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Über dieses Buch

This book presents a rich compilation of real-world cases on digitalization, the goal being to share first-hand insights from respected organizations and to make digitalization more tangible. As virtually every economic and societal sector is now being challenged by emerging technologies, the digital economy is a highly volatile, uncertain, complex and ambiguous place – and one that holds substantial challenges and opportunities for established organizations.

Against this backdrop, this book reports on best practices and lessons learned from organizations that have succeeded in overcoming the challenges and seizing the opportunities of the digital economy. It illustrates how twenty-one organizations have leveraged their capabilities to create disruptive innovations, to develop digital business models, and to digitally transform themselves. These cases stem from various industries (e.g. automotive, insurance, consulting, and public services) and countries, reflecting the many facets of digitalization. As all case descriptions follow a uniform schema, they are easily accessible, and provide insightful examples for practitioners as well as interesting cases for researchers, teachers and students.

Digitalization is reshaping business on a global scale, and it is evident that organizations must transform to thrive in the digital economy. Digitalization Cases provides first-hand insights into the efforts of renowned companies. The presented actions, results, and lessons learned are a great inspiration for managers, students, and academics.

Anna Kopp, Head of IT Germany, Microsoft

Understanding digitalization in all its facets requires knowledge about its opportunities and challenges in different contexts. Providing 21 cases from different companies all around the world, Digitalization Cases makes an important contribution toward the comprehensibility of digitalization – from a practical and a scientific point of view.

Dorothy Leidner, Ferguson Professor of Information Systems, Baylor University

This book is a great source of inspiration and insight on how to drive digitalization. It shows easy to understand good practice examples which illustrate opportunities, and at the same time helps to learn what needs to be done to realize them. I consider this book a must-read for every practitioner who cares about digitalization.

Martin Petry, Chief Information Officer and Head of Business Excellence, Hilti

Inhaltsverzeichnis

Frontmatter

Introduction to Digitalization Cases: How Organizations Rethink Their Business for the Digital Age

Digitalization confronts organizations with huge challenges and opportunities. With all economic and societal sectors being affected by emerging technologies, the digital economy is highly volatile, uncertain, complex, and ambiguous. Against this backdrop, this book reports on best practices and lessons learned from organizations that succeeded in tackling the challenges and seizing the opportunities of the digital economy. It illustrates how 21 organizations leveraged their capabilities to create disruptive innovation, to develop digital business models, and to digitally transform themselves. These cases stem from various industries and countries, covering the many facets that digitalization may have.
Nils Urbach, Maximilian Röglinger

Digital Disruption

Frontmatter

Enabling Digital Transformation Through Robotic Process Automation at Deutsche Telekom

(a)
Situation faced: Due to the high number of customer contacts, fault clearances, installations, and product provisioning per year, the automation level of operational processes has a significant impact on financial results, quality, and customer experience. Therefore, the telecommunications operator Deutsche Telekom (DT) has defined a digital strategy with the objectives of zero complexity and zero complaint, one touch, agility in service, and disruptive thinking. In this context, Robotic Process Automation (RPA) was identified as an enabling technology to formulate and realize DT’s digital strategy through automation of rule-based, routine, and predictable tasks in combination with structured and stable data.
 
(b)
Action taken: Starting point of the project was the aim to implement DT’s digital strategy. In an early stage of the project, it was decided to utilize RPA as enabler, in particular to drive digitization and automation of transactional activities. From a methodical perspective, the set-up and conduction of the RPA project was structured into (1) organization and governance, (2) processes, and (3) technology and operations. From the content perspective, the RPA project defined and implemented a multitude of detailed RPA use cases, whereof two concrete use cases are described.
 
(c)
Results achieved: Within less than 6 months from the project start, the first transactions were performed automatically through RPA. In March 2016, approx. 229 thousand automatic transactions were successfully realized. Since then, the number of automatic transactions through RPA per month has been increasing significantly. The increase of automatic transactions per month was realized through a growing amount of usage of RPA in different process areas of DT. Within 1 year, the number of automatic transactions per month has been increased to more than 1 million.
 
(d)
Lessons learned: The case provides an example for a concrete technology-induced change as part of a digital transformation. The concept of RPA provides an opportunity to automate human activities through software robots. The lessons learned utilizable for future RPA projects are: (1) Agile design and implementation are important for a successful digital transformation. (2) Understand technical innovations as enabler of the digital transformation. (3) Investigate technical and organizational interrelations from the beginning. (4) RPA is more than a pure cost cutting instrument. (5) The impact of RPA on the people dimension should be managed carefully from the beginning.
 
Manfred Schmitz, Christian Dietze, Christian Czarnecki

Airline Application Security in the Digital Economy: Tackling Security Challenges for Distributed Applications in Lufthansa Systems

(a)
Situation faced: In the era of pervasive digitalization, the airline IT software industry is facing a number of challenges from the combination of new distribution channels, social media, Big data, Cloud Computing, etc. One of the major challenges in creating smart and scalable software applications is how to tackle security challenges when components are distributed and operated in hybrid and multiple clouds, whose providers may be independent and heterogeneous. The difficulties reside not only in identifying and expressing the desired level of security in the application, but also in how the security guarantees are influenced by the cloud services used.
 
(b)
Action taken: We exemplify the case with a flight scheduling application prototype developed by Lufthansa Systems and explain how novel approaches are used to address security issues during the development of such a prototype by following the MUSA approach. MUSA stands for Multi-cloud Secure Applications and refers to an EU-funded research project that is developing an integrated solution for the development and operation of secure multi-cloud applications accounting for those security aspects from the beginning. We introduce the MUSA Security DevOps framework and lessons learned from using it.
 
(c)
Results achieved: Lufthansa Systems tested MUSA tools in an exercise to create, deploy and control a new secure application prototype. We describe how these tools were used in the context of the case study presented in this paper. We also analyze the impact that they had in the development, deployment, and operation of the multi-cloud prototype. This analysis is done by means of a user-centered evaluation using questionnaires and informal interviews.
 
