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IT-Enabled Innovations and Driving Value from IT


Subject Technology Pages 4 Style APA


Executive Summary

This paper evaluates how organizations can effectively incorporate IT-enabled innovations and drive value from their information technology (IT). The first question defines digitized platforms and identifies four stages of the IT savvy journey and how it affects IT mastery. Digitized platforms denote online firms that enable commercial interactions between different groups namely suppliers and consumers. The IT savvy journey is defined by four levels; beginners, fashionistas, conservatives, and digital masters. The second question identifies four steps to allocating decision rights and accountability. These steps are; identifying and defining IT principles, formulating an enterprise architecture, using IT infrastructure to govern the responsibilities, setting business project deliverables in line with business needs, and prioritization investments in the IT systems. The third question describes and identifies innovation essentials. Innovation essentials describes the necessities required to make innovations successful. They include motivation, support, and direction. The fourth question describes big data and its correlation to social computing and social networks. Big data refers to the availability of complex data collected from external and internal sources including social networks. Social computing entails sorting and analyzing the data to guide decision making in a business. The last question describes the role of IT in business intelligence (BI). Some of the roles identified include formulation of strategies and plans that are intelligent and light with the firms’ vision, helping acquire and manage data, and managing information among others.




IT-Enabled Innovations and Driving Value from IT

  1. Digitalized Platforms and Four Stages of IT Savvy Journey. Digital Mastery and its Four Levels

Digitized platforms denote online firms that enable commercial interactions between different groups namely suppliers and consumers. These platforms bring together large communities of developers, partners, and customers. As a result, they create large markets with enormous potential. In additional, digitized platforms enable companies to collaborate across sectors and industries thus creating new innovative services and products. The digitized platforms have to transition through the four stages of the IT savvy journey (McKeen & Smith, 2015). These stages begin with breaking and fixing. At this stage, the use of technology is limited to essential functions such as emails. At this stage, the main concern is to lower costs, enhance efficiency, and keep up with IT trends. The second stage is operational management. At this point, technology begins to contribute towards the operational success of the firm. The firm introduces new initiatives to boost its IT integration. It further invests in systems maintenance and management.

The third stage is operational enhancement. This stage is characterized with the realization that technology plays a crucial role in the success of the business since it contributes towards returns on investments. It therefore purchases new applications and systems to foster the success. Existing information technologies are then augmented to enhance operations and optimize profitability. The fourth stage is known as business transformation (McKeen & Smith, 2015). It entails conducting a complete integration of the IT systems with the business models. This stage sets the company apart from competitors thus creating technology capabilities that motivate a change in business model and creates sustainable competitive advantage for the company.

According to Nasution et al (2020), digital mastery is the experience and capability used in driving digital transformations. The concept of digital mastery encases two important dimensions, namely digital capability on the y axis and leadership on the x axis. Whereas digital capabilities concern customer experience and internal operations, leadership capabilities evaluate leadership capabilities in regard to governance, engagement, vision, and IT business relationships. McKeen and Smith (2015) identify four levels to achieving digital mastery; beginners, fashionistas, conservatives, and digital masters. The beginner level marks the onset of the digital journey. Beginners have basic digital skills. They tend to lag behind their competitors citing privacy and regulatory challenges. Most insurance firms fall in this level. Fashionistas buy and invest in any new digital systems as they emerge. These firms focus on flaunting their technological trends and not on the actual benefits offered.

Nasution et al. (2020) associate this behavior with lack of strong digital governance and leadership which leads to wastage. Most fashionistas lack strategies for building synergies across different departments and digital systems. Conservatives have excessive prudence which prevents them from setting up strong digital capabilities. They make digital investments that are strongly coordinated and carefully considered. The management values certainty and control. In failing to experiment, these firms do not make much progress in digital adoption and integration. The last level is digital masters. This level marks the apex of digital mastery. Firm in this level have faced and overcome challenges. They understand the consequences of their digital decisions and are committed to creating a powerful digital future.

  1. Allocating decision rights and accountability using appropriate mechanisms to bridge stakeholders perspectives of business and IT

Westerman, Bonnet and McAfee (2015) refer to the framework of accountabilities and IT decision rights as IT governance. In this case, governance empowers the employees and other stakeholders since it provides transparency during decision making. In fact, contrary to most ideologies, effective governance of IT minimizes dysfunctional politics and bureaucracy. Firms with high effectiveness of IT governance reported 20% more profits. There are five key decisions that managers need to make to effectively allocate decision rights and accountability. The first decision is to identify and define IT principles. IT principles clarify the role of the IT systems in the firm. Second, enterprise architecture denotes the design of the digitized platform of an organization. The governance should ensure to specify the people responsible for different business activities such as monitoring technology standards, data and business processes (Weill, 2009; Weill & Ross, 2011). The third approach is using IT infrastructure to govern the responsibilities allocated to different people. Fourth, setting business project deliverables in line with business needs. This step was effectively done at Southwest Airlines during their introduction of an IT governance systems. The last approach to allocating IT governance is by prioritization and making investments in the IT systems.

