Firm Infrastructure Vs Catalyst to Change Business Models: the Double Side of IT (Change Management)

 Value chain_0

Technology improvements, such as mobile devices with embedded GPS, RFID, WiFi receivers that are becoming cheaper and cheaper, are enabling new business opportunities as well as new threats arising from disruptive innovations.

Few weeks ago I saw a video from MIT Sloan “Video: What Digital Transformation Means for Business.“. A meaningful and for me inspirational chat with Kim Stevenson (Intel Corporation, @Kimsstevenson), Mark Norman (Zipcar), Didier Bonnet (Capgemini Consulting) and Andrew McAfee (MIT Center for Digital Business, @amcafee) about how technology and IT are nowadays impacting businesses. Booking a flight and see its status in real-time or check the bank account are nowadays common consumer habits thanks smartphones and apps, while few years ago that was something beyond imagination.

IT is a catalyst to change business models

If I have to chose a slogan that summarize the video from MIT, I would pick up the words “Nowadays IT is a catalyst to change business models” (by Kim Stevenson and Andrew McAfee). Many cases have shown how technology impacts business by redefining how  services\products are delivered to customers.

Side 1 of IT: process automation

Anyhow, what is IT for a company nowadays? According to the value chain model (see Figure), IT is firstly part of the firm’s infrastructure. When IT plays this role, the objective is to automate standardized processes that are in place within a fixed business model. For example, Operation Support Systems (OSSs) to support operation and inbound\outbound logistic, Customer Relationship Management (CRM) or other administrative functions such as managing payrolls (HRM).

Since the business model is fixed and procedure standardized, when IT is consider as part of the infrastructure, technology advancements might create new opportunities for improving efficiency: do the same with less. For example, new cheaper hard disks and CPUs available in the market that means opportunities to store\process more data.

Side 2 of IT: customer needs and value creation

However, what happen when IT plays the role of a catalyst to change business models? In this case technology advancements might open new approaches for delivering the product\service to customers or even generate completely new customer’s needs. Can you imagine your life now without a WiFi connection? (see a revised version of Maslow’s pyramid model). WiFi connection plus cheaper smart phones are a meaningful examples about how technology might change business models and re-define customer’s needs as well.

Anyhow, generating new needs and changing business model also implies operating with not standardized procedures.

Standardization Vs Innovation: How to manage the double side of IT?

Thus, how to manage together the two opposite sides of IT? One side that standardize procedures and the other that defines new ones?

Moreover, how to bring only IT innovations that really generate value to customers? How to identify the key competencies and resources that are needed as input for the new business model?

In the video of MIT Sloan Leadership skills and M&As might help organizations to handle impacts coming from new technology advancements in order to acquire key competencies as well as avoiding disruptive innovations threats.

Best practices apart, is there a framework that brings together all the aspects of change management also for IT? I mean, is it possible to evaluate customers’ needs, key resources\copetencies, value creations and strategy threats\opportunities as a whole? Moreover, how to control the IT complexity by focusing only on new IT initiatives that really matter?

Big challenges for IT change management, especially considering that nowadays technology breakthroughs are faster and more impacting than in the past.

1 thought on “Firm Infrastructure Vs Catalyst to Change Business Models: the Double Side of IT (Change Management)

  1. Pingback: Firm Infrastructure Vs Catalyst to Change Business Models (part 2): New IT Innovation Process (NITID) | Feelink by ivangruer

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