(d)
Lessons learned: The most important lesson is the importance of a sound risk analysis from which the security decisions are taken. MUSA framework supports the automation of the risk analysis in a per component basis, helping to systematize the creation of the application risk profile. Another important aspect is how implementing a SecDevOps approach in a multi-cloud scenario proves that it is highly valuable to include security topics together with the regular DevOps methodology. Finally, we must underline the need for cloud standards which enable homogeneous cloud service descriptions that ease the comparison of the services and the offered security controls.
 
Balázs Somoskői, Stefan Spahr, Erkuden Rios, Oscar Ripolles, Jacek Dominiak, Tamás Cserveny, Péter Bálint, Peter Matthews, Eider Iturbe, Victor Muntés-Mulero

Digital Technologies for Ordering and Delivering Fashion: How Baur Integrates the Customer’s Point of View

(a)
Situation faced: Digital technologies such as augmented/virtual reality, chatbots, image processing, messaging services, or speech recognition have the potential to fundamentally change ordering and delivery in online-fashion shops: Disrupting customer interaction formats like attended shopping, curated shopping, scanned shopping, or virtual fitting may increase customer experience, satisfaction, and sales. However, when smaller amounts of money are available, the question arises as to in which of them to invest. Baur, a major German online fashion retailer, is faced with this question and wants to integrate the customer’s point of view in the site engineering process explicitly.
 
(b)
Action taken: Secondary research as well as workshops with experts and customers were applied to generate lists of aspects to be improved and potential improvements by digital technologies in the company’s ordering and delivery process. A representative sample of 15,865 customers was confronted with these aspects and potential improvements and asked to evaluate them. 9722 customers returned completed questionnaires. Many of them additionally included detailed comments. The survey data were analyzed and the improvements were prioritized for implementation. The survey methodology yielded recommendations for action to such an extent that it is now integrated in the company’s site engineering process.
 
(c)
Results achieved: Overall, the survey showed that the customers are satisfied with the company’s current ordering and delivery process. However, with regard to selection, packaging, and delivery several changes are necessary. Many customers rated potential improvements like virtual fitting and curated shopping as attractive whereas most of them were indifferent with regard to scanned shopping, personalized areas, attended shopping, or C2C inspiration. The survey research resulted in valuable input for the company what actions should be taken in terms of digital technologies to implement. In addition, the company received valuable information on how to improve the ongoing site engineering process.
 
(d)
Lessons learned: Improvements aimed at integrating digital technologies—in particular virtual fitting by relying on virtual reality as well as curated shopping by making use of chatbots and messaging services—were rated by many customers as attractive and should also be implemented by other online fashion retailers. Other digital technology-based improvements are of lower priority. From a methodological point of view, customer surveys—if developed carefully and integrated in the company’s site engineering process—provide valuable support when selecting digital technologies for implementing improvements.
 
Daniel Baier, Alexandra Rese, Nikita Nonenmacher, Steve Treybig, Benjamin Bressem

Applying Sound-Based Analysis at Porsche Production: Towards Predictive Maintenance of Production Machines Using Deep Learning and Internet-of-Things Technology

(a)
Situation faced: All mechanical and mechatronic devices are subject to wear, tear and breakdown. Failure of such devices can cause significant costs, e.g., in automotive factories. Established predictive maintenance approaches usually require deep integration with the specific machine. Such approaches are not practically feasible because of technical, legal and financial restrictions. A non-intrusive, lightweight and generic solution approach is desired.
 
(b)
Action taken: A solution concept was developed which, at its heart, is based on deep learning algorithms that monitor sound sequences captured from a microphone, analyze them and return classification results for use in further steps of a control loop, such as planning actions and execution steps. We named this approach the ‘Sound Detective’ and it was evaluated by retrofitting a coffee machine using simple microphones to capture production sounds. The sound sequences are subsequently analyzed using neural networks developed in Keras and TensorFlow. During prototyping, multiple kinds of neural networks and architectures were tested and the experiment was realized with two different kinds of coffee machines to validate the generalizability of the solution to different platforms.
 
(c)
Results achieved: The prototype can analyze sounds produced by a mechanical machine and classify different states. The technical realization relies on cheap commodity hardware and open-source software, demonstrating the applicability of existing technologies and the feasibility of the implementation. Especially, it was described that the proposed approach can be applied to solve predictive maintenance tasks.
 
(d)
Lessons learned: The present work demonstrates the feasibility of the Sound Detective’s reference architecture and discusses challenges and learnings during implementation. Specifically, key learnings include the importance of data quality, preprocessing and consistency, influences of the experimental setup on real-world prediction performance and the relevance of microcomputers, the target hardware and type of the programming language for complex analyses.
 
Matthias Auf der Mauer, Tristan Behrens, Mahdi Derakhshanmanesh, Christopher Hansen, Stefan Muderack

Digital Business

Frontmatter

Industry 4.0 Enabling Smart Air: Digital Transformation at KAESER COMPRESSORS

(a)
Situation faced: The case company, KAESER, is a leading manufacturer of compressed air systems and services with worldwide operations. The air compressor industry is characterized by high competition and has undergone significant changes over the last three decades. In response to shifting customer demands, KAESER started to transform and expand its traditional business model.
 
(b)
Action taken: KAESER introduced a service-based operator model, called SIGMA AIR UTILITY. In this model, customers no longer purchase the customized air compressors but pay a monthly base only for the compressed air they used. KAESER remains owner of the system, building and operating the compressors on the customer’s behalf. Industry 4.0 technologies play a key role in the success of this new operator model by enabling operational efficiencies resulting from big data analytics and predictive maintenance.
 
(c)
Results achieved: The SIGMA AIR UTILITY operator model leads to numerous benefits for both KAESER and its customers. Key benefits from a customer perspective include reduced cost and increased flexibility, the transfer of operational risks, increased transparency, and improved operational planning. From KAESER’s perspective, main benefits are the reduction in service cost, the development of a long-term partnership with customers, and synergies in product development and innovation.
 
