Lecture of the CORVINUS Master in Management and Leadership program. The presentation defines the concept of digital transformation, and lists its key technologies. The five pillars of digitalization are discussed with examples. It focuses on the digitalization characteristics of the business services sector and presents the results of a survey in Hungary.

1. Digitalization in practice
Managing Information Systems
October 17, 2022
Lecturer: Péter Móricz

2. Three waves of the IT-driven business transformation*
Mainframe and personal
computing
Network
computing
Ubiquitous
computing
Key
technology
Computer Internet
Powerful emerging
technologies
“Process
catalyst”
Computerization: auto-
mated transactions and
information processing
ERP, global supply
chains, online processes
Digital transformation of
processes
“Strategic
weapon”
Classic strategic
information systmes
E-business models
Smart and connected
products and services,
digital business models
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
2
* Three waves are derived from the model introduced earlier in this course. The
three waves is also explained by Porter és Heppelmann (2014) “How Smart,
Connected Products are Transforming Competition,” HBR 92:11

3. Powerful, readily accessible emerging technologies
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
3
SOCIAL
MEDIA
MOBILE
ANA-
LYTICS
CLOUD
INTERNET
OF
THINGS
WHITE-
COLLAR
ROBOTICS
AI &
MACHINE
LEARNING
MISC
Ubiquitous
computing,
wearables,
AR/VR
Big data,
smart data,
predictive
analytics
Sensors,
M2M,
connected
devices
Chatbot,
RPA
E-mobility,
3D / additive
manufacturing,
blockchain
„SMACIT” In: Sebastian et al. (2017) „How Big Old Companies Navigate Digital Transformation”, MISQE 16:3
MATURE / MAINSTREAM
BUSINESS APPLICATIONS
(should not belong here)
ERP, CRM, BPM/workflow,
document management,
collaboration tools etc.
Also see SMAC/BRAIDA
from Willcocks (2020)

4. Digital transformation / digitalization
▪ “A business strategy, inspired by the
capabilities of powerful, readily accessible
technologies, intent on delivering unique,
integrated business capabilities in ways that
are responsive to constantly changing market
conditions”
Source: Sebastian, Ina M., Jeanne W. Ross, Cynthia Beath, Martin Mocker,
Kate G. Moloney, Nils O. Fonstad (2017) „How Big Old Companies Navigate
Digital Transformation”, MIS Quarterly Executive 16:3, p. 198.
▪ Same as digital strategy?
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
4

5. A new “smart”
combination of
product, service
and data
Procurement 4.0, business
analytics & data-driven
management, digital HR
(recruitment, performance
measurement, culture etc.)
Industry 4.0
production and
logistics,
intuitive digital
service
Personalized and
integrated experience:
customer intelligence,
simplified interaction,
omni-channel, location-
based, co-creation
Innovative value propositions,
breakthrough value configurations,
new-generation revenue models
Five pillars of digitalization1
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
5
1. Digitalization of
business models
2. Digitalization of
products and
services
3. Digitalization of
customer
interactions
5. Digitalization of
secondary value
chains
4. Digitalization of
primary value
chains
„Digital solutions”
strategy2
„Customer engagement”
strategy2
Sources:
1 Daubner, Lips (2017)
„Digitalisation – Discussion
Paper”, Horváth & Partners)
2 See the two stretegies at Ross
et al. (2016) „How to Develop a
Great Digital Strategy,” MIT
Sloan Management Review
Online, November 8

6. 1. Digitalization of business models
▪ (a) innovative value propositions, (b) breakthrough value
configurations, (c) new revenue models enabled by digitalization
▪ Typical patterns:
– Everything as a Service (XaaS)
• pl. Hilti, Kaeser Kompressoren, GE Aviation
– Platform economy:
• pl. Flixbus, Amazon, Facebook, Wechat
– Sharing/access economy:
• pl. Airbnb / Lime
– Crowdsourcing:
• pl. Wolt, TalentUno
– …
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
6

7. 2. Digitalization of products and services
A new “smart” combination of
product, service and data
▪ Sensors, personalization
▪ Remote monitoring and control
▪ Learning, self-control, self-repair
▪ New features
▪ Smart services
▪ …
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
7
1. Digitalization
of business
models
2. Digitalization
of products
and services
3. Digitalization
of customer
interactions
5. Digitalization
of secondary
value chains
4. Digitalization
of primary
value chains

