The Digital Transformation - Challenges and Opportunities for IS researchers

1. The Digital Transformation - Challenges and Opportunities for IS researchers Prof. Dr. Helmut Krcmar Immediate past AIS President (2014-2015) Chairfor Information Systems – www.winfobase.de Vice Dean Informatics – www.in.tum.de Academic Director EMBA Business and IT – tum.eec.de TU München – www.tum.edu Institute for Public Information Management (IPIMA) – www.ipima.de fortiss gGmbH, München - www.fortiss.org Co-Founder Initiative Digital Transformation – idt.in.tum.de

2. The 8th SIGSAND/PLAIS EuroSymposium on Systems Analysis and Design Congratulationsto From

3. AIS serves society through the advancement of knowledge and the promotion of excellence in the practice and study of information systems. founded in 1994, todayaround 4000 members 3,890 members in 93 countries and 36 chapters (April 1, 2015) • 1681 in Region 1 Americas • 1010 in Region 2 Europe • 1191 in Region 3Pacific Asia Countries with more than 100 members: • USA • China • Germany • Australia • Canada • New Zealand • www.aisnet.org

4. AIS serves society through the advancement of knowledge and the promotion of excellence in the practice and study of information systems. founded in 1994, todayaround 4000 members 3,890 members in 93 countries and 36 chapters (April 1, 2015) • 1681 in Region 1 Americas • 1010 in Region 2 Europe • 1191 in Region 3Pacific Asia Countries with more than 100 members: • USA • China • Germany • Australia • Canada • New Zealand • www.aisnet.org

5. AIS conducts a widerangeofactivities • Research • Conferences: ICIS AMCIS PACIS ISD MWAIS SAIS … • Journals: JAIS CAIS JITTA THCI TRR and more in the eLibrary • Special Interest Groups: 37 different topics with 3611 members • Research Conduct Committee: Research code of conduct • Professional development • Early career: PhD Consortia, Jr. Faculty Consortium • Mid Career Workshop: “Tenure? Now what?” • Late Career Workshop: “late career and retirement issues” • Career spanning: Webinars and Colleges • Advocacy • AIS as the Business “STEM” Discipline • Awareness in Industry: Global Sponsors, “AIS Bright ICT Initiative”

6. „Industry 4.0“ - „Smart Service World“ - „Digitale Agenda 2014–2017“

7. Digital Transformation

8. Digital Transformation Explanatory Pattern Leadership Behavior

9. 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Trends – myselection Customer’svalue creation INTER- ACTION Production • Demographicchange • Urbanisation • Serviceation • Predictability • IT-Trends selectionaka SMAC • SocialMedia • Mobility & Consumerization • Analytics / Big Data • Cloud Computing • Cyber-Physical Service Systems (CPSS) • Platform-basedecosystems

10. Digital transformation Explanatory Pattern Leadership behavior Inevitable

11. 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. • Ignoringa disruptive techniques for a long time can lead to an insurmountable resistance to change within the company. • Opennessto disruptive technologies needs to be the goal of every company's culture of innovation.

12. Disruptive innovations often add up over time

13. Disruption, not immediate destruction enables innovation and efficiency New 100% more & different 100% 70% performance „Don´t confuse slow and declining with not needed, unnecessary, not being reinvented“. GinniRometty, 14-05-2014 FT 30% t2 time t1

14. Internet-milieus in selected population groups Germany Source: DIVSI 2013b

15. Digital transformation Explanatory Pattern Leadership behavior Inevitable Irreversible

16. Papal election 2005 Photo: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013 Photo: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013

17. Papal election 2013 Photo: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013 Photo: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013

18. Papal election 2005 Photo: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013 Photo: AP/DPA - Source: Der Spiegel: Digitale Erleuchtung 2013

19. Digital transformation Explanatory Pattern Leadership behavior Inevitable Irreversible Tremendously fast

20. 2005: On whom would you lay your bets on? Founded in 2004 (Zuckerberg et al.) Founded in 2005 (Dariani/Behmann) Founded in 2003 (Tom Anderson)

21. 2005: On whom would you lay bets on? Source: statista.de

22. 2005: On whom would you lay your bets on?2014: It‘s obvious2023: ? Source: statista.de

23. Digital transformation Explanatory Pattern Leadership behavior Inevitable Irreversible Tremendously fast Uncertain in the execution

24. Digital transformation Explanatory Pattern Leadership behavior Inevitable Irreversible Tremendously fast Uncertain in the execution • Service Dominant Logic

25. Production and value creation Production perspective “Joint production process: the Customer participates as co-producer of resources and processeswith the provider” (Eiglier & Langeard, 1975; Grönroos, 1978) INTER- ACTION Customer’svalue creation Production Added value perspective ”Value Facilitation” (Grönroos, 2008) “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)

26. Disruption by Xaas: Substitution of existing industrial silos by service ecosystems Source: Smart Service Welt, 2014, S. 18 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)

27. Digital transformation Explanatory Pattern Leadership behavior Inevitable Irreversible Tremendously fast Uncertain in the execution • Service dominant logic • Ambidexterity

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

29. Digital transformation Explanatory Pattern Leadership behavior Inevitable Irreversible Tremendously fast Uncertain in the execution • Service dominant logic • Ambidexterity • Open innovation on platforms

30. 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

31. „My individual service is my commodity”„My individual service will be assembled through your commodity“ Effective use of platform for companies (Efficiency, innovation, strategy, survival, ...) Consumer Efficient advice on the use of and development on the platform (Supplier, composition, safety, ...) Linkage layer Long-term development and maintenance of reliable, large application environments and platforms (Cost-efficient production and delivery, ...) Producer