(d)
Lessons learned: KAESER learned numerous lessons from the successful introduction of its service-based operator model. Key lessons learned relate to a lack of cost transparency on the customer side, the changing role of the sales department, the importance of partnerships, the emergence of new risks, the offering of a ‘mixed’ model as an intermediate step, the role of data privacy and security concerns, and a need for interdisciplinary teams.
 
Maximilian Bock, Martin Wiener, Ralf Gronau, Andreas Martin

Dual-Track’s Strategy for Incumbent’s Transformation: The Case of Danske Bank Adopting a Platform Business Model

(a)
Situation faced: The traditionally stable and conservative financial service industry is undergoing a process of transformation where contenders utilizing new technologies and relying on novel business models challenge the role of incumbent financial organizations. The changing preferences of customers, who demand customized services at convenient for them time, and the shifting regulatory environment, which encourages the entry of fintech start-ups, threaten the dominant position of these traditional actors.
 
(b)
Action taken: Instead of observing passively this ongoing trend, Danske Bank, one of the leading banks in Northern Europe, took a proactive approach to digitalization by launching pre-emptively a number of disruptive digital initiatives in order to protect itself from disruption. Danske Bank correctly read the market dynamics in Denmark in connection to consumer readiness, technology maturity and competitors’ actions and decided to venture into the mobile payment area in order to position itself as first mover. By launching its solution MobilePay, which functions as digital payment platform, Danske Bank also adopted a platform business model, which differs from the traditional banking products.
 
(c)
Results achieved: Leveraging its first mover advantage, MobilePay gained momentum and has successfully defended its dominant position in the Danish market, which other local and international mobile payment solutions tried to threaten. Four years after its launch, MobilePay is currently being used by more than 90% of the Danes, has established a growing ecosystem of partners, and has expanded to other Nordic markets. MobilePay’s success has helped Danske Bank improve its brand image and reduce customer churn. It has also demonstrated Danske Bank’s ability to be at the forefront of digital innovation by proving the bank’s capability to address the changing preferences of its private customers and to deliver on the digitalization agenda of its corporate customers.
 
(d)
Lessons learned: This case demonstrates how an incumbent financial organization can successfully protect its core services by venturing into disruptive digital initiatives, such as the launch of platform business model, which requires the adoption of different business thinking. The success of such initiative depends upon the timely launch of a customer-centric solution with focus on simplicity, ease of use and strong value proposition. Despite the short-term gains, the long-term sustainability and profitability of such a solution operating in constantly changing environment requires its continuous development. Its success also depends on achieving a certain level of organizational autonomy from the traditional business, while at the same time establishing synergy to it in order to gain access to the incumbents’ core resources.
 
Kalina S. Staykova, Jan Damsgaard

Digitalization Partnership: How GKN Established a Digital Platform with 3YD to Realize the Disruptive Potential of Metal Additive Manufacturing

(a)
Situation faced: GKN Powder Metallurgy, a leading manufacturer for high precision parts for the automotive industry (GKN Sinter Metals) as well as for metal powder (GKN Hoeganaes), faced the question of how to deliver the future technology of metal additive manufacturing successfully to the market. The potential which stems from disruptive technologies, such as 3D printing to established structures of the industry, was supposed to be realized through an innovative business model before other competitors or new entrants would claim the market.
 
(b)
Action taken: GKN connected with start-ups to gain access to innovative ideas and digital know-how. But it also realized that thinking differently makes it necessary to act differently. Therefore, a separate unit was created, which was detached from the established organizational structure. Together with 3YOURMIND (3YD), a start-up in the area of 3D printing, GKN not only realized a platform and business model, but also digitalized the related back-end processes. Based on the initial success and the grown relationship, the digitalization partnership was furthermore instructed to question the status quo at GKN in more fundamental ways.
 
(c)
Results achieved: With InstAMetal, a digital platform and brand has been developed through which the potential of Metal additive manufacturing (MAM) could be realized at the front-end. Due to innovative services as well as the high scalability and reach of the platform, not only existing customers could be inspired with the new offer, but completely new customers and markets could be won. The platform also triggered the digitalization of the related back-end processes, and while technology and procedures changed, the culture also began to transform with regard to the daily work with 3YOURMIND. Inspired by this success, traditional manufacturing technologies are now being successively investigated for their digital potential and platform capability.
 
(d)
Lessons learned: Four central aspects turned out to be important parameters in the digitalization partnership of GKN and 3YOURMIND: (i) plan digital projects “by sight”, but with a vision, (ii) start in market niches and corporate niches to gain experience and legitimacy, (iii) set up a shelter, in order to decouple the digital initiative from established organizational patterns of action and thought, and (iv) actively engage in co-innovation by systematically opening and networking with start-ups, customers and corporates—because digitalization does not stop, but rather starts at corporate boundaries.
 
Klaus Wildhirt, Claudius Seidel, Udo Bub, Markus Josten, Stephan Kühr

Socio-technical Complexity in Digital Platforms: The Revelatory Case of Helix Nebula: The Science Cloud

(a)
Situation faced: The digitalization case reported here refers to the digital platform Helix NebulaThe Science Cloud. Early after the go-live in 2014, Helix Nebula aimed to compete with leading digital platforms such as those of Microsoft and Alphabet. To this end, Helix Nebula extended its scale and scope of inter-organizational collaboration toward a digital ecosystem. In effect, four leading European information technology (IT) providers started cooperating with partners over a shared digital platform to deliver cloud services to client organizations. Value-destroying high levels of socio-technical complexity resulted. This complexity increasingly inhibited the digital platform Helix Nebula from thriving and growing.
 
(b)
Action taken: Helix Nebula implemented four consecutive and interrelated actions to counteract complexity. First, it modelled its digital ecosystem entailing platform owners, partners, clients, and subcontractors. Second, it agreed on a shared understanding of socio-technical complexity comprising four constituents: structural organizational, dynamic organizational, structural IT, and dynamic IT complexity. Third, it identified manifestations of these constituents in its digital ecosystem. Fourth, it took according countermeasures to reduce these manifestations. While two countermeasures (orchestration and standardization) reflect the need of maintaining organizational and technological integrity, the other two (autonomization and modularization) reflect the need of maintaining organizational and technological elasticity in digital ecosystems.
 
