Imperatives of Business Models and Digital Transformation for Digital Services Providers

Imperatives of Business Models and Digital Transformation for Digital Services Providers

Ramamurthy Venkatesh, Liju Mathew, Tarun Kumar Singhal
DOI: 10.4018/IJBDCN.2019010107
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Despite the increasing pace of digital transformation initiatives across many industry verticals, lack of understanding among business leadership is cited as one of the major barriers for successful implementation of business transformation. This article explores the imperatives of business models and digital transformation from practical perspective and proposes an improvised business model framework with particular focus on digital services providers. Extant literature covering the trends of business models and digital transformation were reviewed qualitatively along with select reports pertaining to challenges faced by communications service providers. Key findings of this article suggest, a practical framework and business model representation to mitigate the challenges of business models and digital transformation. The authors believe, such an approach shall open up new and innovative opportunities for communication service providers to become true digital service providers which will help their business customers to plan and empirically progress with their business transformation efforts.
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Perceptions, Challenges And Imperatives Of Business Models And Business Transformation

In this highly digital era, business managers and leaders are challenged with plethora of digital possibilities and business transformation imperatives. Business conversations and articles are abundant with terms such ‘business transformation’, ‘digital transformation’, ’digital enablement’ and ‘digital business models’. It is also not uncommon to see many service offerings and solutions from major vendors such as Ericsson, Cisco, Accenture, IBM and others as they refer to ‘digital business transformation’. However, from the business leaders’ perspective, the terms innovation and business transformation are often used interchangeably in many business discussions, thus blurring the understanding of their contexts. Traditional business models and firms are challenged with myriad vulnerabilities as well as opportunities due to the ubiquitous proliferation of digital technologies. Customers today are more informed and are continuously adapting to digital culture and seek superior value and customer experience in all their product or service choices. So, new business models with digitization of products and services supported by a clear digital strategy is vital for businesses to remain successful and sustainable.

Findings and recommendations of extant academic literatures suggest that majority of business model concepts are derived from various business domains such as strategic management, technology management and innovation management. Over the years, there are many studies that talk about the strong relations between business strategy and business models, especially after the emergence of internet and digital technologies. Business model is a reflection and tactical realization of firm’s strategy and not itself a strategy; these two are related but different constructs (Casadesus-Masanell & Ricart, 2010). In essence, business model shall be considered as a recipe to capture and define the firm’s behavior and characteristic in a concise way (Baden-Fuller & Morgan, 2010) and its components and elements shall portray the business logic and how these elements combine to make that business logic work.

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