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In 2013, Royal Philips was two years into a daunting transformation. Following declining financial performance, CEO Frans van Houten aimed to turn the Dutch icon into a "high-performing Company" by 2017. This case study examines the challenges of the business-driven IT transformation at Royal Philips, a diversified technology company. The case discusses three crucial issues. First, the case reflects on Philips’ aim at creating value from combining locally relevant products and services while also leveraging its global scale and scope. Rewarded and unrewarded business complexity is analyzed. Second, the case identifies the need to design and align multiple elements of an enterprise (organizational, cultural, technical) to balance local responsiveness with global scale. Third, the case explains the role of IT (as an asset instead of a liability) in Philips’ transformation and discusses the new IT landscape with its digital platforms, and the new practices to create effective business-IT partnerships.
In its 100+ years of company history, IBM reinvented itself multiple times. In the last 20 years, IBM had shifted from individual products to integrated solutions and moved to become a globally integrated enterprise with standardized processes. In 2014, the expanding adoption of social, mobile, analytics, and cloud (SMAC) technologies generated excitement in the industry. IBM believed these technologies presented a huge growth opportunity. Simultaneously, management viewed SMAC technologies as disruptive forces demanding transformative changes to how IBM worked. And introducing new ways of working to 400,000 employees in 175 countries was a daunting task.
Based on personal interviews with 17 IBM business and IT executives, the case illustrates organizational challenges of introducing current technologies that even providers of these technologies face – in other words, when they “eat their own cooking.” It demonstrates the difficulties large companies face when implementing technologies that students use daily and take for granted.
The digital economy poses existential threats to — and game-changing opportunities for — companies that were successful in the pre-digital economy. What will distinguish those companies that successfully transform from those that become historical footnotes? This is the question a group of six researchers and consultants from Boston Consulting Group set out to examine. The team conducted in-depth interviews with senior executives at twenty-seven companies in different industries to explore the strategies and organizational initiatives they relied on to seize the opportunities associated with new, readily accessible digital technologies. This paper summarizes findings from this research and offers recommendations to business leaders responsible for digital business success.
The use of digital, IT-based components in physical products is becoming increasingly relevant in practice. Surprisingly, the strategic impact of these "digitized products" has not received a lot of attention in IS research so far. Extant papers on the topic rely on ambiguous terminology (e.g., "smart products", "cyber-physical systems", "digital product-service systems") and underlying concepts differ widely. Based on an extensive literature review, this article provides an overview of the different terms and identifies five conceptual elements that form the building blocks of digitized products in research: "hybridity" (i.e., the combination of digital and physical components), connectivity, smartness, digitized product-service bundles (servitization of digitized products), and digitized product ecosystems. The implication for practitioners is that each element comes with different managerial challenges that companies need to address when incorporating the respective element in their products. The research implication is that each conceptual element is supported by different theoretical streams.
IT platforms as the foundation of digitized processes and products are vital in a digital economy. However, many companies’ platforms are liabilities, not strategic assets because of their complexity. Consequently, companies initiate IT complexity reduction programs. But these technology-centric programs at best provide temporary relief. Soon after, companies’ platforms become just as complex as before. Based on four case studies, we identify three non-technical drivers of platform complexity: (1) Lacking awareness of consequences business decisions have on platform complexity, (2) Lacking motivation to avoid platform complexity, (3) Lacking authority to protect platforms from complexity. We propose measures to address these drivers that can help achieve more sustainable impact on platform complexity: (1) Removing information asymmetries between those creating complexity and those dealing with complexity, (2) Redefining incentives to include long-term effects on platform complexity, (3) Redressing power imbalances between those who create complexity and those who have to manage it.
