Mr. Tosi highlighted

the importance of the difference between a delivery model and an organizational

impact, saying that is very important to leverage on the experience of the business: the

service sold must be a mix of changing models, and the needs must always be

personalized.

Cristina Porzio, Head of IT Business Solutions, Deutsche Bank Cristina Porzio said that

the bank is investing on two front: on one side on the internal Big Data, and on the other

side on the Digital front. Regarding this last area, the business would create a direct

connection with the customers. In her opinion, the next step should be how to use new

technologies in order to speed the business on more creative and valuable ways, even if

banks are not particularly confident with this topic.

Eric Boson, IT Portfolio Manager, Sigma Aldrich Mr. Boson specified that the 50% of

their business goes to e-commerce and a specific digital marketing function was founded

to manage this topic. For this reason, Sial uses to invest both on ERP both on Digital

Marketing.

Giovanni Ferretti, Chief Information and Operation Officer, Seat PG Mr. Ferretti

explained that the company has invested on Big Data and on the development of a

network between the several offices Seat PG has in the Italian territory. He concluded his

speech submit to the participant an interesting question: What will be the future after

the digital development?


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Livio Barbu Bogdan, Business Assistant to CEO, UniCredit UBIS Mr. Bogdan said that

UniCredit has invested particularly on regulatory requests because the business has

pressures from regulators. He said that today some banks are looking at digital but other

banks do not know the way in which approach this topic, as UniCredit. He contributed

also giving some statistics about Banks customers, saying that the 85% of customers

prefers the digital channels instead of the traditional channels.

Gianluca Giovannetti, IT, Organization and Strategy Realization Director at Gruppo

Amadori According with the experience of Amadori, mr. Giovannetti said that the most

important thing is to analyze customers behavior. Moreover, he decided to invest on B-

Modal approach and on the building of an internal Digital team.

Final Remarks and Key Findings

In this second Communitys session, Prof Kretschmer, thanks to the research and the discussion among participants, confirmed the take-home points presented during the first meeting in Rome.

Primarily, the event underlined the importance of learning by failing and the relevance of doing pilot projects in order to manage the failing and to enable the business to control the change. Moreover, the meeting underlined the fact that, thanks to Big Data and Digital Channels, there is a new and deeper knowledge about customers behaviors, from which important data driven opportunities could be caught. In order to do that, creating a fit between organizational structure and IT is crucial.


Executive Summary

Innovation Trends Presentation and Introduction to the Topic

Researchers Keynote 1

As confirmed by the research, the most important topic of 2016 are related to the analysis of Big

Data and the usage of Innovation as a key lever for business success

Digital Ecosystem

Building Digital Innovation

Capabilities

Managing Change

Mobility

Designing metrics for digital

innovation

Big Data Analytics

IT Consumerization

Digital Business Metrics

Multi-Sided Platform

Models

D

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t

a

M

i

n

i

n

g

Cloud Enabled Innovation

Social Collaboration

T

e

x

t

M

i

n

i

n

g

Crowdsourcing

Digital Brand Management

Digital Governance

Gamification

Internet of Everything

Augmented Reality

Mobile Payments

IT Security

User empowerment

Reputation Management

Social customer profiling

Digital Identities

3D printing

S

t

a

n

d

a

r

d

s

Application Programming Interface

Quantum Computing

Digital Payment and

transactions

Massive Digital Education

Systems

Digital Project

Management Office

Collaborative design

Mobile enterprise

Real-time analytics

Digital trust

Business Insight

Digital Asset Management

Social Listening

Cloud Computing

Digital Transformation


On average in Italian companies, the ratio between Business as Usual and Innovation expenditures

is 80/20, due to legacy and cost pressure

RUN THE BUSINESS

Business as Usual

CHANGE THE BUSINESSInnovation

~20%

~80%

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Every company is a Digital Company and every business could learn from the first movers, which

think to digitalization and innovation as their key lever for success


In order to survive to the outdoor evolution, companies need to balance the weight between

internal requirements and market dynamics


RUN THE BUSINESS

Business as Usual


RUN THE BUSINESS

Business as Usual


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If a company decides to move and develop the business, it should take into consideration three

aspects: the Evolution of Processes and Services, the New Technology Adoption and, the New

