the digital transformation - challenges and opportunities for is researchers - 12th contecsi

Technische Universität München

© Prof. Dr. H. Krcmar

The Digital Transformation -Challenges and Opportunities

for IS researchers

Prof. Dr. Helmut KrcmarAIS President 2014-2015

Chair for Information Systems – www.winfobase.deVice Dean Informatics – www.in.tum.de

Academic Director EMBA Business and IT – tum.eec.deTU München – www.tum.edu

Institute for Public Information Management (IPIMA) – www.ipima.defortiss gGmbH, München - www.fortiss.org

Co-Founder Initiative Digital Transformation – idt.in.tum.de


2 © Prof. Dr. H. Krcmar

Congratulations to

From



founded in 1994 4,128 members in 100+ countries and 36 chapters (Summer 2014)

• 1751 in Region 1 Americas• 1218 in Region 2 Europe• 1169 in Region 3 Pacific Asia

Countries with more than 100 members:• USA• China• Germany• Australia• Canada• South Korea

• www.aisnet.org

AIS serves society through

the advancement of knowledge and

the promotion of excellence in the practice and study of information systems.



AIS conducts a wide range of activities• Research

– Conferences: ICIS AMCIS PACIS MWAIS SAIS– Journals: JAIS CAIS JITTA THCI TRR and more in the eLibrary– Special Interest Groups: 36 different topics – Research Conduct Committee: Research code of conduct

• Professional development– Early career: PhD Consortium, Jr. Faculty Consortium– Mid Career Workshop: “Tenure? Now what?”– Late Career: AMCIS 2014 – Panel on late career and retirement issues– Career spanning: Webinars and Colleges

• Advocacy– AIS as the Business “STEM” Discipline– AIS and Accreditation– Awareness in Industry: Global Sponsors, “AIS Bright ICT Initiative”



What to expect from the AIS now that its 21?

• Continous Improvement from members for members

• Teaching and Undergraduate engagement– Education committee aims for a teaching materials repository– 74+ student chapters in all AIS regions with 200+ conference participants

• “Youth” movement: about 1/4 of AIS members are doctoral students– Support Activities at conferences

• Colleges to support issues that cut across– IS Women’s Network, Senior Scholars, Academic Leadership

• Member Recognition by Awards– Doctoral Student Service, Early Career, Continuing Contribution to AIS

As ,,ambassador of the possible” please get involved


6 © Prof. Dr. H. Krcmar6


© Prof. Dr. H. Krcmar7

Industry 4.0 Smart Service Welt



What now?

Picture: jokatoons, Ostrich No Solution, fotolia.com

How will you act as a leader if „industry 4.0“ meets „smart service world“?

Either... remain in the board room or ivory tower?

Or get to the technical details by yourself again?

Or demand that government policies guards your business against digital

competition?

Or let someone collect enough data, you never know if Big Data might make

it some day ?


9

Digital Transformation



Digital Transformation Explanatory Model Leadership Behavior



Trends – my selection

• Demographic change

• Urbanisation

• Serviceation

• Predictability

IT-Trends selection aka SMAC Social Media Mobility & Consumerization Analytics / Big Data Cloud Computing Cyber-Physical Service Systems (CPSS) Platform-based ecosystems

INTER-ACTIONProduction Customer’s

value creation

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005



Inevitable

Digital transformation Explanatory model Leadership behavior



The innovator´s dilemma

• New techniques or business models get (at the beginning) poorer results (measured by traditional criteria), but are usually less expensive (at least later) and easier.

• Ignoring a disruptive techniques for a long time can lead to an insurmountable resistance to change within the company.

• Openness to disruptive technologies needs to be the goal of every company's culture of innovation.



Disruptive innovations often add up over time

Efficient and personalized communication incl. personal

meetings



Disruption, not immediate destruction enables innovation and efficiency

time

perfo

rman

ce 100%

t1 t2

30%

70%

New 100%

more&

different

„Don´t confuse slow and declining with not needed,

unnecessary, not being reinvented“.

