IT Strategy Follows Digitalization

IT Strategy Follows Digitalization

Thomas Ochs (Villeroy & Boch, Germany) and Ute Anna Riemann (SAP SE, Germany)
DOI: 10.4018/978-1-5225-7362-3.ch036

Abstract

The IT strategy is a key anchor for the further development of a company-centric information management. For serving as such, existing IT strategies need a regular check and revision to meet the ever-changing requirements of the companies' markets, to fit to the corporate strategy, and to get the most value out of the possibilities new IT technologies offer. The postulate is that all business areas need to think and act “digital.” This, of course, does require a “digital agenda” in every business area of a company that needs to be orchestrated based on a digital corporate strategy and supported by an adequate IT strategy. For IT this means that it will move towards the role of a business enabler that delivers the fundamental layer to allow a company to participate in the digitalization trends and get the benefit of the opportunities and manage challenges successfully.
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Digitalization

Background

Currently we see a lot of information addressing the topic of digitalization. Beyond the pure buzz-word a lot of previously effective and useful assumptions, structures and procedures have to be adapted to become successful in the new digitalized world. Our chapter focuses on the company’s IT and highlights in detail what the required changes in its various levels and dimensions for corporate IT are to meet the new digital requirements. The idea of our chapter is to make the relevant levels and dimensions transparent, outline how the various elements interfere with each other and how this transforms the corporate IT in regards to its positions and importance of the company, the structure and processes within an IT organization and the requirements towards agility and skills.

Key Terms in this Chapter

Public Cloud: A public cloud is one based on the standard cloud computing model, in which a service provider makes resources, such as applications and storage, available to the general public over the Internet.

Deployment Models: A cloud deployment model represents a specific type of cloud environment, primarily distinguished by ownership, size, and access. There are four common cloud deployment models: Public Clouds; Community Clouds; Private Clouds; and Hybrid Clouds.

Process Re-Engineering: Documenting, analyzing, and comparing a process to benchmarks such as best-in-class practices, implementing the required changes, or installing a different process.

On Premise: On-premises is a type of software delivery model that is installed and operated from a customer's in-house server and computing infrastructure. It utilizes an organization’s native computing resources and requires only a licensed or purchased copy of software from an independent software vendor.

Omni-Channel: Omni-channel is a multichannel approach to sales that seeks to provide the customer with a seamless shopping experience whether the customer is shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store.

Software-as-a-Service (SaaS): Software as a service (SaaS) is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet.

Service Level Agreements (SLAs): Contract between a service provider and a customer, it details the nature, quality, and scope of the service to be provided.

Infrastructure-as-a-Service (IaaS): Infrastructure as a Service (IaaS) is a form of cloud computing that provides virtualized computing resources over the Internet.

Service-Oriented Architecture (SOA): Service-oriented architecture (SOA) is an approach used to create an architecture based upon the use of services. It carries out function, such as producing data, validating a customer, or providing simple analytical services.

Cloud Computing: Cloud computing is a general term for the delivery of hosted services over the Internet. Cloud computing enables companies to consume compute resources as a utility -- just like electricity -- rather than having to build and maintain computing infrastructures in-house.

Shared Service Center: A shared services center – a center for shared services in an organization – is the entity responsible for the execution and the handling of specific operational tasks, such as accounting, human resources, payroll, IT, legal, compliance, purchasing, security. The shared services center is often a spin-off of the corporate services to separate all operational type of tasks from the corporate headquarters, which has to focus on a leadership and corporate governance type of role.

Internet of Things: A network comprised of physical objects capable of gathering and sharing electronic information. The Internet of Things includes a wide variety of “smart” devices, from industrial machines that transmit data about the production process to sensors that track information about the human body. Often, these devices use Internet Protocol (IP), the same protocol that identifies computers over the world wide web and allows them to communicate with one another.

Hybrid IT Infrastructure: Approach to enterprise computing in which an organization provides and manages some information technology (IT) resources in-house but uses cloud-based services for others. A hybrid approach allows an enterprise to maintain a centralized approach to IT governance, while dealing with cloud computing.

Cloud: Describes the locations where services are acquired and data is stored, can take various forms.

Platform-as-a-Service (PaaS): Platform as a service (PaaS) is a cloud computing model that delivers applications over the Internet.

Industry 4.0: Industry 4.0 or the fourth industrial revolution, is the current trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the Internet of things and cloud computing.

Master Data Management: Master data management (MDM) is a comprehensive method of enabling an enterprise to link all of its critical data to one file, called a master file that provides a common point of reference.

Big Data: Big data is high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.

Digitalization: Integration of digital technologies into everyday life by the digitization of everything that can be digitized.

Predictive Analytics: Predictive analytics is the branch of data mining concerned with the prediction of future probabilities and trends. The central element of predictive analytics is the predictor, a variable that can be measured for an individual or other entity to predict future behavior.

Economics of Scale: Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because of the inverse relationship between the quantity produced and per-unit fixed costs; i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are spread out over a larger number of goods. Economies of scale may also reduce variable costs per unit because of operational efficiencies and synergies. Economies of scale can be classified into two main types: Internal – arising from within the company; and External – arising from extraneous factors such as industry size.

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