Mind-set coming from the ICT structure

Skills & Organization

Design

CHANGE THE BUSINESS

New Tech

Adoption

Digital Transformation


To rationalize todays topic we offer you the BTO Collection, an assortment of articles selected by

the research group

SELECTED CONTRIBUTION AIM OF THE CONTRIBUTION

2Expanding Business from Products to Digital Services:value dimensions of digital services enabled byembedded technology

Due to the re-programmability of digital technology,new digital services can be designed and added toexisting digitalized products. Embedded digitaltechnology sets a link between products and producers

The decision making process would benefit from aformal problem representation structure for theanalysis of IT development trends and from a reductionin the complexity of IT landscape

1 Making Sense of Technology Trends in the InformationTechnology Landscape: A Design Science Approach

Building strategic technology capability at all levelswith competent digital change leadership and strategicpositioning from the board has a positive impact onorganization performance. A competence is to leadEnterprise Business Technology Governance

3Enterprise Business Technology Governance: ThreeCompetencies to Build Board Digital LeadershipCapability

There are best practices for optimizing eWOM in socialand inter-organization operability, that can fosterimprovements and value like brand building, pricepremiums and increased loyalty

4Best practices in creating value with social media: insights from four Fortune 500 companies

It is crucial to explore and foster the understanding of B2B companies external social media use, perceived potential and barriers against the utilization

5Social media utilization in business-to-business relationships of technology industry firms


Keynote Speech

Digital Trends Outlook 2016: IT Roles & Evolution

Profile

Tobias Kretschmer currently directs the Institute for Strategy, Technology and Organization at the Munich School of Management at LMU

Munich. He also serves as Co-Director of the Organizations Research Group at LMU Munich. Professor Kretschmer has recently delivered

keynote speeches on ICT, employment and growth and ICT and innovation at international conferences and has published in leading

journals in Economics, Strategy, Information Systems and Organization Science. Prior to joining LMU, Professor Kretschmer taught at London

School of Economics and Political Science (LSE). He holds a Master of Science in Strategy from the University of St. Gallen and a PhD in

Economics from London Business School.

Tobias Kretschmer

University of Munich:

Professor of Management Institute for Strategy,

Technology and

Organization

Publications:

The Contribution of ICT to Productivity - Key Conclusions from Surveying the Empirical Literature (with M. Cardona and T. Strobel).

Information Economics and Policy. 3/25 (2013), 109-125.

The effects of rewarding user engagement The case of Facebook apps (with J. Claussen and P. Mayrhofer). Information Systems

Research. 1/24 (2013), 186-200.

Complementarities between Personal Computing and Organizational Structure The Role of Corporate Exploration and Exploitation

The What, the Who, and the How: Coordination Experience and Team Performance in the Electronic Game Industry. Academy of

Management Annual Meeting 2010

Research Areas of Interest

2016 Business Agenda

2016 IT Agenda

Key Digital Trends

IT as a Service Broker


Information Technology as a General Purpose Technology and an Agent for Change

General Purpose Technologies

The Wheel

Writing

Electricity

Information Technology

Internet

Biotechnology

3D Printing

?

The next digital innovation?

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Intelligent Networks: a potential GPT?

1 Aggregating data

2 Link the aggregated data

3 Intelligent processing of linked data

The IT -producing sector benefits from data-intensive applications

Productivity gains in other sectors through the use of these applications

Conditions:

Users need to recognize the added value

There must be rapid diffusion

Productivity benefits of smart grids arise only through aggregation, linkingand processing a large amount of different data

Cloud-based smart grids have the potential to become a general purpose technology because they allow far-reaching innovations.


Digital Trends: cloud computing, big data and intelligent networks

Fluid is developing an expert personalshopping app powered by IBMWatson: natural dialogue-drivenassistance to help arrive at the bestpossible purchase.

eGovernment in the EU

Electronic collaboration between Publicadministrations can make proceduresquicker, simpler and cheaper for all partiesconcerned, in particular when transactionsneed to be done cross-border and/or cross-sector.


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Intelligent Networks may stretch existing organizations

Todays business has to be managed, but future demands have to be embraced atthe same time.