Ginni Rometty,14-05-2014 FT



Internet-milieus in selected population groups Germany

Source: DIVSI 2013b



Inevitable

Irreversible



18 © Prof. Dr. H. KrcmarPhoto: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013

Papal election 2005

Photo: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013



Papal election 2013




Papal election 2005




Inevitable

Irreversible

Tremendously fast




2005: On whom would you lay your bets on?

Founded in 2003(Tom Anderson)

Founded in 2004(Zuckerberg et al.)

Founded in 2005(Dariani/Behmann)



2005: On whom would you lay bets on?

Source: statista.de



2005: On whom would you lay your bets on?2014: It‘s obvious2023: ?

Source: statista.de



Inevitable

Irreversible

Tremendously fast

Uncertain in the execution




Inevitable

Irreversible

Tremendously fast


Digital transformation

Service Dominant Logic

Explanatory model Leadership behavior



Production and value creation

INTER-ACTIONProduction Customer’s

value creation

”Value Facilitation”(Grönroos, 2008)

Production perspective

Added value perspective

“Joint production process: the Customerparticipates as co-producer of resources

and processes with the provider”(Eiglier & Langeard, 1975; Grönroos, 1978)

“Joint value creation process: the Provider participates as co-creator of value (value-

in-use) with the customer”(Grönroos, 2008; Grönroos & Ravald, 2011)

Grönroos (2011)



Disruption by Xaas: Release of existing industrial silos by service ecosystems

• Smart Service World: From business-centric processes through to event-centered process assistance

• Industry 4.0: From office-centered processes (coordinated centrally) through to workpiece-centered production (self-organized)

Sour

ce: S

mar

t Ser

vice

Wel

t, 20

14, S

. 18



Inevitable

Irreversible

Tremendously fast



Service dominant logic

Ambidexterity


30

Innovation process: Exploitation and exploration

Exploitation

Utilization of existing potential in order to ensure efficient operations.

Refinement, optimization, selection, implementation and execution

Exploration

Generating alternative potentials to be able to react more flexibly to changing environmental requirements

Search, variation, risk recording, experimentation, play, flexibility, discovery and research

March 1991

“It was the best of times, it was the worst of times, ...” Dickens, C. 1859



Inevitable

Irreversible

Tremendously fast




Ambidexterity

Open innovation on platforms




Open innovation from the perspective of platform

Open innovation(Gassmann/Enkel, 2004)

• Inside-out• Outside-in• Coupled-Process

Fit to Service Ecosystems(Gassmann 2006)

• Reuse

• Knowledge exploitation• New business models



„My individual service is my commodity”„My individual service will be assembled through your commodity“

Consumer

Linkage layer

Producer

Effective use of platform for companies(Efficiency, innovation, strategy, survival, ...)

Efficient advice on the use of and development on the platform(Supplier, composition, safety, ...)

Long-term development and maintenance of reliable, large application environments and platforms(Cost-efficient production and delivery, ...)

34

Success of platforms: Governance as part of the operating model of the technical platform

Legal factors Technicalfactors

socio-economicfactors

Competitive factors

Stakeholder behavior

Platform provider

Platform

Third-party supplier

Consumer

PlatformPlatform

Platform



Inevitable

Irreversible

Tremendously fast




Ambidexterity


Real Options in the portfolio




1 1

• Management flexibilities: also allows a partial realization of projects

• Options entitle to, but not obligate to buy or sell a specified asset for a payment of an agreed price

Hull (2009)

Picture: www.strategispartners.com.au/real-options-for-tomorrows-growth/

• Expected cash flows are interest-bearing with the market rate at the time of investment

• Usually assumes one single future scenario

From DCF (Discounted Cash flow) … to real options



Inevitable

Irreversible

Tremendously fast




Ambidexterity






Shift of the innovation limit

80s

Today

Competition uber industrial structuresCompetition via business modelsIT enables the use of Ubiquitous

ComputingProduct- und process innovations

process efficiencyStrategic Information Systems

Any use of IT

Smart Service WorldCyber Physical Service SystemsIT/IS ecosystemsIS as platformIT ecosystemsProprietary ISProprietary IT



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model

Act „Value in use“

Live Exploit & Explore

Speed-on&Stability-inthe platforms

Explore options

Leadership Behavior



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model




Explore options

Leadership Behavior

Towards a culture of (digital) transformation: people and technologies matter!