(c)
Results achieved: Helix Nebula has reduced its digital ecosystem’s socio-technical complexity to value-adding levels. This reduction contributed to realizing three interrelated improvements. First, Helix Nebula has scaled more effectively from initially 10 partners to currently 40. Second, partly owing to reduced socio-technical complexity, Helix Nebula has improved its efforts in co-creating value through more effectively exchanging, adding, and even synergistically integrating resources. Third, in implementing the countermeasures against socio-technical complexity, Helix Nebula has developed four capabilities for facilitating a thriving digital platform. These capabilities deal with the intricacies of digital ecosystems that substantially complicate digital platforms’ state of continued existence.
 
(d)
Lessons learned: First, facing considerable challenges in analyzing its evolving digital ecosystem, capturing all dimensions and characteristics of socio-technical complexity in digital platforms proved intricate. In effect, Helix Nebula managers have favored the parsimonious and succinct framework presented in this work conversely. Second, Helix Nebula managers adopt an ambidextrous approach to reducing complexity. That is, successful digital platforms balance (i) top-down, central control imposed by platform owners and (ii) bottom-up, decentral generativity imposed by platform partners, clients, and subcontractors. Third, complexity in digital platforms can pose both good effects (enabling, rewarding, value-adding, required, desirable) and bad effects (constraining, unrewarding, value-destroying, unrequired, undesirable).
 
Michael Blaschke

Sitecore: Retaining Technological Leadership Through Digital Tech Acquisitions

(a)
Situation faced: In 2011, Sitecore was the market leader in web content management industry. Sitecore envisaged that the web content industry was about to converge with the e-commerce industry as one unified industry. To remain competitive in this new market, Sitecore would need to provide integrated commerce and a content platform in its product portfolio. To build this unified platform, Sitecore would require a commerce engine. Sitecore’s competitors also recognized this gap in the market and started actively exploring options for making this industry convergence. Thus, the competition to be the first one to offer a unified platform in the industry was in full throttle.
 
(b)
Action taken: Sitecore considered the different options of the building, buying (acquiring), and partnering to cover up the e-commerce gap in its offering. Building the commerce engine would involve complex development, and take a longer time to market. Sitecore, therefore, shortlisted the different options for partnering and acquiring. During this shortlisting phase, a company named SMITH—with one of the leading e-commerce engine in their product portfolio—approached Sitecore with a selling proposition. Sitecore decided to acquire the e-commerce unit. Sitecore established the strategic rationale for the acquisition, investigated its feasibility, and eventually integrated both the technology and the development team of the e-commerce engine into a coherent platform.
 
(c)
Results achieved: As a result, Sitecore achieved technology leadership in the converged industry including both e-commerce and web content management—commonly referred to as omni-channel retailing. Being the first one to be able to combine commerce and content, Sitecore has been successful in maintaining its leadership position in Gartner’s magic quadrant for web content management for four straight years since the acquisition of Commerce Server in 2013. Altogether, Sitecore has held this leadership position in quadrant for 8 consecutive years now. By providing a unified platform, Sitecore has been able to increase customer satisfaction and successfully established a partner eco-system around the unified platform.
 
(d)
Lessons learned: Sitecore learned valuable lessons for what it takes to retain technology leadership through acquisitions that are of value to all companies seeking to compete on technological innovation. Five critical learnings extracted are: First, when speed matters, acquisition can be the right thing instead of building or partnering with technology. Second, the cultural fit is essential, and to ensure this fits the organization, it must invest in the acquisition process. Third, acquiring something that is not overlapping makes integration easier. Fourth, a tech acquisition creates technological debt that needs to be paid off. Fifth, it is never too early to think about integration in the acquisition process.
 
Stefan Henningsson, Nishu Nishu

Development of Strategies and Transformation Paths for Structured and Targeted Digital Change: The Case of the Presbyterian Church of Ghana Trinity Congregation

(a)
Situation faced: The Church, irrespective of its steady growth from 4 members in 1965 to 2910 members in 2015, struggles to reach out to larger (newer) communities and improve money collection. It struggles as well in reaching its local community especially its members at the right time with the right message. In brief, for the Church to engage its members and the public with respect to worship service, publicizing its social activities (evangelism, donations to the needy, visits to prisons, etc.) and payment of voluntary contributions, it had to count on their physical presence on its premises.
 
(b)
Action taken: The Church developed an interactive online presence (website) with payment integration for payment of tithe, offertory, voluntary thanksgiving, etc. Social media accounts were established to help create an online community with the secondary objective of driving traffic to the website and engaging the congregation remotely outside church service hours. Mobile money and a point of sale (POS) device were used to facilitate cashless transactions. Supportive committees were set up while interconnecting existing ones. Some of the pastors upload videos to social media as supplement to morning devotions. Events were promoted on the website and social media.
 
(c)
Results achieved: Amongst the lot, there is currently an increase in social media engagements through event posts, live streaming, image and other post formats and also an increase in participation of church events by almost 50% on average as well as an increase in the number of website visitors from 2558 (901 unique visitors) in the first year after deployment to 11,612 visitors (5841 unique visitors) in the third year as at September 2017. Even though membership statistics surprisingly indicated a 638 decline in 2017, which is worth investigating.
 
(d)
Lessons learned: Although deploying the online system was successful, it came with its lessons drawn from challenges which cannot be ignored. These include trust in electronic payments, the need for strategic framework in the adoption of technology, the need to educate users. Other lessons include the need for management support and readiness of employees/volunteers and resource availability as a precursor to achieving strategic IS innovation objectives.
 
Sylvester Tetey Asiedu, Richard Boateng

Creating a Digital Consulting Solution for Project Management Assessments at Dr. Kuhl Unternehmensberatung: Development and Initial Demonstration of a Fully Automated Asset-Based Consulting Approach

(a)
Situation faced: Consulting provider DKUB GmbH & Co. KG was looking for options to achieve a positive marketing effect with only moderate effort, to raise the profile of the company through innovative consulting services, and to supplement the existing portfolio with digital services, which represent a “door opener” for the classical consulting business. Due to a personal contact between the first two authors of this contribution, the idea of a joint project emerged. It was decided to develop a digital assessment tool. The chosen pilot application area was project management assessment, as project management issues account for the core of DKUB business.
 
