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1 Introduction
An Introduction to Digital Transformation
Patrick Mikalef and Elena Parmiggiani
Abstract Digital transformation has been one of the most studied phenomena in
information systems (IS) and organizational science literature. With novel digital
technologies emerging at a growing pace, it is important to understand what we have
learned in over three decades of research and what we still need to understand in
order to harness the full potential of such digital tools. In this chapter, we present a
brief overview of digital transformation and develop a conceptual framework which
we use as a basis of discussing the extant literature. The conceptual framework is
also used as a means of positioning the empirical chapters presented in the rest of this
edited volume. Finally, we discuss the role of context in digital transformation and
identify some differences that span industry, domain, size class, and country of
Digitization, digitalization, and digital transformation are terms that often appear in
the top of priorities for contemporary managers. While often used synonymously,
these notions have very different meanings and entail a radically different approach.
Digitization describes the process of moving from analog to digital, while digitali-
zation is defined as “the way many domains of social life are restructured around
digital communication and media infrastructures”[1]. Finally, digital transformation
has been defined as “a process that aims to improve an entity by triggering significant
P. Mikalef
Department of Computer Science, Norwegian University of Science and Technology,
Trondheim, Norway
Department of Technology Management, SINTEF Digital, Trondheim, Norway
e-mail: patrick.mikalef@sintef.no
E. Parmiggiani (*)
Department of Computer Science, Norwegian University of Science and Technology,
Trondheim, Norway
e-mail: parmiggi@ntnu.no
©The Author(s) 2022
P. Mikalef, E. Parmiggiani (eds.), Digital Transformation in Norwegian Enterprises,
https://doi.org/10.1007/978-3-031-05276-7_1
1
changes to its properties through combinations of information, computing, commu-
nication, and connectivity technologies”[2]. Although largely acknowledged that
these three terms often follow a sequential order of maturity, most contemporary
organizations are now in the process of digitally transforming their operations.
Doing so, however, presents a number of caveats, and technology is often only a
part of the complex puzzle that must be solved to remain competitive in the digital
world.
2 P. Mikalef and E. Parmiggiani
While there has been a significant amount of research conducted over the past
decade in the domain of digital transformation, there is still a lot to learn about this
shift. This is largely because digital transformation is subject to a vast array of
contingencies and takes place in a fluid and constantly changing environment which
requires a holistic understanding of the entire ecosystem in which it unfolds. Among
the vast empirical research conducted examining the phenomenon of digital trans-
formation, researchers have examined changes in organizational strategies [3],
process [4], structures and decision-making organizing [5], culture [6], as well as
industry shifts [7]. Nevertheless, digital transformation is not a phenomenon that
prompts effects at these different levels, without at the same time being influenced by
them simultaneously. Therefore, there is a complex interplay between the forces that
affect digital transformation and its effect on them.
For this article, we ground our understanding of digital transformation on the
abovementioned definition of Vial (2019). This definition regards digital transfor-
mation as a process that encompasses significant changes through the introduction of
information and communications technologies (ICTs). Extending the work of Vial
(2019), we develop a conceptual model which incorporates theoretical insight from
the literature on digital business strategy [8], organizational change management [9],
and IT capabilities [10]. The conceptual model serves as a basis for positioning the
cases presented in the remainder of the book, as well as for developing a compre-
hensive understanding of digital transformation as studied in the extant literature.
We want to highlight here that the conceptual model presented in this article serves
the purpose of creating a comprehensive understanding of what the concept entails,
without having emerged from a systematic process of reviewing all relevant litera-
ture. Rather, it builds on prominent research streams that have appeared over the
years, as well as on the authors’own perspectives.
The next section introduces the conceptual model of digital transformation and
presents some key themes that have occupied academic and practical interest over
the past decades. In sequence, we briefly touch upon the implications that research
has had on practice and conclude with a brief description of the subsequent chapters
and the different domains they cover.
An Introduction to Digital Transformation 3
2 A Conceptual Model for Digital Transformation
Building on the extant literature on digital transformation, and grounded on the
synthesis of recent prominent literature reviews [2,9], we develop a consolidated
perspective of digital transformation as depicted in Fig. 1. The conceptual model
makes the distinction between digitalization, which only involves the improvement
of organizational activities by leveraging digital technologies, and digital transfor-
mation which entails a deeper, core change of the entire business model of an
organization with ripple effects on entire industries. Thus, digital transformation
requires a broader view of antecedents that spark or condition changes within
organizations, as well the outcomes that such changes have on the broader context
of operating. By applying this understanding in our conceptual model of digital
transformation, we define four key points of interest which are described in more
detailed in the sub-sections below. These are by no means exhaustive, and there are
obviously complex causal and feedback associations between the key elements that
jointly comprise digital transformation. For the sake of simplicity and to provide a
concise and understandable overview of digital transformation, this article presents
some of the key findings within the four main areas: antecedents, leveraging digital
technologies, value generation, and performance.