Existing managers will rely on intuition and experience to manage stable businesses,while new segments rely on data-driven, quantitative decision-making to achievemassive growth rates.

Organizations have to be able to deal with both of these in the same organization;they have to be ambidextrous.

Through 2015, more than 85% of Fortune 500 organizations will fail to effectivelyexploit big data for competitive advantage

Why is this? How can IT (and the CIO especially) in a firm assist the differentbusinesses in achieving ambidexterity?


Digital Innovation drives change

Data drives Digitization

24IDC (2012): The Digital Universe in 2020


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The right environment for digital innovation is important

Digitization creates new agile competitors!

Retail News and Media

Photography & Printing

Agricultural Commodities

Advertising & Marketing

Education Banks Movie Rentals

e-choupal

Disruptive changes can be driven by general purpose technologies


Digital Innovation drives change

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What is digitization?

Two views:

Creating digital copies of analog capabilities. The degree to which an enterprisesproducts and service value and revenues are realized through technology.

Some leaders are redesigning their capabilities and operating models creatingqualitatively new business models, disruptive digital opportunities and superiorreturns.

But: Doing old things with new technology doesnt necessarily represent innovationand is not automatically better.

Balancing electronic capabilities with traditional business practices (hard-copydocuments and correspondence, face-to-face interactions) is a challenge in a digitizingworld.

Digitization changes established organizations and allows for new forms of organizations.

Data drives Digitization


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Digitization has peculiar characteristics

In daily life, more and more activities are supported digitally or carried outcompletely digitally

Investors see large growth potential in digital businesses for the future

Not all companies will withstand and survive the digitization

Other companies manage to adapt and create value from digital services orsoftware

Digitization opens up opportunities for new business models and companies

Companies are increasingly switching to digital processes as the extent ofdigitization is increasing


Digitization has peculiar characteristics

Digitization enables more efficient, decentralized production and innovationprocesses.

Personalization provides a higher accuracy of fit between the products andservices and the preferences of the consumers, which increases theirwillingness to pay.

But: Does digitizing reduce transaction costs and how?

If the capacity and capabilities are kept within the organization

If the capacity and capabilities are outsourced (e.g. Cloud Computingprovider)


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Digitization changes existing organizations

Digitization across industries can be highly different:

Booz & Co. (2013): Navigating the Digital Future


Digitization changes existing organizations

Hardware does not give you competitive advantage anymore, its the services you run that distinguish you.


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The case of 7 Eleven Japan

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The case of Seven-Eleven Japan

Grew to become the highest grossing retailer in Japan.

20-year track record of industry-leading financial returns.

Very savvy about using IT.

Matching local practices and preferences to IT investments, the store can continuallyintroduce and succeed with new product lines. The typical store adds 70% new items forsale each year, a higher rate than that of any other retailer in Japan.

Store managers regularly receive graphical data showing recent sales, weatherconditions and product range information.

The convenience-store giant blends its IT investments with a range of assertive ITpractices and capabilities.

The right Horizontal Fit (Organizational structure/HRM practices IT) gives a competitive advantage.


The case of Lufthansa

Sharing information vs. keeping data within the organization

Case of Lufthansa:

Cross subsidy due to sharing of data with partners & credit card offering

Huge volume of fares data available to Lufthansa`s leisure business partners

Possible future services: Sharing some information with Uber or Taxi services for pick-ups


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Cases of data driven organizations

we search for understanding in every piece of data, and knowledge in every number



Digitization can lead to innovation by offering data driven possibilities like trendspotting, cool-hunting and personalized offerings.

August 24, 2014


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Digitization can lead to new knowledge about customers or the organization and generate new data driven innovative services.


Data driven organizations extract value from their data

Due to far reaching personalization, the willingness to pay of a user is increased.


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Data driven organizations extract value from their data

Data driven organizations have to decide on how freely to share their data forvalue creation purposes.

Publishing open data can be supported through three general business models:

Freemium: you provide an added value data product or service, for which you charge.

Cross subsidy: you reach more customers, or provide enhanced services toexisting customers, through wider sharing and use of your data.

Network effects: by collaborating with other organizations, you reduceyour costs in maintaining data which you use in your work or extend thepossible audience for your products and services.


