PoEB The Digital Firm 4 2024-2025 PDF

PoEB: The Digital Firm 2024-2025 PoEB 2: The Digital Firm 4. What is IT Success? Prof. dr. Hans P. Borgman Prof. Dr. Hans Borgman 0 PoEB: The Digital Firm 2024-2025 The Digital Firm:...

PoEB: The Digital Firm 2024-2025 PoEB 2: The Digital Firm 4. What is IT Success? Prof. dr. Hans P. Borgman Prof. Dr. Hans Borgman 0 PoEB: The Digital Firm 2024-2025 The Digital Firm: Course Outline Introduction 1. IT and Strategy 2. Winner Takes All? 3. AI and the Future of Work 4. What is IT Success? 1 Prof. Dr. Hans Borgman 1 PoEB: The Digital Firm 2024-2025 What is IT Success: The quest for the dependent variable and what drives it IT investments are >50% of Capital expenditures across industries. ? ? "IT Success" ? Return on Investment? Return on Assets? Profit? Rate of Change?... Prof. Dr. Hans Borgman 2 Theories of Digital Business 2024-2025 What is IT Success: the quest for the dependent variable and what drives it Does IT matter? IT productivity paradox Paradox 'resolved': lag, mismeasurement Firm-level pay-off vs 'invisible' industry-level pay-off IT productivity paradox (2000) 3 Nicholas Carr's 2003 HBR paper (Carr, N. (2003). IT Doesn’t Matter’, Harvard Business Review, May 2003).addressed the question whether IT matters or whether IT is a commodity. Carr argued the latter, stating IT had gone the way of railroads and electricity and had become a commodity. He built his arguments partly on earlier studies on the apparent IT productivity paradox which centers on the question why we cannot seem to see a return on IT spending in national productivity numbers. Subsequent studies have shown that the ‘paradox’ is not visible at firm level but only at industry or national level, meaning that companies spending more on IT indeed see higher returns and improved productivity, but that for an entire industry or country the quality of service goes up but not necessarily the productivity. For instance, banks now allow online transactions, 24/7 availability, etc, all factors that do not show up in productivity statistics. Although Carr's message has since been replaced by new insights, it does form a good background to discuss the changing nature of IT innovations over time. Also when looking at more recent IT innovations, including AI, we see productivity gains that are less than what could be expected. Will AI replace jobs? Is this still going to happen (lag) or are there gains outside of productivity (mismeasurement?) The 'puzzle' is yet to be fully solved. Prof. Dr. Hans P. Borgman 3 Theories of Digital Business 2024-2025 IS success: the quest for the dependent variable technical functional adoption: use impact: impact: quality quality (or intention to individual + organization use: individual local al business or business value organizational) value Understanding what drives IS success requires us to think about what IS success really is, and that is not an easy question at all. Prof. Dr. Hans Borgman 4 Theories of Digital Business 2024-2025 Good IT outcomes ≠ Good business outcomes Delivering Business Outcomes From IT Increased Faster Improved Reduced risk Greater Reduced competitive time to end user for critical operating risk and advantage business experience business profit and cost for through IT benefit services lower IT compliance costs IT Outcomes Project milestones Servers and Database is Developers Help desk Change are met network are accessible have fixed incidents processes are available defects are logged documented 5 Different ideas about IS success also mean different indicators to measure this. 'IT outcomes' are important, but unless you are in a 'factory quadrant' (McFarlan) and running IT like a factory, you better focus on business value and business outcomes as well. Prof. Dr. Hans Borgman 5 Theories of Digital Business 2024-2025 Impact and Control Business value of IT Impact What are the business outcomes that IT can impact? Are we doing the Are we Will the Are we Are our How can IT right things, increasing application serving the services business work and end- efficient & innovate the and doing business? them right? agility? perform? customer? available? Control IT 6 But what are the indicators for 'business value of IT'? Prof. Dr. Hans Borgman 6 Theories of Digital Business 2024-2025 Running vs growing/transforming the business Shift from Reactive Crisis Management new initiatives (‘Grow/Transform the Best practice: 35-45% to Pro-active IT Leadership Norm: 20-30% business’) Strategic Linking business strategy with IT decisions Ø are we spending enough? Tactical Ø...on the right things? Ø...generating optimal business value? Best Practice: 55-65% Maintenance Norm: 70-80% (‘Keep-The-Lights-On’ or ‘Run the business’) 7 Prof. Dr. Hans Borgman 7 Theories of Digital Business 2024-2025 Our second part today, discussed in class only (Gallaugher doesn't cover this), is about technology acceptance and technology adoption, classic issues that continue to be relevant, also in view of our understanding of AI adoption or (post-) Covid monitoring of employees, where ethics and privacy play a more pronounced role than by more traditional technology acceptance. Prof. Dr. Hans P. Borgman 8 Theories of Digital Business 2024-2025 Case: acceptance of social distancing technologies UvA starts a pilot, you are guinea pigs Would YOU accept to use social distancing technologies? Would firms (UvA) adopt this technology? Which factors would help understand/predict acceptance? How to define success? Prof. Dr. Hans P. Borgman 9 Theories of Digital Business 2024-2025 Success IS success: the quest for the dependent variable Risks technical functional adoption: Mitigationuse impact: impact: quality quality (or intention to individual + organization