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IT Strategy Assignment

IT Strategy Assignment Digital Masters By Nishant Dey Purkayastha PGP/18/153

Digital Masters

By

Nishant Dey Purkayastha

PGP/18/153

Table of Contents

  • 1. Who/What are Digital Masters?....................................1

  • 2. Four Levels of Digital Mastery......................................2

Table of Contents 1. Who/What are Digital Masters?....................................1 2. Four Levels of Digital Mastery......................................2 3. How
  • 3. How to Become a Digital Master?.................................4

    • 3.1 Framing the Digital Challenge..................................4

    • 3.2 Focusing Investment................................................4

    • 3.3 Mobilizing the Organization......................................5

    • 3.4 Sustaining the Digital Transformation......................6

  • 4. Digital Mastery at Microsoft..........................................7

  • 5. Digital Mastery at Infosys...........................................10

  • 6. Conclusion..................................................................12

  • 1. Who/What are Digital Masters?

    Digital Masters are companies that use digital technologies to drive significantly higher levels of profit, productivity and performance.

    Digital mastery is a combination of two separate but related dimensions .The first, digital capabilities, is
    Digital mastery is a combination of two separate but related dimensions .The first, digital
    capabilities, is investment in technology-enabled initiatives to change how the company operates.
    Firms maturing in the second dimension, leadership capabilities, are creating the right conditions
    to drive digital transformation throughout the organization. Leadership capabilities include the
    vision to shape a new future, governance and engagement to steer the course, and IT/business
    relationships to implement technology based change.
    To succeed in digital transformation, CIOs and other business leaders must throw out the old IT
    cost center management style and instead, they must focus on using digital technologies and new
    operational processes and infrastructures to improve the customer experience, handle governance
    and more.
    As per research, digital Masters generate 9 percent more revenue with their existing physical
    capacity and drive more efficiency in their existing products and processes. Also, masters are 26
    percent more profitable than their average industry competitors.

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    2.Four Levels of Digital Mastery

    2.Four Levels of Digital Mastery Digital Masters represent excellence on both digital and leadership dimensions. Beginners

    Digital Masters represent excellence on both digital and leadership dimensions. Beginners are just at the start of the digital journey. As a result, Beginners have only basic digital capabilities. And they lag behind their competitors on multiple measure of financial performance. Fashionistas are not waiting to act. They buy every new digital bauble. However, because they lack strong digital leadership and governance, they waste much of what they spend. Or they find that they need to reverse what they've done so that they can integrate and scale their capabilities. Although Conservatives have useful digital leadership capabilities, excess prudence prevents these firms from building strong digital capabilities. This caution can be useful, but it can also create a governance trap that focuses more on controls and rules than making progress. By focusing on control and certainty, Conservatives find it hard to mobilize top management – and the rest of the organization – to see the bigger prize that digital transformation can bring. Digital Masters have overcome the difficulties that challenge their competitors. They know how and where to invest, and their leaders are committed to guiding the company powerfully into the digital future. They are already exploiting their digital advantage to build superior competitive positions in their industries.

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    Digital transformation is moving more rapidly in some industries than in others. Companies in the travel and music industries were hit early by threats from digital competition, and have already undergone profound transformation, but still have more challenges to face. Industries such as financial services and retail underwent major transformation due to electronic commerce in the 2000s, and are now starting to innovate with technologies such as social media, mobility and analytics. Other industries, however, have yet to be hit hard by fast-changing technologies.

    Digital transformation is moving more rapidly in some industries than in others. Companies in the travel

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    3.How to Become a Digital Master?

    The road to digital mastery can be broken down into four broad stages, with each stage having a set of well-defined objectives and a list of activities that need to be undertaken in order to achieve those objectives.

    3.1Framing the Digital Challenge

    BUILD AWARENESS

    Ensure that the top leaders understand the need for digital

    Increase understanding of the potential threats and opportunities of digital?