Innovation is driven by an organizations processing of information

39Galbraith, Organization Design: An information processing view, interfaces Vol. 4 No.3 May 1974

Uncertainty: Limits the ability of the organization to preplan or to make decisions about

activities in advance of their execution.

The greater the uncertainty of the task, the greater the amount of information that has to be

processed between decision makers during the execution of the task.

During the actual task execution more knowledge is acquired which leads to changes in

resource allocations, schedules, and priorities.

The greater the task uncertainty, the greater the amount of information that must be

processed among decision makers during task execution to achieve a given level of

performance.Task Certainty Task Uncertainty


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Organizational environment & strategy matters

Different organizational forms are variations in the strategies of organizations to:

Increase their ability to preplan

Increase their flexibility to adapt to their inability to preplan

Decrease the level of performance required for continued viability

Information processing needs do not always matchinformation processing capability.

Challenges arise due to growing data sources (Internet ofThings, Mobile sensors, etc.) and demand for extracting valuefor the organization.

The growing amount of information can lead to overload.

Organizational environment determines information processing and therefore innovative ability.


Organizational environment & strategy matters

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Organizational Learning theory: Different corporate learning types require differentorganization designs

Exploration demands decentralization which allows employee autonomy and thereforeconstant experimentation and adaptation.

Exploitation calls for centralization which minimizes output variation and maximizesefficiency and control.

Mahr, F. (2010): Aligning Information Technology, Organization and Strategy.

Control oriented

Decision rights allocated high in hierarchy

Coordination oriented

Decision rights allocated low in hierarchy


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IT can complement the organizational environment

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IT has to support and complement the organizational form.

Through its capability to facilitate horizontal and vertical information processing IT can enhance both greater decentralization and greater centralization.

Firm performance

Decentralized coordination

Centralized coordination Transfer of local information from subunits

Dissemination of instructions

Tacit local information will remain nontransferable

Endow lower-level employees in subunits with more

information

Coordination between subunits (corporate intranets..)

Control oriented IT

Coordination oriented IT



In young and growing markets, new information has to be gathered and processed constantly uncertainty is higher and the need to be flexible in unexpected situations is high

decentralized coordination

In mature and stable markets, there is a wealth of information about similar transactions uncertainty is lower and information can be used to predict behavior and plan in advance

centralized coordination

The job of IT also changes with the type of tasks and the maturity of the organization


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Horizontal fit (organizational structure IT technology)

Relationship between organizational learning, organizational structure and theright IT on firm performance

Avoid information overload (central decision makers: speed & quality)

Vertical fit (environment organization design)

Matching the information processing requirements of the environment, strategy andculture with the information processing capacities of organization design

Organizational structureHRM practices

Information technologyHorizontal fit

Organizational design

Environment, strategy, culture

Vertical fit


Effective information flow supports innovative ability

Trend towards increased intensity of operational information & intensity of digitization.

Middle Management connects technology investments with tangible outcomes at the customerand operations level. The edge rules in these considerations because value is created at theedge even though it may be controlled by the center.

With the emergence of Analytics, Big Data and Internet of Things a trend evolves:Middle management is replaced with performance transparency, social coordination,purpose driven cultures, meritocracy and democratized decision-making.

Innovative companies should think about how these new options could help them allocatetheir resources more efficiently.

This can be accomplished by changing structures and processes to share information and insights across business units and functions to make sure the

business model, organizational structure and IT fit together.


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IT as part of organization

Roles of organization:

Increase firm ability to preplan.

Business analytics, Big Data, centralization of information

Increase their flexibility to adapt to their inability to preplan.

Distributed information, decentralization of information

Decrease the level of performance required for continued viability.

Variable costs, ITaaS


IT as a Service

Three levels:

Infrastructure as a Service the metered resource is storage space

Platform as a Service infrastructure and basic resources like operating system

etc.