2.1 Antecedents
Antecedents of digital transformation include elements that trigger and shape digital
transformation [11]. Such antecedents either have a direct relationship in shaping the
actions organizations must undertake to transform their business strategies and
operations or act as moderating conditions which influence the way digital transfor-
mation is enacted.
Emerging digital technologies are obviously one of the key drivers of prompting
changes and disruptions in how organizations operate. Over the past decade, the pace
at which such new digital technologies are maturing and reaching production has
accelerated, with technologies such as augmented/virtual reality, 3D printing, IoT,
cloud computing, blockchain, drones, digital twins, and machine learning, to name a
few, creating massive disruptions in entire industries [12]. A prominent example has
been the proliferation of cloud computing services which has enabled organizations
to deploy digital solutions throughout their value chains, which were previously
unable to do so due to the high cost of setting up and maintaining scalable local
infrastructure.
Nevertheless, emerging digital technologies alone are insufficient to produce
digital transformation effects, as they are heavily dependent on the organizational
context in which they are introduced. The history of an organization and the
structures, culture, skills, and leadership commitment play an important role not
only toward what types of digital technologies will be embraced but also at what
. 1 Conceptual framework of digital transformation
4 P. Mikalef and E. Parmiggiani
Fig
speed and to what breadth within organizational activities [13]. As with any orga-
nizational change, rigidity, path dependence, and resistance to change can signifi-
cantly impact efforts toward digitally transforming operations. These effects can
manifest themselves at different levels within an organization and at different stages
of deploying digital technologies [14]. Hence, there are numerous tensions that
manifest during the process of digital transformation which can either enable or
impede diffusion [14,15].
An Introduction to Digital Transformation 5
Similarly, there are forces from the external environment that can prompt or
restrict the digital transformation process of organizations. For example, changes in
customer behavior or their expectations can necessitate strategic responses from
organizations in order to address the new requirements [16]. On the other hand, such
prompts may be a result of competitive actions which then spark a snowball effect in
entire industries. Some examples of this are the use of touchscreens on mobile
devices or the use of digital distribution channels for audio and video content
which sparked a major disruption through streaming services [17]. Yet, changes in
how digital transformation is deployed can also be a result in new laws and
regulation or even based on acceptable social norms and ethical practices.
2.2 Leveraging Digital Technologies
The process of leveraging digital technologies consists of different levels of planning
and deploying novel solutions. Studies within the digital transformation literature
have shown that the process of doing so includes elements such as developing
strategies of how such transformations will take place, therefore linking digital
transformation to the overall strategy of organizations [3]. In addition, there is a
requirement to convert strategies into deployable practices with concrete rules,
process, structures, and a timeline of activities in order to be able to orchestrate
and manage all relevant resources [18].
In this stream of research, there have been studies that have examined digital
transformation from a number of different standpoints, such as identifying how
digital transformation strategies should be designed and implemented [3], to under-
standing resource structuring and capability building to leverage different types of
novel digital technologies [19]. Nevertheless, there has been significant heterogene-
ity in findings around how to digitally transform based on the varying emerging
technologies that are prevalent at different points in time. The focus has thus shifted
from integrated large-scale information systems, such as enterprise resource plan-
ning (ERP) and customer relationship management (CRM) systems, to distributed,
decentralized, and cross-organizational technologies that facilitate real-time infor-
mation exchange and knowledge management. During the past 5 years, the focus has
shifted on leveraging data analytics technologies that utilize big data, as well as on
sophisticated forms of analytics which fall under the umbrella term AI [20,21]. Such
technologies create novel forms of transformations for organizations that can
generate more accurate insight into complex processes, as well as automate many
previously manual tasks.
6 P. Mikalef and E. Parmiggiani
2.3 Value Generation
The forms and scale of value generation from digital transformation have shifted as
different emerging technologies mature. While previously digital technologies were
used to enhance prior tasks and processes, they are now creating opportunities for
organizations that were previously impossible to conceive. For example, the intro-
duction of AI in the pharmaceutical domain in conjunction with the advancing
knowledge on genomes has given rise to the novel approach of pharmacogenomics.