(b)
Action taken: Since a software system should be created, a design-science (DS) approach was employed. Within design and development, a prototype-oriented process model was used. The project took place without a particular client. Instead, the basis was a jointly developed business concept. Furthermore, a study of Nissen et al. (2017) on quality requirements for virtual consulting services and general features of advisory consulting were considered. The process within the web-based system should reproduce an expert report by gathering data from the client company and linking these with digitally stored expert knowledge to produce a well-founded assessment on the given subject.
 
(c)
Results achieved: The assessment is today available to clients on the initial website of the consulting firm via an online shop. After all participants (which might have different roles in the respective project) have successfully taken part in a survey related, the client can call up an expert report. As a result, he or she receives an approximate overview on the status of project management in this particular project. Moreover, recommendations for action to improve the situation are given. Currently, the system is being evaluated for use in a multinational company to assist in continuously monitoring internal projects.
 
(d)
Lessons learned: It is possible to create a flexible architecture for virtual assessments on in principle any conceivable subject. Whether virtualization is the right approach for a specific client or project should be clarified based on appropriate criteria, such as the ones proposed by Nissen and Seifert (2017a). The early integration of clients into design and development of digital consulting products is important to economic success. Consulting providers should get involved early and build up experience and knowledge in virtualizing own services without expecting immediate breakthroughs. We estimate that virtual consulting will not generally replace conventional on-site consulting, but rather supplement it.
 
Volker Nissen, Jochen Kuhl, Hendrik Kräft, Henry Seifert, Jakob Reiter, Jim Eidmann

Building a Digitally Enabled Future: An Insurance Industry Case Study on Digitalization

(a)
Situation faced: INSUR is one of the top fifteen insurance companies in Germany. Between 2000 and 2015, the organization focused on (1) external growth through several acquisitions as well as (2) the integration of these acquisitions including the corresponding IT landscape into the overarching organization. From 2016 onwards, INSUR’s strategic focus shifted to actively shaping its group’s digital journey, including the build-up of new digital capabilities to fulfill the agility and innovation requirements of the business units. INSUR’s strategy focused on growth and efficiency gains through digitalization as well as on fostering innovation in developed digital solutions and services.
 
(b)
Action taken: At the end of 2015, INSUR's top management started a strategic digital transformation initiative to define the cornerstones of the groups’ innovation and digital agenda. This agenda followed six strategic imperatives: (1) creating digital awareness throughout the organization; (2) developing a group-wide common understanding of digitalization and establishing the first digital and innovation strategy; (3) selecting and validating strategic focus areas for digitalization; (4) enlarging the company's digital ecosystem using collaborations with startup accelerators and universities; (5) setting up a digital lab to develop and prototype digital use cases and (6) enhancing and scaling the digital lab towards a digital factory.
 
(c)
Results achieved: INSUR successfully initiated its digitalization journey and developed a high-level, group-wide digital and innovation strategy and selected its digital focus topics. Further, it set up an innovation management process and enlarged its digital ecosystem. The digital lab that INSUR started, however, did not take on as well as expected. Realizing that a small incubator is insufficient, INSUR is currently upscaling and transitioning the lab towards an integrated end-to-end digital factory.
 
(d)
Lessons learned: While all changes might require some management support, the nature of digitalization requires top management support across all business and functional areas right from the beginning. Even if there are still legacy systems that need to be shut down or renewed, digitalization should be addressed early on while continuing to renovate the IT. Furthermore, fostering cultural change to be an attractive employer for new digital talents, which are required on all levels to make the digital transformation a success, is a key success factor. Finally, handling and actively managing concerns and required cultural change within the organization are paramount.
 
Janina Weingarth, Julian Hagenschulte, Nikolaus Schmidt, Markus Balser

Digital Transformation

Frontmatter

Digital Transformation of ABB Through Platforms: The Emergence of Hybrid Architecture in Process Automation

(a)
Situation faced: ABB faced four decades of successive digitization of core technology in the process automation business, i.e., platform technology for process control. The infusion of digital technology into the physical production environment generated recurrent disruptions of the business model calling for drastic adjustments that lead to an emergent transformation process. Digitization of ABB’s business scaled and traversed multiple social and technical settings whereby the platform evolved from product-focused into sustaining a digital ecosystem comprising a complex system of actors and value generation processes.
 
(b)
Action taken: Successive digitization with four distinct strategic foci; (1) replacement of analogue equipment for digitally enabled efficiency in restricted and well defined products and processes, (2) internal integration of information systems for efficiency in maintenance and engineering, (3) open and semi-open boundary resources for improved data integration and information services with critical partners, and (4) orchestration and adaptation of externally induced technical innovation on the platform to enable data-driven operations.
 
(c)
Results achieved: ABB transformed their operations and successfully adapted to digital disruption by adopting new business models. The company managed the threat of digital disruption by newcomers and incumbents in the software industry, despite the constant dissolution of product boundaries and the risk of unbundling of value creation. ABB is now a global leader in the process automation industry, and the digital agenda and capabilities have been integrated into the mission and business model.
 
(d)
Lessons learned: (1) Physical and digital architecture enables different dynamics (episodic change vs. emergence), hybrid architecture is subject to clashes between these logics. (2) Digitalization is cumulative and emergent. In this case, it happened across four phases categorized by shifts in functional levels, decision rights, combinatorial options, boundary configurations and value propositions. (3) Since digitalization inverts the organization’s strategic emphasis, collaboration across boundaries becomes a pivotal capability to succeed. (4) Through new functionality and more sophisticated responses, digitalization increases organizational capacity to deal with complexity, but also triggers new types of stimuli. (5) When faced with significant tensions, signals from management generate amplifying deviation loops with unexpected consequences (butterfly effect).
 