Software as a Service on-demand software

Goal is to make previously fixed costs variable and based on actual usage

Efficient for rarely used, generic services


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IT as a Service

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Infrastructure as a Service Kroll Factual Data, a provider of businessinformation to mortgage lenders, migrated to Oracle Databases hosted onMicrosoft Platform

Advantages:

Enables growing businesses flexibly through scalability

Secures constant service

Increased data security


IT as a Service

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Platform as a Service Apprenda develops, delivers and manages JPMorgan Chases portfolio of internal applications in a private cloud

Advantages:

Single-click rapid app deployment (5mins)

Pay as you go pricing

Standardization of software architecture


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IT as a Service

Software as a Service Salesforce.com provides a CRM system to BritishGas CHI (Central Heating Installation) Department

Advantages:

Standardize lead lists by sales reps and enable electronic storage

Customer support can draw on institutional knowledge and becomestrackable and accountable

Ability to gather and analyze customer data systematically withoutcapital outlay of a standalone system


What does this mean for corporate IT and the CIO?

IT becomes less important: IT in itself is not a source of competitive advantage, cost savings etc. anymore Just because youre good at managing IT doesnt make you a successful firm!

IT becomes more important: IT is an integral part of a well-functioning organization and cannot be viewed in isolation If you cannot manage your IT well, you may not be able to compete successfully or even survive!!

IT will have to be part of a large-scale analysis of the information needs of the firm and willhave to be designed in combination with the other organizational elements Treating IT as a cost center is outdated; just like corporate strategy, marketing etc. form anintricate part of what the organization is about, so does IT!


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Selected Contributions

Making Sense of Technology Trends in the Information Technology Landscape


The whole number of available technologies and the complex set of relationships among them

make decisions on IT investment even more challenging for IT Executives

Facts

Both past and current IT investments and partnershipplay a significant role in future investment

Senior managers must predict IT landscape to positiontheir firms investments in respect with emerging marketopportunities, regardless the difficulty to forecastadvances and trends in IT

Strategic IT investment decisions are often outsourced topartners and suppliers, as consulting firms, potentiallyleading to biased and generic advice

Insights from IT experts, from both business andacademia, reinforce the importance of providing newtechniques to aid practitioners in evaluating IT trends

Context

Consequence

FOCUS POINT: The decision making process would benefit from a formal problem representationstructure for the analysis of IT development trends and from a reduction in the complexity of ITlandscape

New techniques to helppractitioners evaluating trends inthe IT field are needed;

Combining principles and sense-making strategies of process theorya new tool was developed tomodel, visualize, and analyzetrends in the IT landscape.


The visual mapping strategy shows large quantities of data in a relatively little space and may be

used to explain how complex outcome evolves over time

* (i) technological change will continue to occur following the same patterns; (ii) the role of external forces (e.g. market dynamics),the demand environment, and context-specific factors (as society and culture) are excluded from the model

Visual mapping strategy

or graph-based approach, refers to thegraphical representation of process data andconsists of:

Codifying technological innovationsbased on the role they play within anecosystem (i.e. Component, Product orInfrastructure)

Determining the dominance of a role ineach specific time period

Representing patterns focusing on thetransitions from one set of dominant rolesto another

Two complementary strategies: Visual mapping

Under few simplifying assumptions*, we can useeducated speculation to forecast future patternsof technological change


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Combined with the visual mapping strategy, a quantitative approach provides the ideal lens to

add rigor to the identification of evolutionary patterns

* (i) technological change will continue to occur following the same patterns; (ii) the role of external forces (e.g. market dynamics),the demand environment, and context-specific factors (as society and culture) are excluded from the model

Quantification strategy

used to empirically identify patterns oftechnology evolution works as follows:

Codes raw technology introduction datainto roles

Derives estimated frequency functionsfor each role based on the proportion ofeach role

Using proportional frequency asthresholds, determines the dominanttechnology role in each time period

A state diagram represents the transitionsacross technology evolution patterns

Two complementary strategies: Quantification

Under few simplifying assumptions*, we can useeducated speculation to forecast future patternsof technological change

1

6

11

16

21

0 2 4 6 8 10 12F

req

uen

cy

Periods of time

Infrastructure

Components

Products


Evaluating the utility of the methodology in a business setting confirms that it provides the formal

problem representation structure able to complement existing approaches

Assessment of the model

The use of technology roles and paths of influence provides structure toreduce complexity. Moreover, it forces the analyst to considerinterdependencies among technologies

This methodology provides means for generating representations of the ITlandscape that is relevant to the firms interests and business context,bringing the ability to work interdisciplinary within an organization