8. More details: features of
smart and connected products
▪ Three core elements1
– Physical components
– “Smart” components (microprocessor,
sensors, software etc.)
– Connectivity (e.g. antennae, SIM card)
▪ Four capabilities1
– Monitoring (remote)
– Control (intervene)
– Optimization (enhancement)
– Autonomy (self-operation)
Lessons from the software industy?2
▪ Shorter development cycles (version changes)
▪ Product-as-a-service (instead being sold)
▪ Focus on customer success (engagement)
▪ Products part of broader systems (ecosystem)
▪ Analytics as a competitive advantage
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
8
1 Porter és Heppelmann (2014) “How Smart, Connected Products are Transforming Competition,” HBR 92:11
2 Porter és Heppelmann (2015) “How Smart, Connected Products are Transforming Companies,” HBR 93:10

9. 3. Digitalization of customer interactions
▪ Taglines of personalized and integrated
customer experience:
– Customer intelligence
– Simplified interaction
– Omni-channel
– Location-based
– Co-creation
– …
▪ From a technology perspective:
– Self-service online interface or physical
automaton (kiosk) for customers
– Customer service via chat or robot
(chatbot, e-mail bot, voice robot)
– Social media analytics (systematic
collection of customer feedback,
sentiment, brand ambassadors, etc.)
– …
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
9

10. Consequence: increased expectations for all processes
▪ Digital process criteria:*
– Around-the-clock availability
– Personalized treatment
– Real-time fulfillment and
automated decision making
– Intuitive interfaces and self-service
– Zero errors
– Global consistency
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
10
* Markovitch, Willmott (2014) „Accelerating the digitization of business processes”, McKinsey Quarterly (May)

11. 4. Digitalization of primary value chains
▪ Logistics and production
– Industry 4.0 (automated, connected,
optimized, predictive/adaptive,
personalized, human-machine
interaction)
– Connectivity: machine to machine
communication (M2M), industrial IoT
and narrowband IoT network (NBIoT),
5G broadband, RFID / Bluetooth etc.
– Technologies: sensors, 3D printing,
collaborative robots, self-driving
vehicles, exoskeletons, digital twins,
augmented reality, cloud
▪ Service sector
– Harness the potential of smart devices
connected to the service
– Fulfill the digital process criteria
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
11
Steam engine,
loom
Mass production,
conveyor belt
Mechatronics,
automation
Cyberphysical
systems, IoT
1st industrial
revolution
2nd industrial
revolution
3rd industrial
revolution
4th industrial
revolution
Late 18th century Early 20th century Early 1970s 2010s
TIME
COMPLEXITY

12. 1. Digitalization
of business
models
2. Digitalization
of products
and services
3. Digitalization
of customer
interactions
5. Digitalization
of secondary
value chains
4. Digitalization
of primary
value chains
5. Digitalization of secondary value chains
Procurement 4.01
▪ Procurement as a Service, big
data / predictive analytics, analytics as
added value, co-creation…
Digital HR2
▪ Social media, RPA/chatbot, MI, self-service /
mobile interfaces, big data
@ recruitment/selection, onboarding, PM,
training and development etc.
Finance and management control3
▪ Automated and robotized processes, real-time
data visualization, advanced analytics >
decision-making, uncover hidden shareholder
value and growth potential…
>> Data literacy / data-driven management
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
12
1 Strategy& (2016): Procurement 4.0
2 Deloitte (2017): Digital transformation in HR
3 McKinsey (2018): Memo to the CFO

13. Research insights

14. The business services sector as a “laboratory” for digital
transformation of processes
Challenges
▪ Paper documents still exist
▪ Multiple IT systems across processes with missing
links and functions
▪ Highly labor intensive and expensive, high level of
wastes
▪ High complexity and variety of processes
▪ Flaws, service issues, missing transparency and
predictability
▪ Slow and cumbersome interactions, siloes of
channels
▪ Limited customer experience, unmet customer
needs
Service 4.0 expectations*
▪ Simple, intuitive, proactive, real-time, and
personalized interactions
▪ Seamless switch between multiple channels
▪ Self-service, remote access, and interactive tools
support customers
▪ Swift handling of complaints, or even preventing
the complaint by prediction of potential issues or
automated issue detection and resolution
▪ Enhanced, real-time, and/or personalized offerings
enabled by advanced technologies and the
integration of internal and external (big) data
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
14
* Marciniak (2019) „Impact of Industry 4.0 technologies for Business Services in Hungary”,
EDT Conference, University of Rijeka, June 3
Slide to study after class