Johan Sandberg, Jonny Holmström, Kalle Lyytinen

Digitalization of Information-Intensive Logistics Processes to Reduce Production Lead Times at ENGEL Austria GmbH: Extending Value Stream Mapping with Subject-Oriented Business Process Management

(a)
Situation faced: ENGEL is a strongly customer-oriented company with a focus on flexibility and innovations. These priorities are projected into a constant effort to offer customer-oriented solutions with short delivery times and the highest possible quality. Driven by this strategy, one of the company’s goals was to further decrease the lead time of one of the main components for the injection molding machines by at least 30%. We were facing a cross-company process spanning over several different departments (logistics, production, IT, etc.), dozens of involved process actors, and no available process documentation.
 
(b)
Action taken: The first step was to use Value Stream Mapping (VSM) to document the production process and to identify weak points and potential improvements. However, the defined lead time reduction could only be achieved by considering the production process in conjunction with accompanying administrative processes. Both areas are information-intensive as they are largely based on the processing and transfer of data. This required a combination of VSM with subject-oriented Business Process Management (S-BPM) as basis for specifying new and improved processes which were then implemented in an SAP ERP System environment.
 
(c)
Results achieved: The main achievement was the optimization of cross-company processes and the digitalization and automation of formerly manual processes. This resulted in greatly reduced process costs, reduced work in process, a reduced production lead time for individual components, and a reduced overall lead time by approx. 45%.
 
(d)
Lessons learned: By using the VSM method we produced a detailed description of our production processes. The S-BPM method provides a modeling language that is easy to learn and can document complex processes at a high level of detail. It can provide a process description that complements the VSM with the required description of the information flows. The focus on the information flow of a process allows for process improvements and the digitalization of processes to be implemented in existing software environments with relatively little effort and still achieve significant results. A detailed and concrete process description can support the IT department to directly digitalize and automate process steps, reducing the time needed for additional verification steps and test runs.
 
Christoph Moser, Karel Říha

Digitalization in Public Services: Process Automation and Workforce Management at BruderhausDiakonie, a Social Services Organization

(a)
Situation faced: In Germany’s public sector, one of the main challenges is the demographic change and the resulting lack of skilled human resources. At the same time, digital solutions for e.g. citizens, businesses or other stakeholders move from “nice to have” towards “must have”. The automation of services seems to be a promising approach to combine these two developments. This paper features BruderhausDiakonie, a social services organization which is growing horizontally at many new locations in order to ensure closeness to its clients. This process leads to an increase in complexity for its daily business and necessitates a change in thinking regarding the organization’s IT towards increased digitalization.
 
(b)
Action taken: In 2016, BruderhausDiakonie initiated a change process. The central message, which guided the project team from the beginning, gets to the root of the problem regarding digital transformation: Standardization before digitalization. The first step of a thorough analysis is the identification of routine tasks. Additionally, the vision of no more “Turnschuh-IT-Administration” (eng: “IT department in sneakers”) was developed and communicated. An easy to use technology platform was implemented, mobile devices were integrated—and data security was given number one priority.
 
(c)
Results achieved: The digitalization process of BruderhausDiakonie is not yet finished. However, first results are already visible. In August 2017, five pilot offices were reorganized towards the new model. Until 2020, the process is to be finished for all offices. The first effects are already observable, along with the feedback of the involved employees. After all, the tangible benefits of digital transformation take a certain amount of time to become clear to employees. The IT department can help to start a new process, but everyone can and should be actively involved. The employees working in care or other departments feel the change happening, which is indicative of how their daily work is going to be in the future. Their work becomes more convenient, more comfortable and less time-consuming in regard to purely administrative tasks. Additionally, BruderhausDiakonie is also taking a pioneering position in how they will implement the benefits of the Internet of Things (IoT) as quickly as possible in their offices. In the future, employees should not only be provided with mobile devices, but also intelligent working materials, which not only make their work with clients easier, but diagnosis and care as well.
 
(d)
Lessons learned: Digital transformation is a challenge, but it is feasible. It is important to choose an IT which allows for a gradual development towards the digital age. Knee-jerk solutions seem to be counterproductive. More promising is a step-by-step change process in regard to digital transformation, because it allows all involved parties a smooth adjustment to the digital requirements of the future. Three lessons learned stand out: (i) digital transformation is more complex than expected; (ii) all employees need to be involved and creating acceptance is a continuous task; (iii) one has to carry on and not to stop after the first successes.
 
Ulrich Müller, Thomas Deelmann

Digital Health Innovation Engineering: Enabling Digital Transformation in Healthcare: Introduction of an Overall Tracking and Tracing at the Super Hospital Aarhus Denmark

(a)
Situation faced: Digitalization is changing healthcare. Especially hospitals are under tremendous pressure and there is a recognizable difference of digital maturity compared along the European states. Besides German hospitals, Fraunhofer ISST is supporting the Danish Government as they are in an outstanding restructuring process with the aim of building five super hospitals in different regions. The vision, fixed by the Danish DNU Hospital in Aarhus, was to allow the overall vertical and horizontal digitalization of processes by having one common information architecture. Fraunhofer ISST was contracted by DNU to support the definition and valuation of a reference architecture.
 
(b)
Action taken: We started with a very lean approach and identified three key requirements: (1) support of operative processes, (2) analysis and optimization, and (3) automation and planning. A first idea was to implement an “Automated Transport Service” in a logistical scenario by combining the “trolley service” with the “task management service”. The whole vision could be reduced to one aim: Optimization by automation. To reach this aim we identified the need for a structured process for digital transformation that will pay attention to the demand and needs as well as the competences of the employees. Therefore, Fraunhofer ISST started to develop the approach called “Digital Health Innovation Engineering” (DHIE).
 
(c)
Results achieved: Making use of digitalization in healthcare requires a structured process called digital transformation to enable health companies, hospitals and other facilities to do so. The preliminary results deduced from the learnings at the DNU hospital were used to define the basic framework of DHIE. Furthermore, we detailed the method called “maturity index for hospital 4.0” to measure the digital maturity of hospitals paying attention to technical as well as human factors.
 