Opposite to current practices, the proposed method use formalquantitative means to produce technology forecasts within the ITlandscape

The proposed method to analyze IT landscape will complement existingtechniques by providing structured input and formal analysis of the pastand current state of the IT landscape

The information produced by the model would be useful to decisionmakers in both IT-consuming and IT-producing firms, as well to thosethird parties (e.g. vendors and consultants) which IT-consuming firmsconsult

Dimensions Description

Complexity reduction

Structure for IT investmentdecision making

Formal method to quantifytechnological change

Locus of value for the artifacts

Complementary valueof the proposed artifacts


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Expanding Business from Products to Digital Services


Due to the re-programmability of digital technology, new digital services can be designed and

added to existing digitalized products. Once products are sold, embedded digital technology sets

a link between products and producers

Digital CapabilitiesThe digital capability in products creates opportunities for firms to makenew value propositions to customers by designing digital service offerings

Technological Feasibility

Information Sharing

Customer Needs

Tangible

Intangible

A company needs to articulate value propositions based on the offeringsenabled by the technology; however, services need to be developedtogether with customers so that the latter can perceive value

To help the customers perceive the value of services, information needsto be shared between firms and customers

Interactions with customers should not be neglected in order tounderstand customers needs

Customers perception of value is connected to the value propositionsthat companies make with a new product or service offering

One of the most delicate issue is the understanding of desired intangiblevalue that can be achieved; customer perceived value comprises theperception of intangible outcomes that they desire from a service offering

EmbeddedIT

Informationmindset

Values

A framework to investigate value dimensions


Firms may identify new value dimensions of digital services, namely value in connectivity and

value in architecture, which are enabled by embedded digital technology in tangible products

Value dimensions to business

Customers perceive the value of digital services while using digitalizedproducts and interact with a firm to express the desired outcomes fromdigital services

First, knowledge is shared between the firm and target customers indesigning digital services, then firms share digital contents obtained fromdigitalized services to their customers. Knowledge sharing can becontinued to innovate and redesign the services once service provisionbegins

Manufacturing firms have the possibility to conduct business with digitalservices in a way that evaluates the potential of the digital services bycreating service packages and set prices for the packages

Digitalized products work as medium for data generation andtransmission. This value does not rely on the active role of customers, butit does depend on a firms continuous and active dealings with the datacollected from products

Value in use

Value in co-creation

Value in exchange

Value in connectivity

Value in architectureDue to the combination of modular product components with digitaltechnological layers, the firms now can offer not only tangible products,but also continuously design and offer digital services

2

3

1

4

5


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Enterprise Business Technology Governance


There is growing evidence that digitally mature boards providing competent digital leadership

outperform their peers; this suggests that this new boards role increasingly contributes to growing

business value in the digital economy

FOCUS POINT: Building strategic technology capability at all levels with competent digitalchange leadership and strategic positioning from the board has a positive impact on organizationperformance. In fact, irrespective of the size or type of organization, one of the board of directorscompetences is to lead Enterprise Business Technology Governance

Lack of technology savvy board members

Prospects

Skills set

The role of strategic technology capability

Even though executives and directors recognize the importance of technology totheir business, less than 20% identify as having Enterprise BusinessTechnology Governance (EBTG) competent directors (i.e. able to lead andoversee enterprise technologies)

A boards digital leadership capability, particularly in the field of EBTG, enablesthe enterprise to effectively oversee a range of technology-related risks andwhether IT-related topics make it onto the board agenda

It is vital to further clarify the boards role in EBTG as well as the knowledge,skills, and experience that support board level digital leadership


A multi-method approach identified three EBTG competencies able to cover the pervasiveness of

technology in every aspect of business, including its design, delivery and measurement

Three competencies

1 step

2 step

3step

Direct and govern technology-enabled strategy and planningto maximize the advantages oftechnology and enhanceperformance at all levels of theorganization

This competency covers the skills, knowledge and experience togovern technology for strategic advantage and firm performance.In particular, it develops understanding of external and internaldigital technology environments and the impact of new andemerging technologies

Lead and govern businesstechnology investment andrisk by making qualitytechnology related judgmentsand decisions