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model




Explore options

Leadership Behavior

Towards a culture of (digital) transformation: people and technologies and law matter

Privacy

CyberSecurity

Trust

Principles

Requirements until now



Disruptive platform-based innovation

• Co-evolution in the entire-supply-ecosystem of single suppliers, solution developers and operators in the service ecosystem (in multilateral governance structure)

• Co-evolution in the supply-demand-ratio of single suppliers, solution developers, operators and users throughout the ecosystem service (for multilateral governance structure)

• Concept-context changes via (Re-)regulation



„new digital life“

“In face-to-face encounters, our interactions are "private by default, public through effort."

With mediated technologies, the defaults are inverted. Interactions are

"public by default, private through effort.“

danah boyd 2011. in (co://llaboratory,Gleichgewicht und Spannung zwischen digitaler Privatheit und Öffentlichkeit, 2011, p. 113)



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model




Explore options

Leadership Behavior

Towards a culture of (digital) transformation: people and society, technologies and law matter

Privacy and individualized services

CyberSecurity and convenience

Trust by regulation and markets

Principles and discourse

Requirements today



And now ? - a managerial view

• Design smart services• on platforms existing and new• in co-innovation with customers, suppliers, and competitors• in agile steps• by starting today



And now ? - a managerial view

“Any technology company not focused on speed will be disrupted from its position. Wal-Mart as a technology company and innovator will be a tale told on speed.” (Karenann Terrell, CIO Wal-Mart, 2015-May-6)

• Design smart services• on platforms existing and new• in co-innovation with customers, suppliers, and competitors• in agile steps• by starting today



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model Research Challenges



Some starting considerations• You can count innovations only after they are conceived

– and the often come in Singularity• Reality poses problems

– for those that see them– it does no pose methods– IS/IT might be one of the solutions

• Researchers research– We all have our likes and skills

• IT/IS is an artifact– which needs to be built and designed, and well to work

based on Briggs, R.; Krcmar, H.: The Simple Elegance of Scientific Inquiry in a Technical Field. Workshop held at HICSS 2012



The context of IS research has changed

• The IT/IS-artefact is different today than just ten years ago– the first iPhone was released on June 29, 2007

• People, organizations, and society use IT/IS-artefacts as embedded tools and do not even call it “computing” anymore– ubiquitous computing, ambient computing

• The users of today are consumers and organizational IS-users alike- Any restrictiveness of user interfaces is easilyrecognized

• The companies of today are engulfed in their digital transformation– AND THE DIGITAL CHALLENGERS ARE EVERYWHERE

Our knowledge is context based



New contexts – new topics – more interdisciplinarity while„focussing“ on the individual, the organization, and society

Leimeister et al 2014 (DOI: 10.1007/s12525-014-0174-6)



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model

People first, but holistically

Research Challenges



Outsourcing through the times –From “Buyer-Beware” to “Expertise-Aware”

• What if the assumptions that informed outsourcing researchover the past decades do not hold (anymore)?

• Today we know – In mature outsourcing markets client capabilities rather than vendor

capabilities are the primary drivers of BPO performance– Vendor offerings converge, which requires that clients are flexible and adapt

themselves to the service offerings• That means

– These Results challenge the assumptions that informed the early outsourcing research (‘buyer-beware’ framing)

• Which other IS-(Management) knowledge is similarly situated?



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model


revisit&reframe

Research Challenges



What is Design Research?

• Design Research tries to develop Artifacts that fulfill a certainpurpose

• „devising artifacts to attain goals“ (Simon, 1969)

• Design Research can be defined as identifying a unique orinnovative solution for a previously unsolved problem

• Revolutionary• Evolutionary• Not intuitive (Briggs, 2006)

Natural andBehavioral Science

Design Science

artificialobjects andphenomena

observe create



What are possible results of Design Science Research?