use: individual local al business or business value organizational) value Understanding what drives IS success requires us to think about what IS success really is, and that is not an easy question at all. Prof. Dr. Hans P. Borgman 10 Theories of Digital Business 2024-2025 New Technology: IT/IS adoption & success Firm-level: DeLone & McLean: IS success Rogers: Diffusion of Innovation (DoI) DePietro, Wiarda, & Fleischer (TOE) Individual level Rogers: Diffusion of Innovation (DoI) Davis: TAM (TAM2, TAM3, UTAUT) Related Dinev & Hart: Privacy calculus Firm level relates to adoption decisions made for an organisation by just one or a few people. Individual level models look at the level of each individual. The DoI model can be used at firm level as well as at individual level. Prof. Dr. Hans P. Borgman 11 Theories of Digital Business 2024-2025 DeLone & McLean: IS Success (1992) Prof. Dr. Hans P. Borgman 12 Theories of Digital Business 2024-2025 DeLone & McLean: IS Success (2003) Prof. Dr. Hans P. Borgman 13 Theories of Digital Business 2024-2025 2x Image page Insert pict Chang 1 deletin Click o appea Rogers: Diffusion of Innovation (1962, 1995) Select 2 to ‘Inser 3 If you drag t ‘Draw 'Crop round image brack the im Prof. Dr. Hans P. Borgman 14 Theories of Digital Business 2024-2025 Gartner's Hype Cycle vs Rogers' DOI 'crossing the chasm' Gartner's hype cycle has similarities to Rogers' DOI model. Superimposing the hype cycle on the DOI curve shows how there is a challenge to move from early adopters to the early majority, as at that point the perceived value (the 'hype') is in the 'trough of disillusion'. Moving upwards in adoption at this point is particularly challenging; there is a 'chasm' that needs to be bridged or crossed, a metaphor popularized in the marketing bestseller 'Crossing the chasm' by Geoffrey Moore (1999). Prof. Dr. Hans Borgman 15 Theories of Digital Business 2024-2025 DePietro, Wiarda, & Fleischer: TOE (1990) Prof. Dr. Hans P. Borgman 16 Theories of Digital Business 2024-2025 2x Image page Insert pict Chang 1 deletin Click o appea Davis: TAM (1989) Venkatesh et al.: UTAUT (2003) Select 2 to ‘Inser 3 If you drag t ‘Draw 'Crop round image brack the im For the exam, you are expected to know the TAM model and know how UTAUT is similar but adds and changes independent (left-hand) variables and moderators (bottom-right), no need to know the exact UTAUT independent/moderator variables. Prof. Dr. Hans P. Borgman 17 Theories of Digital Business 2024-2025 Dinev & Hart: extended privacy calculus model (2006) Prof. Dr. Hans P. Borgman 18 Theories of Digital Business 2024-2025 Case: acceptance of social distancing technologies UvA starts a pilot, you are guinea pigs Would YOU accept to use social distancing technologies? Would firms (UvA) adopt this technology? Which factors would help understand/predict acceptance? Use one or more technology acceptance models to structure your answer Prof. Dr. Hans P. Borgman 19 PoEB: The Digital Firm 2024-2025 Example exam question 1. Digital good are called non-rivalrous. When a good or a technology is non-rivalrous this means that 1. Consumption of this information good does not reduce the amount of it 2. Production costs of information goods are low 3. Fixed cost of producing information goods are high 4. Costs to reproduce an information good are almost zero Prof. Dr. Hans Borgman 20 PoEB: The Digital Firm 2024-2025 Example exam question 2. Which of the following can be considered as ‘revolutionary’ transformations? a. Automating an existing isolated task b. Linking and integrating a number of tasks c. Streamlining and reorganizing internal processes d. None of the other options is correct. Prof. Dr. Hans Borgman 21 PoEB: The Digital Firm 2024-2025 Example exam question 3. Which option is not one of the nine building blocks of the Business Model Canvas? a. Customer segments b. Value propositions c. Revenue streams d. Shareholder interest Prof. Dr. Hans Borgman 22 PoEB: The Digital Firm 2024-2025 Example exam question 4. According to Bonnet and Westerman (2020), what capability or capabilities allow(s) a company to transform digital technology into business advantage? a. Digital capability b. Leadership capability c. Digital capability and leadership capability d. None of the other options is correct Prof. Dr. Hans Borgman 23 PoEB: The Digital Firm 2024-2025 Example exam question 5. What is the primary benefit of network effects in a product or service? a. Reduced competition b. Increased production costs c. Enhanced value as more users join d. Higher initial pricing Prof. Dr. Hans Borgman 24 PoEB: The Digital Firm 2024-2025 Example exam question 6. According to Ozalp et al. (2022), digital platforms create value because they excel in... a. Connecting different users through enhanced matchmaking AND facilitating transactions among different users b. Matching demand and supply in a very efficient way AND facilitating flexible organizations c. Generating new business models very quickly AND facilitating the use of artificial intelligence d. Getting into winner-take-all position very fast AND defending this position through network effects Prof. Dr. Hans Borgman 25 PoEB: The Digital Firm 2024-2025 Example exam question 7. Digital platforms have to harness massive demand side economies of scale because digital products and services... a. are characterized by low revenue margins b. can easily be imitated and reproduced c. are not easy to produce d. complement the core products and services of the platform Prof. Dr. Hans Borgman 26 PoEB: The Digital Firm 2024-2025 The Digital Firm: Course Outline Introduction 1. IT and Strategy 2. Winner Takes All? 3. AI and the Future of Work 4. What is IT Success? 2 7 Prof. Dr. Hans Borgman 27