32. Digital transformation Explanatory Pattern Leadership behavior Inevitable Irreversible Tremendously fast Uncertain in the execution • Service dominant logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio

33. Shift of the innovation limit Today Smart Service World Cyber Physical Service Systems IT/IS ecosystems IS as platform IT ecosystems Proprietary IS Proprietary IT 80s Competition uber industrial structures Competition via business models IT enables the use of Ubiquitous Computing Product- und process innovations process efficiency Strategic Information SystemsAny use of IT

34. Towards a culture of (digital) transformation: people and technologies matter! Digital Transformation Explanatory Pattern Leadership Behavior Inevitable Irreversible Tremendously fast Uncertain in the execution • Service Dominant Logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio • Act „Value in use“ • Live Exploit & Explore • Speed-on&Stability-in the platforms • Explore options

35. Towards a culture of (digital) transformation: people and technologies and law matter Digital Transformation Explanatory Model Requirementsuntilnow Leadership Behavior Inevitable Irreversible Tremendously fast Uncertain in the execution • Privacy • CyberSecurity • Trust • Principles • Service Dominant Logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio • Act „Value in use“ • Live Exploit & Explore • Speed-on&Stability-in the platforms • Explore options

36. 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-relationship of single suppliers, solution developers, operators and users throughout the service ecosystem (in multilateral governance structure) • Concept-context changes via (Re-)regulation

37. „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.“ danahboyd 2011. in (co://llaboratory,Gleichgewicht und Spannung zwischen digitaler Privatheit und Öffentlichkeit, 2011, p. 113)

38. Towards a culture of (digital) transformation: people and society, technologies and law matter Digital Transformation Explanatory Model Requirementstoday Leadership Behavior Inevitable Irreversible Tremendously fast Uncertain in the execution • Privacy andindividualizedservices • CyberSecurityand convenience • Trust byregulationandmarkets • Principles and discourse • Service Dominant Logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio • Act „Value in use“ • Live Exploit & Explore • Speed-on&Stability-in the platforms • Explore options

39. Andnow ? - a managerialview today “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.” (KarenannTerrell, CIO Wal-Mart, 2015-May-6) Design smart services on platformsexistingandnew in co-innovation withcustomers, suppliers, andcompetitors in agile steps bystarting

40. Digital Transformation Explanatory Pattern Research Challenges Inevitable Irreversible Tremendously fast Uncertain in the execution • Service Dominant Logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio

41. Somestartingconsiderations based on Briggs, R.; Krcmar, H.: The Simple Elegance of Scientific Inquiry in a Technical Field. Workshop held at HICSS 2012 • Youcancountinnovationsonly after theyareconceived • andtheoftencome in Singularity • Reality posesproblems • forthosethatseethem • itdoesnoposemethods • IS/IT mightbeoneofthesolutions • Researchers research • We all haveourlikesandskills • IT/IS is an artifact • whichneedstobebuiltanddesigned, and well towork

42. The contextof IS researchhaschanged • The IT/IS-artefactis different todaythan just tenyearsago • 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 easily recognized • The companies of today are engulfed in their digital transformation • AND THE DIGITAL CHALLENGERS ARE EVERYWHERE Our knowledge is context based

43. New contexts – newtopics – moreinterdisciplinaritywhile „focussing“ on the individual, theorganization, andsociety Leimeister et al 2014 (DOI: 10.1007/s12525-014-0174-6)

44. Digital Transformation Explanatory Pattern Research Challenges Inevitable Irreversible Tremendously fast Uncertain in the execution • Service Dominant Logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio Human centric, but holistically

45. Outsourcing throughthetimes – 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?

46. Digital Transformation Explanatory Pattern Research Challenges Inevitable Irreversible Tremendously fast Uncertain in the execution • Service Dominant Logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio • Human centric, but holistically • revisit&reframe

47. artificialobjectsandphenomena create observe Design Research Natural andBehavioralScience Design Science • Design Research triestodevelopArtifactsthatfulfill a certainpurpose • „devisingartifactstoattaingoals“(Simon, 1969) • Design Research canbedefinedasidentifying a uniqueor innovative solutionfor a previouslyunsolvedproblem • Revolutionary • Evolutionary • Not intuitive (Briggs, 2006)

48. possibleresultsof Design Science Research Terminology(Concepts, language) Terminology Theory(Cause-Effect-Relationships) Theory Design Theories and Principles (Goal-Means-Relationship) Models Systems Methods Technology (Goal-Means-Relationship)

49. Digital Transformation Explanatory Model Research Challenges Inevitable Irreversible Tremendously fast Uncertain in the execution • Service Dominant Logic • Ambidexterity • Open innovation on platforms • Real Options in the portfolio • Human centric, but holistically • revisit&reframe • Design Principles

50. Singularityofeach Digital Transformation Process • Singular, context-rich, dynamicallycomplexandsituated • Sometimes all different & revolutionary, sometimes all similar & evolutionary • Implementation dominates DT effects • contextsmightbetoo diverse forcontingencybasedapproaches • Researchers mightneed • toactasethnograperstoexplorethedetailsofthetechnicalandorganizationalimplementation • toperformdetaileddocumentationtoenablemulticasesurveysfor EBM • todesign different technologicalsolutionsfordifferent organizations • tocombine different orientations: individual, technical, organizational, societal, historical, …