15. Levels of digital transformation of business services
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
15
4. Use of cognitive systems
•Continuous improvement and
data-driven decision making
3. Automation and robotization of
processes
•Replacement of human workforce,
efficiency, speed, accuracy
2. End-to-end processes going online:
process transformation
•Simplified, standardized processes
1. From analogue to digital: transforming
the content (e.g. documents)
•Digital content management, access and search
100101
111010
101011
Source: Marciniak Róbert, Móricz Péter, Baksa Máté (2019) Intelligent Business Services Operation, In: 10th
International Symposium on Intelligent Manufacturing and Service Systems: Proceedings (Full Papers),
Sakarya, Turkey : Sakarya University, (2019) pp. 110-120.
Intelligent/cognitive
technologies
Digitization
Digitalization
Automation,
robotization

16. Technologies for digital transformation of processes in
the business services sector
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
16
Innovators Early adopters Early majority Late majority Laggards
Machine learning
Cognitive RPA and
chatbot
Process and
system simulation
(digital twin)
Blockchain
Artificial
intelligence
Cybersecurity
Augmented Reality
Intelligent
character
recognition
Natural language
processing
Computer vision
Predictive analytics
/ big data
Process mining
Self-service
workflows
Robotic process
automation
Chatbot
Process analytics
and dashboards
Cloud computing
Ticketing and
workflow systems
Automation tools
(macros, scripting,
routing)
Server
virtualization
Core business
applications (e.g.,
ERP, CRM,
document
management)
Optical character
recognition
Smart/mobile
devices
Source: Marciniak, Móricz, Baksa (2019) „Intelligent Business Services Operations”, Proceedings of 10th
International Symposium on Intelligent Manufacturing and Service Systems, Sakarya University, pp. 110-120,
framework: Rogers (1962) Diffusion of innovations, NY: Free Press
This research was supported by the project “Aspects on the development of intelligent, sustainable and inclusive society: social, technological, innovation networks in employment and digital economy”
(EFOP-3.6.2-16-2017-00007). The project has been supported by the EU, co-financed by the European Social Fund and the budget of Hungary.

17. Meanwhile, medium-sized and large companies in
Hungary...
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
17
Based on a 209-item survey of companies in
Hungary, conducted in the first half of 2019.
Research leader: Chikán Attila.
Source: Móricz (2021) Informatika és digitalizáció – Helyzetkép Versenyképesség
Kutatás 2019-es adatfelvétele alapján , Műhelytanulmány, Budapesti Corvinus Egyetem
The data collection was managed by TÁRKI Zrt. between October 2018 and July 2019. The support for data collection was provided by OTP Nyrt. and Vállalatgazdaságtan Tudományos és Oktatási Alapítvány.
1% 3%
3%
12%
39%
62%
10%
7%
46%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013-as felmérés 2019-es felmérés
Az informatika szerepe számunkra
nem jelentős, sokkal fontosabb
versenyzők vannak
Az informatika számunkra komoly
költségtényező, elsősorban
elsősorban ezért fontos
Az informatika stratégiai
szükségszerűség, a versenyben
maradás feltétele
Az átlagnál jobb informatikánk
rövid időre versenyelőnyt képes
biztosítani
A folyamatosan a versenytársak
előtt járó informatikánk több éven
át is versenyelőnyt jelenthet
Competitiveness Research Centre
2013 2019
The role of IT is not important
for us, it is not a factors of our
competitiveness
IT imposes significant costs for
us, which is why it is important
primarily
IT is a strategic necessity, a
prerequisite for remaining
competitive
Our better than average IT can
give us a competitive advantage
in the short term
Keeping our IT ahead of the
competition can also give us a
competitive advantage in the
longer term

