3 Ways to Manage Corporate Digitization

Single digital executive or digital islands? It’s time to choose an approach that fits your corporate strategy, according to research by the MIT Center for Information Systems Research

Today's CIOs need to figure out how to handle the total digitization of their enterprises. We are already seeing companies in which digitization spending is over 25 percent of the operating budget, and we expect that this will become common. At the MIT Center for Information Systems Research, we have done 10 case studies and a survey to understand best practices.

So far, the landscape of enterprise digitization is diverse in both management processes and spending. In a survey of over 2,012 CIOs, we found that only 39 percent of enterprise-wide investment in digitization shows up in the IT budget.

The remaining expenditures are spread throughout the enterprise--often creating six or seven islands of digitization. Typical islands include production and operations, engineering, R&D labs, knowledge work, digital products, and customer interaction, including social media, mobility and websites.

We've found that enterprises are often using one or more of three approaches to managing total digitization:

Convergence: This approach brings all digitization investments together under a single executive. It usually requires new organizational structures to create efficiencies and synergies and to increase reuse. Enterprises using this approach tend to consolidate the key assets of people, data, infrastructure, skills and management processes.

Coordination: This approach doesn't change organizational structure, but instead adds mechanisms to increase coordination of the big digital investments made by engineering, operations, product owners and other enterprise groups. Leaving the organization structure as is reduces disruption, while coordination mechanisms (such as committees) help units work together and facilitate the delivery of enterprise goals.

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