Furthermore, the scale, speed, and accuracy that can be achieved by leveraging
various digital technologies vastly outperform manual ways of executing different
tasks. An example of this is the use of recommender systems to provide personalized
recommendations to millions of consumers, such as those implemented by Amazon
[22]. Nevertheless, the use of digital technologies and leveraging them in the
organizational sphere do not only concern marketing and end products. Many digital
technologies are now commonly used in organizations in order to improve collab-
oration and communication and enhance knowledge capturing and sharing, as well
as in improving information linkages with external parties such as supplies and other
business partners [23].
Value generation by leveraging different digital technologies has been studied
extensively from different streams of research. These include the IT capabilities
stream of research which seeks to understand how digital technologies along with
complementary resources can be converted into hard-to-replicate organizational
capabilities that can confer value [24]. In an attempt to understand what digital
technologies enable organizations to do, another prominent stream has adopted an
affordance perspective, which seeks to examine the way in which novel technolog-
ical tools can afford individuals and organizations to perform certain actions
[25]. Studies that adopt the affordance perspective seek to understand not only
what digital technologies can enable organizations to do with the different types of
functions offered but also how the process of leveraging unfolds [26]. From a
strategy point of view, several studies have examined digital transformation through
the lens of how it can support or drive business strategies [27]. The main argument in
such studies is that digital transformation should be seen through the lens of the
strategic direction organizations want to pursue. Thus, any use of digital technolo-
gies must be driven by the strategic orientation of the organization at hand [28].
An Introduction to Digital Transformation 7
2.4 Performance
One of the central areas of inquiry within the IS domain has been to gauge the degree
to which digital transformation results in tangible performance outcomes for orga-
nizations. Most studies have emphasized on economic-related measures of perfor-
mance such as financial performance or the degree to which digital transformation
results in a competitive advantage for firms [17]. This trend has been driven by the
fact that investments in novel and often costly digital technologies must justify a
financial return [29]. In addition, such economic measures of performance are the
predominant way of assessing the impact of digital technologies within the IS
domain, which follow studies that are grounded in disciplines such as economics,
organizational science, and strategic management. Furthermore, other types of
performance metrics such as environmental and social have until recently not been
considered as primary to organizational operations. Nevertheless, with the focus on
responsible and sustainable business models that promote inclusiveness and social
cohesion, studies on digital transformation have begun to examine the effects that
such transitions have on these types of outcomes [30]. Several articles have also
begun to examine how novel digital technologies can support specific strategies that
fall under such paradigms and what the performance effects are using new types of
metrics [31,32]. Yet, while there are an increasing number of studies that take a
broader view of performance measures to determine the impact of digital transfor-
mation, there are still several research streams that have yet to be integrated or
adopted in the IS domain. We discuss these and other opportunities for research and
practice in the concluding sections.
3 Context-Driven Digital Transformations
Much of what we briefly described in the previous section highlights the contextual
nature of digital transformations. From the drivers that either enable or inhibit
organizations to commence their journey of digitally transforming operations, to
the contingency elements that underpin the activities of leveraging such digital
technologies, to the types of effects that are realized, much of what has been found
in the literature on digital transformation underscores the important role of context
[33]. Nevertheless, context and contingency elements can come in many “shapes and
sizes”and oftentimes involve more than one important element that has an important
bearing on the entire process.
For instance, there is a large divide in the literature regarding digital transforma-
tion in the private and public sector. These studies have documented that there are
significant forces that influence not only the types and outcomes of digital transfor-
mation but also the speed of adoption, pace of deployment, and forms of work within
the different types of organizations [34,35]. Similarly, large differences have been
identified when comparing among firms that belong to different industries
[36,37]. The organizational processes that are digitally transformed in various
industries are largely dependent on how important they are for the organization at
hand. For example, robotic process automation has been central for many firms in
the manufacturing or assembly industries since it vastly improves efficiency and cost
reduction. On the other hand, being able to maintain good customer relationships,
improving profit margins from customers, and identifying untapped market seg-
ments have been at the core of retail companies. Therefore, it is interesting to try to
draw a mental image of how novel technologies might reshape different industries in
a number of varying ways.
8 P. Mikalef and E. Parmiggiani
Finally, an important contextual dimension when examining digital transforma-
tion has to do with the country or region in which such transformation takes place.
Several studies have documented that cultural, socioeconomic, and political ele-
ments can have a profound effect on what organizations do with new digital
technologies, as well the ways in which they leverage them. Country-specific studies
have elucidated such practices and shed some light on how organizations engage in
the process of digital transformation. As a country with many unique characteristics
in terms of socioeconomic and political history, Norway presents an interesting
context to study digital transformation. In the next chapter, we present a historical
overview of digital transformation in Norway and identify some of these important
contextual elements.
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