Direct and govern technology-enabled innovation and valuecreation, by overseeingtechnology use to achievereturns and demonstrate value

This competency addresses using technology to achieve returnsand demonstrate values. It implies asking the right questions,critically evaluating responses, and being competent tochallenge them

This competency consists of making technology decisions andgoverning risk. It ensures that board attitudes and beliefsenhance digital opportunities, and makes sure that the capabilityof its workforce remains viable in the future

2

3

1


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Social Media utilization in Business-to-Business relationship of Technology industry firms


Despite companies that make use of business-to-business social media and benefit greatly from

these investments, external social media adoption remains low

Social media has been demonstrated to enhancecommunication, interaction and learning, bringingsignificant benefits to organization

Regardless the current low understanding of socialmedia in B2B companies, the adoption of suchapplications may be very fast in certain business area

The B2B context includes several information securityrisks and IPR challenges limiting the use of socialmedia

B2B challenges in using social media

FOCUS POINT: It is crucial to explore and foster the understanding of B2B companies externalsocial media use, perceived potential and barriers against the utilization

An empirical survey of 125B2B companies in theFinnish technology industryshows that in all theseindustry sectors, socialmedia adoption is low,with external utilization(i.e. with customers andpartners) lagging behindinternal one


Research shows that there is a significant gap between the perceived potential of social media

and social media use with customers and partners

Research Results

Reasons for not utilizingsocial media

The reluctance against adopting social media is mainly due to other projectsbeing more important, and incapability to measure or assess the benefitsfor business. In addition, the most important barriers are the generic lack ofgood case studies and know-how.The adoption of social media with external utilization purpose does notdiffer neither with respect to sales turnover nor with respect to firm size

Adoption process

Empirical findings suggest that companies first test and experiment withnovel technologies and practices internally, and expand the use tocustomers or external parties only in next stages; this seems to hold also forsocial media

Perceivedsocial media potential

Analyzing social media potential in the customer interface, there is strongpositive correlation between social media use and perceived potential inmarketing. Among companies using social media externally at leastmoderately, high potential is perceived in employer branding andrecruitment, general communication with partners and customers andsales support


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Best practices in creating Value with Social Media


Successful firms are creating value through a solid social media strategy in the information system

field. The identification of guiding objectives help to set the direction of social media practices in

firms

FOCUS POINT: There is consensus on the most important design functions and features needed for optimizingeWOM in social and inter-organization operability; they range from analytics (e.g. advertising analytics, contentanalytics and social analytics) to knowledge sharing, easy navigation and other fundamental capabilities (e.g. co-creation, risk management, multi-user capabilities).These attributes can foster improvements and value like brand building, price premiums, seller differentiation,increased loyalty, customer satisfaction, improved reputation.

Understanding the role of eWOM

The understanding andmanagement of eWOM,minimizing negative statementsand maintaining positive one; forthese reasons, it is crucial to thesuccess of an organization

Through social media it ispossible to track every positiveor negative statement made bypotential, actual, formercustomers, competitors,activists and employee, whichis made available via theInternet, the so-called onlineword-of-mouth (eWOM)

When monitoring the eWOMenvironment, social mediaprovide the capacity to addtransparency and newunderstanding to everyrelationship in the value chainand partnerships. In fact, socialmedia magnify corporatecapability to identify futureventures

Strengthening businessDefining eWOM Stepping outside your network


As brand management and CRM has evolved, continuously engaging with clients and monitoring

their need to make changes in products or services is necessary for market awareness and overall

success

Findings

A socially ready enterprise is able to attainnew ideas and perspectives from socialmedia; since the process of taking customerinsights should be consistent, centralizedplanning is needed.

Analogously, social media is a properchannel to do problem-solving based onthe needs of clients and improve customersatisfaction

Customer engagement

Since targeted engagement andsocial media participation aremeasurable, personalized servicesare on the rise

Additionally, success can beachieved by engaging customersthroughout their life-cycle, whichincludes during buildingawareness, product evaluation,purchase, confirmation of valuedelivery, and after sales phases

BTO Research Via delle Asole, 420123 Milano

Italy

MILAN ROME LONDON MUNICH LUXEMBOURG MADRID PARIS

2015-04 Digital Executive Community Proceedings

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