(d)
Lessons learned: We identified, that the introduction of digital solutions and processes requires a structured process. Digitalization is more than technology; it is a process of transformation. Especially in healthcare, the human-to-human interaction like patient to physician plays an important role. Thus, digitalization has to define solutions how processes can change with respects to its human actors.
 
Sven Meister, Anja Burmann, Wolfgang Deiters

Digital Transformation in Healthcare: How the Potential of Digital Health Is Tackled to Transform the Care Process of Intensive Care Patients Across All Healthcare Sectors

(a)
Situation faced: The digitalization case reports from the care process of the fictitious mechanically ventilated patient, Mr. Müller. After inpatient treatment in the ICU of the Charité, Mr. Müller is awaiting his discharge to the outpatient nursing care facility of LRD that is an outpatient care provider for long-term mechanically ventilated patients. The current care process of long-term mechanically ventilated patients is determined by insufficiently coordinated care processes between the inpatient and outpatient care providers and missing standards and tools for information exchange and communication between the care providers, as well as between the care providers and the patients. Motivated by the unsatisfactory patient data management across all healthcare sectors, Mr. Müllers takes part in the feasibility study of the scientifically supported innovation project Bea@Home. The aim of the project is to develop, test, and evaluate an innovative, integrated, and digitally supported care model for mechanically ventilated patients.
 
(b)
Action taken: This section focuses on the digital transformation of the care process introduced by the innovation project Bea@Home and describes the implemented inter-organizational, technological, and organizational changes in detail. As digital innovations in German healthcare typically face the challenges of idiosyncratic and often non-interoperable IT infrastructures and applications as well as non-coordinated processes, the development and implementation of coordinated organizational processes across the relevant healthcare sectors is an essential basis for any intersectoral change process before technological aspects, such as the implementation of digital health solutions, can be addressed. The inter-organizational changes refer to collaboratively developed process and quality standards that integrate the relevant healthcare sectors. The technological changes refer to the digital solutions implemented in the feasibility study, including an inter-sectoral EHR, a video conference tool, and AAL services. The organizational changes refer to the change processes within each organization that are triggered by the aforementioned inter-organizational and technological changes. These are the adjustment of firm internal process standards and their documentation, HR training on the use of the digital solutions, the creation of new organizational positions, as well as the specific customization of the digital solutions.
 
(c)
Results achieved: The qualitative evaluation of the feasibility study from the perspectives of the care providers and the patients shows a distinct amelioration of the quality of life for the mechanically ventilated patient, Mr. Müller. Furthermore, an increase in the quality of care, especially in outpatient care, as well as during the discharge and re-admission process, is indicated. The quantitative evaluation of the new care model from an economic perspective, being a process cost analysis of digitally supported care processes, shows an unbalanced allocation of benefits and costs between the inpatient and outpatient healthcare sector. Due to the higher commitment of the hospitals’ physicians during the outpatient care process, the new care model causes a distinct increase of the personnel related process costs for the hospital. At the same time, the personnel related process costs decrease for the outpatient care providers due to the reduction of patients’ re-hospitalization.
 
(d)
Lessons learned: This digitalization case highlights five key lessons learned: (1) the necessity of changing governance structures for successful digital transformation processes, (2) the necessity of adequate business models for the different actors involved, (3) the meaning of a strategic fit between digital solutions, and market regulations and standards, (4) for the special case of German healthcare—the necessity of changing reimbursement models for innovative digital care models, and (5) the reciprocal relation between digitalization and inter-organizational collaboration.
 
Charlotte Vogt, Martin Gersch, Claudia Spies, Konrad Bengler

Data Innovation @ AXA Germany: Journey Towards a Data-Driven Insurer

(a)
Situation faced: AXA is transforming towards a data-driven insurance company to fully unlock the potential of its data. However, the transformation faces several challenges: Firstly, implementing a living data-driven decision-making system, demands a cultural change in the business lines. Secondly, the heterogeneous infrastructure complicates the deployment of advanced technologies. Data harmonization techniques are outdated, causing low computing performance, and high maintenance costs. Thirdly, insurers have to fulfill new legal regulations ensuring strict data protection. Since the functional roles to address the aforementioned challenges are not clearly assigned, a new organizational entity within AXA Germany was required.
 
(b)
Action taken: The Data Innovation Lab was founded to focus on these tasks. It is a cooperation of the units Data Analytics, Data Management Office, and Data Engineering under one transversal roof. Data Analytics drives innovative data analytic projects and designs new solutions for complex business challenges. The Data Management Office is concerned with process efficiency, compliance, stability, and evolution. This includes tasks such as initiating activities for data quality improvements, providing data architecture and prioritizing data protection. Data Engineering builds the technical infrastructure, accelerates the evolution of the IT landscape and implements a data lake.
 
(c)
Results achieved: A target operating model shows how AXA Germany operates the tranformation towards a more digital, data-driven, and customer-centric organization. The target operating model (TOM) of Data Analytics states the tasks, role definitions and a cooperation model of how to operate innovative data analytic projects. The TOM of Data Management Office states the tasks, role definitions and disciplines of how to provide an efficient and compliant data organization. The TOM of Data Engineering states the tasks, role definitions, and a cooperation model of how to develop and operate the data lake.
 
(d)
Lessons learned: It is essential to build up an interdisciplinary work environment as Data Analytics and the Data Management Office operate at different speeds. A bottom-up transformation, which actively involves every member of the enterprise, is required to establish a cross-sectional data culture. The funding is allocated depending on several factors: Data initiatives have financial incentives but also an experimental orientation. Most of the data management activities are necessary due to future regulatory requirements. Furthermore, a major success factor on the data-driven journey is the support and the commitment of the top-management.
 
Alexa Scheffler, Christian Paul Wirths

Volkswagen Education Lab: Accelerating the Digital Transformation of Corporate Learning

(a)
Situation faced: As a car manufacturer, the Volkswagen Group faces a challenging business environment due to digitalization and new requirements regarding mobility. Those trends force automotive companies to review their portfolio. The development of new products and services results in a changing competence need within the (existing) workforce. To achieve the required skill transformation, new corporate education and training solutions based on innovative concept development is rapidly gaining importance.
 