    DEFINE THE STARTING POINT

    Determine which strategic assets will help the company excel

    Understand how mature are the company’s digital competencies

    CREATE A SHARED VISION

    Ensure that the company’s top leadership been aligned around a vision of the company’s digital future

    3.2Focusing Investment

    TRANSLATE THE VISION INTO ACTION

    Convert the vision into strategic goals

    Translate the digital priorities into a roadmap of digital activities

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    BUILD THE GOVERNANCE

    Design governance mechanisms to steer the digital transformation

    Use strong digital governance to keep the company on track

    FUND THE TRANSFORMATION

    Work out the funding mechanisms of the transformation

    Design a balanced portfolio of digital investments

    3.3 Mobilizing the Organization

    SIGNAL THE AMBITIONS

    Market clearly the ambitions and benefits of digital

    Explain to the employees how digital will benefit them on a day-to-day basis

    ENGAGE THE EMPLOYEES

    Build momentum with the employees by co-creating solutions and involve those who will be making the change happen

    SET NEW BEHAVIORS AND EVOLVE CULTURE

    Use digital technologies to encourage culture shift

    Use the digital transformation to break operational paradoxes of the past

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    3.4 Sustaining the Digital Transformation

    BUILD FOUNDATION SKILLS

    Have a well-structured digital platform

    Develop strong IT business relationships

    Have a digital competence growth roadmap

    ALIGN INCENTIVES AND REWARDS

    Align incentives, rewards and recognitions to the objectives

    MEASURE, MONITOR AND ITERATE

    Develop a management process to measure and monitor the progress of transformation

    Adapt the course as needed

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    4.Digital Mastery at Microsoft

    Microsoft (Microcomputer Software) was founded in 1975 to enable people and businesses throughout the world to realize their full potential by creating technology that transforms the way people work, play, and communicate. From 1975 to 2010, PC sales grew strongly with a CAGR of 25% YoY. Microsoft successfully captured up to 95% of this growth. Its two major cash cows are the “Windows Platform” (client and server), and the “Office” business productivity suite which created a de facto industry standard because of associated network externalities.

    Most of Software Editors adopted the Microsoft’s business model of licensed software: customer bought the right to use the software on a per user basis (infamous End User License), or per computer basis while the code itself remained the property of the software vendor. It was a lucrative business model, with windows platform trapped customers due to high switching costs.

    First big disruptor in that legacy business model, was the “Open Source” business model where software was provided for free. The launch of Appli iPhone and Google’s Android further challenged Microsoft. Microsoft was losing its relevancy in the consumer IT space. Worse, developers are getting away from the Microsoft platform which was de facto losing value for end- consumers.

    It was not a single technological disruption which did harm to the Microsoft legacy business model, but the emergence of a new ecosystem which leveraged innovation in devices (Moore’s

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    law for electronic components density, i.e. miniaturization) and friendly user interfaces, mobile internet performance improvements (2G, 3G and 4G), Moore’s law and economy of scale through deployment of giant datacenters (hundreds of thousands servers), ultimately giving birth to new business models.

    Anticipating the impact of the consumerization of IT, Microsoft decided to move its focus more on the consumer’s side and to modify its business model from selling software to renting software. This digital transformation of an unprecedented magnitude started “slowly” and accelerated as Microsoft’s organization was walking its learning curve. Microsoft started to build “cloud” services out of its legacy server products.

    In the same time, Microsoft’s organization itself evolves from what might be seen as a cooperative of software editors, known as Product Groups competing against each other to a more functional organization which allows better resource utilization than a divisional organization: engineering teams could produce piece of software in a genuine platform approach, i.e. components/artifacts which could be used in different products. Ultimately the objective was componentization of products.

    The organization also evolved from a HR perspective. Microsoft gave-up its infamous “Stack Ranking” performance review. Product Groups also embrace agile development methodology for continuous delivery. This has been possible, because the incentive framework itself shifted from individual mercenary style incentive, to more team-wide incentive: you fail as a team, and win as a team. The collaboration and cross team communication culture also evolved at Microsoft leveraging available tools as they were developed. Embracing agile development patterns for continuous delivery, Microsoft is leveraging the telemetry it has embedded within its code (to

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    accurately monitor and manage cloud services consumption and behavior against workloads) to make its solutions evolve. Microsoft’s CEO pretty well understood that Microsoft did not need to own the devices to enlarge its cloud services usage, but that Microsoft could leverage its competitors’ network externalities (IOS + Android ubiquity) to push client applications to these end user devices which will consume Microsoft’s cloud services.