Theory Theory(Cause-Effect-Relationships)

Terminology Terminology(Concepts, language)

Technology(Goal-Means-Relationship) Models Methods Systems

Design Theories and Principles(Goal-Means-Relationship)



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model


revisit&reframe

Design Principles

Research Challenges



Singularity of each Digital Transformation Process

• Singular, context-rich, dynamically complex and situated– Sometimes all different and revolutionary, sometimes all similar and

evolutionary• Implementation dominates DT effects

– contexts might be too diverse for contingency based approaches

• Researchers might need– to act as ethnograpers to explore the details of the technical and

organizational implementation– to perform documentation to start multicase surveys for EBM – to design different technological solutions for different organizations



Inevitable

Irreversible

Tremendously fast




Ambidexterity



Explanatory Model


revisit&reframe

Design Principles

Individual dynamics of transformation

processes

Research Challenges



Now, what could be the impact of DT research




• More papers



Why do we want to do research?

The holy grail

Practically useful Scientifically useful

Relevatory

Incremental

Originality

Utilityadapted from Corley, K. G., & Gioia, D. A. (2011). Building Theory About Theory Building: What Constitutes A Theoretical Contribution? Academy of Management Review, 36(1), 12-32.




The holy grail


Relevatory

Incremental

Originality

Utilityadapted from Corley, K. G., & Gioia, D. A. (2011). Building Theory About Theory Building: What Constitutes A Theoretical Contribution? Academy of Management Review, 36(1), 12-32.




The holy grail


Relevatory

Incremental

Originality

Utility

adapted from Corley, K. G., & Gioia, D. A. (2011). Building Theory About Theory Building: WhatConstitutes A Theoretical Contribution? Academy of Management Review, 36(1), 12-32.




• More papers• More citations• Change in the perception of actors (in academia and

practice, suppliers and customers, …)• New product features, implementation processes, …• New suppliers (Startups, Spinoffs, Business units, …) • …



How to go about research in DT• Technology oriented:

– design theory based research (DSR)

• Organizationally oriented: – exploratory and confirmatory (work centered) research with

a longitudinal orientation

• Societally oriented: – „culture changes“ from digital ignorants to digital natives,

from departmental orientation towards process orientation, – new generations and paradigms come into play, yet it takes

a while to get a hold of those shifts



UnexplainedEffects

Avenues of Enquiry

ExploratoryResearch

ExperimentalResearch

AppliedResearch /Engineering

TheoreticalResearch

TreatmentsControls

Design Guidelines

All Modes of Scientific Inquiryfor rigor AND relevance

From: Briggs, R.O., Schwabe, G. (2011) On Expanding the Scope of Design Science Research. In H. Jain, A.P. Sinha, and P. Vitharana (Eds.): Proceedings of Design Science Research in Information Systems and Technologies: DESRIST 2011, LNCS 6629, pp. 92–106, 2011.



Some Implications

• Collobaration in and with the „theatre of action“ – „in and out of the ivory tower“ with shared data sets

• With many cycles and on many levels over extended time– „concatenated exploration“ (Stebbins, 2001,p.12)

• with different skills needed for each mode of scientific inquiry– Methodological plurality and tolerance

• and different pitfalls to avoid for each mode of scientific inquiry– Often spanning different academic communities

• In research programmes with an overarching question– „How to make Digital Transformation work“

A non-trivial balancing act over time as research programmes are reality-driven, projectsare funding-driven, publications are outlet driven for each Knowledge nugget

based on individual researcher´s perspectives and motivation instead of just followinggenerally prescribed research as as craft prescriptions



“Everything can look like a failure in the middle.

Every new idea runs into trouble before it reaches fruition, and the possibilities for trouble increase with the number

of ways the venture differs from current approaches.”

(Kanter 2001, S. 274).

Ambassadors of the Possible

enjoy, research, and engage!

Prof. Dr. Helmut Krcmar, Dean, TU München, Director SAP UCC Munich November 11, 2011

SAP University Competence Centers Educational Service Providers

TUM. The Entrepreneurial University.

“Talents are our assets, reputation is our return“

IDT Initiative for Digital Transformation

An initiativeto analyze, understand and support the design of

leadership, innovation, and motivationin the Digital Transformation

Co-FoundersGert Oswald, SAP

Helmut Krcmar, TUM & fortiss



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