  1. Innovation Essentials

Innovation essentials describes the necessities required to make innovations successful. They include motivation, support, and direction. Motivation is realized when people establish the rewards to be accrued from innovation. Many people are motivated to innovate, however, they are often caught in busy lifestyles, lack of resources, and the fear of risks (McKeen & Smith 2015). These factors discourage them from trying out their creative ideas. Given these factors, organizations can create a culture of innovation by creating an innovation enabled organization. This includes providing incentives and rewards to encourage risk taking and innovation. Additionally, innovations can be introduced into the annual performance assessment so that employees are encouraged to come up with new ideas. The second innovation essential is support. Organizations have to create systems and infrastructure that sustain innovation. For instance, offering rewards disseminates the message that innovation is recognized, valued, and encouraged. As a result, employees are motivated to experiment. The specific organizations are needed to show support to the process. This requires combining recognition with other forms of support in order to embed a culture of innovation. Some organizations introduce departments dedicated to IT and innovations such as Chief Scientist (McKeen & Smith 2015). These departments are allocated resources and budgets to facilitate their work. The third essential is direction. It enables firms to manage their innovations in a strategic manner. Direction ensures innovations are linked to customer value and core business processes. Likewise, providing direction ensures venture funds are effectively utilized to realize strategic initiatives.

  1. Big Data, Social Computing, and Social Networks

Big data refers to complex and large sets of data that can be analyzed computationally to exhibit trends, associations, and patterns that help predict human interactions and behavior. The data can be structured or unstructured. It requires advanced analytic techniques to analyze this data and make meaningful inferences. Big data has had an immeasurable impact on organizations. This is because it correlates to social networks and social computing. Collectively, these concepts can be merged to optimize the value realized by the firm. As newer tools for analyzing large amounts of data are being generated, businesses can easily analyze, extract new insights and make predictions on the future of consumer behavior. McKeen and Smith (2015) lament that whereas social networking and big data have in the past been considered to work independently, there is widespread evidence that the two are converging in many ways. However, the degree of convergence is dependent on company’s needs and industry. Social media is a frontline point in collecting customer. In addition, big data tools are used for analytics and to drive information that guides the development of business strategy. According to McKeen and Smith (2015, social media and big data are intricately related.

Organizations receive data from external and internal sources which forms the bulk of big data. Social media data, drawn from engagement with customers, partners, suppliers and potential customers is further integrated into the other data sources. The data is then analyzed to guide strategy and decision making. The analyzed data could also be used on other business activities to identify and exploit opportunities. Big data further correlates to social computing in the sense that computing algorithms can be introduced to social networking sites to facilitate real time analysis and collection of useful data. This way, an organization only collects useful data while ignoring the other data that could be expensive to store. The correlation between social media, big data, and social media computing helps firms in innovation and creating business value.  McKeen and Smith (2015) explain that in the process of exploiting big data, social networks, and social computing for business growth, IT managers tend to experience diverse challenges. Some of the challenges include limitations to accessing data because of privacy protection and intellectual property, the need for process orientation, regulatory accountabilities, data security, and aligning the data with business values and strategies.

  1. Role of IT in Business Intelligence

IT activities form the foundation for information technology roles. The first role is formulating business intelligent plans and strategies. BI strategies are preferable to normal strategies since they are more business focused. BI plans are equally helpful since they are not prescriptive but rather iterative (McKeen & Smith, 2015). The second role of IT in BI is to aid in acquiring and managing data. There is a high possibility of accessing duplicate and inflexible data, as well as having multiple data marts. Having IT enhances the computational capabilities of the organization reducing the costs of acquiring and managing large amounts of data. The third role is managing information. IT and BI can collectively be used to develop a framework where information can be extracted and developed for business use. Collectively, the two components can be used for data integration, aggregation, and information architecture (McKeen & Smith 2015). IT and BI could further be used for intelligence delivery. IT can easily be used to prepare information dashboards and reports to stakeholders. With the introduction of new tools for IT and BI, businesses will be able to solve most business problems as the systems provide structured intelligence.

New IT-capabilities improve strategic innovations and business analytics in a number of ways. First, it enables the management to learn from the past. Secondly, it provides a strategy for the business to invest in continuous improvement. Third, IT-capabilities guide the organizations into focusing on specific goals for maximum impact (McKeen & Smith, 2015). Fourth, IT capabilities enable cross functional governance. Fifth, once IT is introduced, the organization invests in training which improves the IT and analytical skills of the employees. These improvements can be noted across most organizations that have adopted new IT capabilities.




McKeen, J. & Smith, H. (2015). IT Strategy – Issues and Practices, 3rd Edition. Pearson, http://pearsonhighered.com

Nasution, R. A., Arnita, D., Rusnandi, L. S. L., Qodariah, E., Rudito, P., & Sinaga, M. F. N. (2020). Digital mastery in Indonesia: the organization and individual contrast. Journal of Management Development.

Weill, P. & Ross, J. (2011). IT Savvy – What Top Executives Must Know to Go from Pain to Gain, Harvard Business Press, http://www.harvardbusiness.org/press

Weill, P. (2009). Allocating Decision Rights and Accountability. Retrieved from: file:///C:/Users/user/AppData/Local/Temp/itsavvych_5.pdf

Westerman, G., Bonnet, D. & McAfee, A. (2015). Leading Digital: Turning Technology into Business Transformation, Harvard Business Review Press, http://www.hrb.org/books

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