Digitization

There are three aspects of digitization [1]:

  1. The full digitization of the company’s operations.  This includes both vertically, across every function in the entire hierarchy, and horizontally, seamlessly linking partners and stakeholders in the value chain.
  2. The redesign of products and services so they track their own activity and results.
  3. Closer interaction with customers via the new digitized processes, products, and services and the insight that they provide.

The business goals for digitization transformation are to increase revenue, improve efficiency, and mitigate risks. To support these business goals IT needs to:

  • innovate and transform
  • create synergy and economies of scale
  • react faster and reduce costs
  • enable and maximize reuse
  • reduce complexity
  • minimize redundancy

Digitization will be realized through the implementation of the business as a digital platform. With a digital platform, businesses can connect, build complementary products and services, and co-create value.

The success of a platform strategy is determined by three factors [2]:

  • Connection: how easily others can plug into the platform to share and transact
  • Gravity: how well the platform attracts participants, both producers and consumers
  • Flow: how well the platform fosters the exchange and co-creation of value

References:

  1. Geissbauer, Reinhard, Jesper Vedso, and Stefan Schrauf. A Strategist’s Guide to Industry 4.0. strategy+business, Summer 2016, Issue 83. 5/9/2016.
  2. Bonchek, Mark and Sangeet Paul Choudary. Three Elements of a Successful Platform Strategy. Harvard Business Review, 1/31/2013.

Leave a Reply

Your email address will not be published. Required fields are marked *