A business strategy is an action plan designed to build capabilities and achieve goals. With the introduction of digital technologies, companies try to understand a strategy that is relevant and compatible with digital transformation. There is a difference between an information technology (IT) strategy and a digital business (DB) strategy, and this blog post aims to clarify the difference between the two and a business strategy.
An IT strategy is about how a company intends to use information technologies to implement its business strategy. This concept has emerged before the wide expansion of digital technologies. The main idea of an IT strategy is that it is designed based on a business strategy, which must therefore be planned first. In other words, the IT strategy is used as a supportive strategy to achieve the goals set in the business strategy, but not the other way around. (Bharadwaj et al. 2013.)
As digital technologies enable a business to be conducted in a new way that transcends the boundaries of time, place, and functions, the business strategy has been reformed to be compatible with the digital world. Such a comprehensive action plan is called a DB strategy, and it is formulated to yield achievements in digital leadership and digital operations to obtain competitive values through digital transformation. (Ukko et al. 2019.)
Companies need a stand-alone strategy
An IT strategy and a DB strategy have common qualities but also some apparent differences. First, unlike an IT strategy, a DB strategy is not limited to technology, rather it considers a resource-based view of a strategy. Second, an IT strategy is used as a supportive strategy that aligns itself with the business strategy. Instead, a DB strategy is a standalone strategy and can be used in different areas such as operations, marketing, supply chains, etc. Third, there is a one-way direction between a business strategy and an IT strategy. But DB strategy has a two-way discourse with the business strategy and can thus influence and direct a business strategy and vice versa.
Since digital transformation is a comprehensive phenomenon, companies need to have a stand-alone strategy to manage digital transformation successfully. This means that companies must have a DB strategy that is not part of another organizational or functional strategy, but a comprehensive action plan for digital leadership and digital operations to succeed. Digital leadership means doing the right things for the strategic success of the digital transformation. Digital leaders must have digital mindsets to get things done through the opportunities provided by digital technologies. Aside from digital leadership, digital operations are also important in a DB strategy. Digital operations are about integrating digital technologies into different operations and placing them at the core of all business processes and corporate strategy. (Bharadwaj et al. 2013.)
Authors
Mina Nasiri (D.Sc. Tech) is a post-doctoral researcher at LUT University. Her research lies in digital transformation, cooperate sustainability and performance management. Her works have been published in different journals such as Technovation, Information System Frontiers, Technology Analysis and Strategic Management, and Computers in Industry.
Sariseelia Sore (M.Sc. Maths) works at LAB University of Applied Sciences as a senior lecturer and coordinator of the Master’s Programme in Digital Solutions. In addition, she works as a project manager for the digiUP project. Her research interests include areas of digital business operations and performance management, currently focusing on digital solution capabilities and digital business value.
References
Bharadwaj, A., El Sawy, O.A., Pavlou, P.A. & Venkatraman, N.V. 2013. Digital business strategy: toward a next generation of insights. MIS Quarterly, 37(2), pp. 471–482. [Cited 22 Oct 2021]. Available at: https://doi.org/10.25300/MISQ/2013/37:2.3
Ukko, J., Nasiri, M., Saunila, M. & Rantala, T. 2019. Sustainability strategy as a moderator in the relationship between digital business strategy and financial performance. Journal of Cleaner Production, 236, 117626. [Cited 22 Oct 2021]. Available at: https://doi.org/10.1016/j.jclepro.2019.117626
Links
LAB. 2021. Managing digital transformation. [Cited 22 Oct 2021]. Available at: https://lab.fi/en/project/digitaalisen-transformaation-johtaminen
Images
Image 1. geralt. 2019. Altmann, G. Nuoli, menestys, verkkoon, liiketoimintaa. [Cited 24 Oct 2021]. Available at: https://pixabay.com/fi/illustrations/nuoli-menestys-verkkoon-4465292/