(b)
Action taken: The Volkswagen Group Academy is responsible for the training and development of the entire organization’s workforce. To get an understanding of new technologies and trends in corporate education, the organization initiates the Education Lab as an independent unit. The lab’s core idea is target group centered problem-solving. The development of new solutions starts with user problems regarding corporate learning at Volkswagen, which are examined by quantitative and qualitative methods. The lab therefrom uses an iterative, experimental method to validate the potential of the derived solutions to meet the identified user problems.
 
(c)
Results achieved: When implementing the Education Lab’s methodological approach, a key result is the development of prototype solutions that meet the target group needs. The accuracy with which the prototypes meet the needs of the target group validates the methodology of the Education Lab. In addition, the entire organization benefits from the lab’s incubator-like approach, which helps to build technological expertise based on research and scouting. Herein, the lab empowers employees to participate in developing new ideas outside their day-to-day business and departmental structures.
 
(d)
Lessons learned: Implementing an innovative approach such as the Education Lab within a traditional corporation results in a variety of challenges. The existing structures grew over a long time—and they work well in serving the current purpose. Hence, projected changes are often associated with uncertainty. The learnings gained out of the implementation of the Education Lab provide the opportunity to derive concepts and ideas about how to overcome innovation barriers within traditional organizations.
 
Mathias Wildgrube, Nils Schaupensteiner, Jan Wehinger

Navigating Through Digital Transformation Using Bimodal IT: How Changing IT Organizations Facilitates the Digital Transformation Journey at Deutsche Bahn Vertrieb GmbH

(a)
Situation faced: Deutsche Bahn Vertrieb GmbH (DB Vertrieb) is a sales company, operating as part of the DB Group in the passenger transportation industry. Around the millennium, the firm introduced digital sales channels in addition to its traditional ones. The inherent increasing visibility of DB Vertrieb’s IT systems for the customer required a flexible and fast IT function. Fifteen years later, the importance and pervasiveness of IT accounted for the need to integrate all parts—traditional and digital—of DB Vertrieb’s channel strategy to allow for a smooth omni-channel customer experience.
 
(b)
Action taken: The company reorganized its IT division twice. First, it established a second IT function within its online and mobile channel division. The new IT unit was small and flexible, incorporating a start-up culture. The divisionally separated bimodal IT approach lasted for about 15 years before both functions were reintegrated within the firm’s new digital division. DB Vertrieb also introduced a framework for scaling the agile approach of the former online IT to the corporate level.
 
(c)
Results achieved: The bimodal IT design enabled the company to implement changes quickly with regard to the online and mobile channels. However, the setup also led to cultural differences between the two IT units impeding desirable collaboration. After the restructuring into a single digital division IT unit, channel-spanning strategies were possible and DB Vertrieb experienced a boost in motivation and employee engagement. Nevertheless, bringing the modes of operation together takes more time than expected, so the new setup still lacked the desired success in terms of tangible results.
 
(d)
Lessons learned: The case demonstrates how bimodal IT as a tool can facilitate the IT transformation necessary to accomplish a company’s digital transformation. A continuous reassessment of the bimodal IT type is vital. It enables the IT unit to support the business in satisfying changing customer needs in the best way possible. In addition, certain strategic components, such as omni-channel strategy, seem to be in need of a specific type of bimodal IT. Furthermore, the case indicates which leadership roles, training styles, and measures are pivotal for successful transformation through bimodal IT and how adaption of a different type of bimodal IT helps to push core IT topics.
 
Lea Fortmann, Ingmar Haffke, Alexander Benlian

How the US Federal Communications Commission Managed the Process of IT Modernization

(a)
Situation faced: This case examines how the U.S. Federal Communications Commission (FCC) executed its information technology (IT) modernization effort. In 2013, the FCC was spending about 80% of its IT budget on maintaining its legacy systems. Further, the FCC had experienced constant changes in top leadership that resulted in several fragmented IT modernization efforts. The outdated IT systems were not only costly to maintain but were prone to cyber-attacks and verge of major failure. And, the employee morale was lower, and they feared IT modernization and transformation. Overall, the FCC faced several technical and human challenges with IT modernization.
 
(b)
Action taken: Acknowledging the eight previous years of fragmented implementation, the new CIO conducted inventory of both IT and human infrastructure. The CIO commissioned an IT tech team to conduct an inventory of the existing IT infrastructure in the organization with a focus to understand vulnerabilities and level of exposure to cyber security. Further, the CIO also took steps to understand the sentiments of employees, customers, and top leadership about IT modernization efforts. Public agencies often promote silo functioning and employees are fearful about change. Thus, the CIO designed several initiatives to solicit feedback from diverse stakeholders and regularly engage them in the process of IT modernization.
 
(c)
Results achieved: The FCC moved 207 on premise IT systems to either public cloud environments or with a commercial service provider. In the process of this successful transformation, the Commission reduced the amount spent on operating and maintaining systems from over 85% to less than 50%. The FCC achieved this with a flat budget, thereby increasing the percentage of funds available for new development even. The FCC also reduced the time it took to prototype new systems from approximately 7 months to less than 48 h to produce a prototype.
 
(d)
Lessons learned: The FCC’s IT modernization efforts offer following lessons to C-suite leaders: (1) develop a IT modernization strategy that includes both IT systems and the people supporting it; (2) plan a phased approach that achieves ‘quick wins’ in cloud implementation to increases momentum; (3) take time to align both top leadership and employees’ expectations with the IT modernization effort during planning; (4) adopt an open innovation approach that encourages and empower ‘change agents’ within the agency to creatively address in a cloud environment the longstanding challenges associated with the agency’s legacy endeavors, IT systems, and roles; and (5) effectively engage and communicate openly with internal and external stakeholders.
 
Kevin C. Desouza, James S. Denford, Rashmi Krishnamurthy
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