IT Governance (ITG) is crucial due to its significant impact on enabling innovation and enhancing firm performance. Hence, in the last decade ITG has become important in both academic and in practical research. Although several studies have investigated individual aspects of ITG success and its impact on single determinants, the causal relationship of how ITG promotes firm performance remains unclear. Thus, a more comprehensive understanding about the link between ITG and firm performance is needed. To address this gap, this research aims at understanding how ITG and firm performance are related. Therefore, we conducted a systematic literature review (1) to create an overview on how current research structures the link between ITG mechanisms and firm performance, (2) to uncover key constructs as potential mediators or moderators on the general link between ITG and performance, and (3) to set the basis for future studies on the ITG-firm performance relationship.
This paper examines the efficacy of social media systems in customer complaint handling. The emergence of social media, as a useful complement and (possibly) a viable alternative to the traditional channels of service delivery, motivates this research. The theoretical framework, developed from literature on social media and complaint handling, is tested against data collected from two different channels (hotline and social media) of a German telecommunication services provider, in order to gain insights into channel efficacy in complaint handling. We contribute to the understanding of firm’s technology usage for complaint handling in two ways:
(a) by conceptualizing and evaluating complaint handling quality across traditional and social media channels and (b) by comparing the impact of complaint handling quality on key performance outcomes such as customer loyalty, positive word-of-mouth, and crosspurchase intentions across traditional and social media channels.
Recent digital technologies like the Internet of Things and Augmented Reality have brought IT into companies’ core products. What were previously purely physical products are becoming hybrid or digitized. Despite receiving a lot of recent attention, digitized products have only seen a slow uptake in businesses so far. In this paper, we study the challenges that keep companies from realizing the desired impacts of digitized products and the practices they employ to address these challenges. To do so, we looked at companies from a set of industries that are highly affected by digital transformation, but at the same time hesitant to move to a more digitized world: the creative industries. Based on a literature review and twelve interviews in creative industries, we developed a conceptual model that can serve as a basis for formulating testable hypotheses for further research in this area.
In 2016, German car manufacturer the Audi Group (AUDI AG) was working on an expanding array of digital innovations. The goals of these innovations varied, and included strengthening customer- and employee-facing processes, digitally enhancing existing products, and developing new, potentially disruptive business models. Audi’s IT unit was critical to each of these efforts. Based on personal interviews with 11 IT- and non-IT executives at Audi, this case examines the different ways in which digitization can help to enhance and transform an organization’s processes, products, and business models. The case also highlights the challenges that arise as large companies “digitize.”
Digital technologies are moving into physical products. Smart cars, connected lightbulbs and data-generating tennis rackets are examples of previously “pure” physical products that turned into “digitized products”. Digitizing products offers many use cases for consumers that will hopefully persuade them to buy these products. Yet, as revenues from selling digitized products will remain small in the near future, digitized product manufacturers have to look for other sources of benefits. Producer-side use cases describe how manufacturers can benefit internally from the digitized products they produce. Our article identifies three categories of such use cases: product-, service-, and process-related ones.
Potentials of smart contracts-based disintermediation in additive manufacturing supply chains
(2019)
We investigate which potentials are created by using smart contracts for disintermediation in supply chains for additive manufacturing. Using a qualitative, critical realist research approach, we analyzed three case studies with companies active in additive manufactures. Based on interviews with experts from these companies, we could identify eight key requirements for disintermediation and associate four potentials of smart contracts-based disintermediation.
Digitalization of products and services commonly causes substantial changes in business models, operations, organization structures and IT infrastructures of enterprises. Motivated by experiences and observations from digitalization projects, the paper investigates the effects of digitalization on enterprise architectures (EA). EA models serve as representation of business, information system and technical aspects of an enterprise to support management and development. By comparing EA models before and after digitalization, the paper analyzes the kinds of changes visible in the EA model. The most important finding is that newly created digitized products and the associated (product)- and enterprise architecture are no longer properly integrated into the overall architecture and even exist in parallel. Thus, the focus of this work is on showing these parallel architectures and proposing derivations for a better integration.