    Consumerization of IT” (i.e. usages developed in the mass consumer space instill in the enterprise space) and “Commoditization of IT” (i.e. users want the innovation to be generalized quickly and for almost free as an outcome of the Moore’s law) are the megatrends shaping the business model and technical evolution of Microsoft and its competitors. This is the reason why it all started in the consumer space, and now it is instilled in the Enterprise Customer’s space in which software vendors, cloud service providers try to adapt their consumer’s oriented solutions.

    Microsoft as being once a web 1.0 company and being now almost a full web 2.0 company, both from a technological and business model perspective, is in the unique position through its Enterprise Services to assist its Enterprise Customers in that difficult and uncertain digital transformation, because Microsoft has just walked its way through. This is a profound transformation while it is somehow led by fast pace technology evolution, it is first of all mostly an organizational and a cultural evolution.

    Being “forced” to execute its own “digital transformation” has been mandatory for Microsoft in its attempt to stay relevant in its own industry. It is transforming its business model, its organization, its culture to adapt to fast pace changes in its business environment (competitors, consumer, megatrends). It gained legitimacy through its own digital transformation execution. However, while these changes might have been “positive” leading to a “more agile” corporation, there is still

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    a lot of work to do to achieve this transformation. Microsoft transitioned from a high margin & “low volume” to a low margin & high volume positioning. As Microsoft’s revenue generation pattern is changing, its cost structure needs to change too. Its previously product oriented sales force need to be “retro fit” into cloud solution oriented sales force.

    5.Digital Mastery at Infosys

    Digital transformation is not only expected to be at the core of all future business activities, but Infosys is also actively embracing the topic, and placing it at the front and center of its go to market approach. Infosys plans not only to create value from digitization for its clients, but will at the same time undergo a transformation itself and become a digital master.

    This management has identified several aspects:

    Renew its existing service and solution offerings (e.g. through automation, innovation and operational excellence),

    Further build out its IP-based assets (e.g. Finacle and Edge Suite),

    Drive innovation initiatives through design-thinking, co-creation and strategic partnerships,

    Build out a strong corporate culture based on learning, talent and engagement, e.g. through talent management and co-innovation initiatives with external institutions.

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    This is, to a certain extent, a continuation of the existing vision for the company. The timeline to achieve this is ambitious: Infosys plans to have its internal transformation completed by summer

    2016.

    As well as this internal turnaround, Infosys is enhancing its digital transformation offering for clients. To this end, it has established dedicated focus and investments for digital transformation capabilities.

    Prior to this step, the services offered within the Infosys Digital group focused primarily on customer experience topics, but now they will increasingly also address the enterprise core and its digital ecosystem. Infosys positions itself as a holistic partner across all areas, with the aim to become the 'new age integrator' of services, partnerships, products, platforms and operations.

    In this context, there is also an approach to bridging the divide between the CMO and the CIO. There is a growing need for collaboration and joint decision-making between marketing and IT departments.

    Infosys is moving in the right direction to become a key partner for its clients in the future digital space. It is clearly neither the first nor the only service provider adopting this position, but it certainly has the capabilities, scale and momentum to play in the digital transformation space. Time will tell if they can become one of the leaders. For now, there is work left to do to stem the flow of the internal challenges before they can aggressively gain market share. Moreover, Infosys has to build out its brand awareness and continue to deliver business results - and innovation - for their clients.

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    6.Conclusion

    Digital transformation will continue to transform the way customers view and interact with enterprises. Customers have higher expectations for level of service, access to information and product quality regardless of the line of business or channel. Today, customers expect enterprises to be fully aware of their needs and be smarter in their interactions. Companies find it difficult to navigate disruption. Even when they embrace the shift, it is difficult to change. They are often rooted to their status quo by existing processes, organizational structures, and investments. Leading organizations take every customer touch-point as an opportunity to influence, engage, and transact with the customer, while laggards remain internally focused on legacy solutions and measures.

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