Machine learning (ML) techniques are rapidly evolving, both in academia and practice. However, enterprises show different maturity levels in successfully implementing ML techniques. Thus, we review the state of adoption of ML in enterprises. We find that ML technologies are being increasingly adopted in enterprises, but that small and medium-size enterprises (SME) are struggling with the introduction in comparison to larger enterprises. In order to identify enablers and success factors we conduct a qualitative empirical study with 18 companies in different industries. The results show that especially SME fail to apply ML technologies due to insufficient ML knowhow. However, partners and appropriate tools can compensate this lack of resources. We discuss approaches to bridge the gap for SME.
The promise of the EVs is twofold. First, rejuvenating a transport sector that still heavily depends on fossil fuels and second, integrating intermittent renewable energies into the power mix. However, it is still not clear how electricity networks will cope with the predicted increase in EVs and their charging demand, especially in combination with conventional energy demand. This paper proposes a methodology which allows to predict the impact of EV charging behavior on the electricity grid. Moreover, this model simulates the driving and charging behavior of heterogeneous EV drivers which differ in their mobility pattern, decision-making heuristics and charging strategies. The simulations show that uncoordinated charging results in charging load clustering. In contrast, decentralized coordination allows to fill the valleys of the conventional load curve and to integrate EVs without the need of a costly expansion of the electricity grid.
Artificial Intelligence enables innovative applications, and applications based on Artificial Intelligence are increasingly important for all aspects of the Digital Economy. However, the question of how AI resources such as tools and data can be linked to provide an AI-capability and create business value is still open. Therefore, this paper identifies the value-creating mechanisms of connectionist artificial intelligence using a capability-oriented view and points out the connections to different kinds of business value. The analysis supports an agenda that identifies areas that need further research to understand the mechanism of value creation in connectionist artificial intelligence.
In the upcoming years, huge benefits are expected from Artificial Intelligence (AI). However, there are also risks involved in the technology, such as accidents of autonomous vehicles or discrimination by AI-based recruitment systems. This study aims to investigate public perception of these risks, focusing on realistic risks of Narrow AI, i.e., the type of AI that is already productive today. Based on perceived risk theory, several risk scenarios are examined using data from an exploratory survey. This research shows that AI is perceived positively overall. The participants, however, do evaluate AI critically when being confronted with specific risk scenarios. Furthermore, a strong positive relationship between knowledge about AI and perceived risk could be shown. This study contributes to knowledge by advancing our understanding of the awareness and evaluation of the risks by consumers and has important implications for product development, marketing and society.
While there has been increased digitization of private homes, only little has been done to understand these specific home technologies, how they serve consumers, among other issues. “Smart home technology” (SHT) refer to a wide range of artifacts from cleaning aids to energy advisors. Given this breadth, clarity surrounding the key characteristics and the multi-faceted impact of SHT is needed to conduct more directed research on SHT. We propose a taxonomy to help outline the salient intended outcomes of SHT. Through a process involving five iterations, we analyzed and classified 79 technologies (gathered from literature and industry reports). This uncovered seven dimensions encompassing 20 salient characteristics. We believe these dimensions/characteristics will help researchers and organizations better design and study the impacts of these technologies. Our long-term agenda is to use the proposed taxonomy for an exploratory inquiry to understand tensions occurring when personal and sustainability-related outcomes compete.
So-called cloud-based management information systems are a fairly new phenomenon in management accounting in recent years. Quite a few companies (and especially their business managers and management accountants) do not always work via the cloud, but with hybrid solutions or on-premise solutions of ERP software such as SAP or Oracle, but often still with "manual" solutions such as Microsoft Excel.
Study programs in higher education have to reflect important societal and industrial challenges to prepare the next generations of professionals for future tasks. The focus of this paper is the challenge of digitalization and digital transformation. The paper proposes the IS education profile of a Digital Business Architect (DBA). The study program emphasizes design thinking, model centricity, and capability thinking as a response to domain requirements from digital transformation and educational system and structure requirements. Experiences in implementing the DBA include the need for integrating deductive and inductive teaching, a strong basis in real-world cases, and collaborative learning approaches to develop adequate competences in business model management, enterprise modeling, enterprise architecture management, and capability management.