18. What information systems are used?
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
18
Source: Móricz (2021)
69%
65%
53%
53%
43%
40%
37%
37%
32%
13%
13%
12%
0% 10% 20% 30% 40% 50% 60% 70% 80%
ERP rendszer
Ügyfélkapcsolati rendszer (CRM)
Dokumentummenedzsment / kollaboráció
Riportkészítő alkalmazás (pl. PowerBI, Tableau)
Folyamatmenedzsment eszköz (BPM)
Workflow rendszer
Közösségimédia-eszközök
Belső közösségimédia-eszközök
CAD/CAM
Prediktív analitika
Szoftverrobotok (chatbot, RPA)
Big Data rendszerek (pl. Hadoop)
ERP system
Customer relationship management system (CRM)
Document management / collaboration
Reporting applications (e.g., PowerBI, Tableau)
Process management tool (BPM)
Workflow system
Social media tools
Enterprise social media
CAD/CAM
Predictive analytics
Software robots (chatbot, RPA)
Big Data systems (e.g., Hadoop)

19. 42%
28%
21%
30%
25%
27%
23%
31%
30%
26%
34%
26%
36%
33%
34%
28%
29%
25%
27%
28%
0% 10% 20% 30% 40% 50% 60% 70% 80%
A vállalatvezetőség érti a vállalat előtt álló digitális kihívásokat és
lehetőségeket
Szervezetünk vezetése világosan meghatározta a szervezet digitális
üzleti stratégiáját
A digitális átalakulással kapcsolatos projektek megvalósítása
meghatározott módon (nem esetlegesen) történik
A digitális üzleti átalakulás megtervezéséhez és végrehajtásához
megfelelő anyagi erőforrásokat rendeltünk
Szervezetünk rendelkezik a digitális üzleti átalakuláshoz szükséges
technológiai tudással és képességekkel
A szervezetünkben adott a lehetőség az alulról jövő digitalizációs ötletek
felmerülésére és felkarolására
Digitális megoldásainkat gyorsan tudjuk az üzleti kihívásoknak
megfelelően változtatni
Hajlandók vagyunk a meglévő gyakorlatunkhoz képest kockázatokat
vállalni innovatív digitális megoldások bevezetésével
Nyomon követjük az iparág élenjáró digitális megoldásait
Az új digitális technológiákat tudatosan kipróbáljuk, hogy vizsgáljuk azok
alkalmazhatóságát
5 - Teljes mértékben 4 - Inkább igen
A vezetés
felkészültsége
Tudatosság,
tervezés
Képességek,
erőforrások
Nyitottság,
fogékonyság
Digital readiness
...is deemed to be good by themselves
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
19
Source: Móricz (2021)
Management understands the digital challenges and opportunities facing the company
Our organization's leadership has clearly defined the organization's digital business strategy
Digital transformation projects are delivered in a defined (not ad-hoc) way
Adequate financial resources have been allocated to plan & execute digital business transf.
We have the technological knowledge and capabilities to deliver digital business transf.
We have the capacity to generate and embrace bottom-up digital transformation ideas
We can rapidly change our digital solutions to meet business challenges
We are willing to take risks by implementing innovative digital solutions
We track industry-leading digital solutions
We consciously try out new digital technologies to test their applicability
Fully agree Somewhat agree
Management
engagement
Defined,
planned
Capabilities,
resources
Openness,
culture

20. Wrap-up
▪ IT is driving major business transformation for the third time in the last 50 years. At its heart
are breakthrough “SMACIT” technologies, software robots and machine learning. Their use
as process catalysts is obvious, but their effect on competitive advantage also makes them
act as a strategic weapon.
▪ The digital transformation can be described along five pillars: (1) innovative business
models, (2) smart and connected products/services, (3) engagement-oriented customer
relationships, (4) industry 4.0 primary processes, and (5) robotizing support processes and
roadmap to a data-driven management.
▪ The business services sector is leading in the digital transformation of support processes
at all four levels: (1) digitization, (2) digitalization, (3) automation-robotization, and (4)
cognitive systems/artificial intelligence.
▪ On the positive side, our survey shows that medium and large enterprises in Hungary are
aware of the importance of digitalization. They see IT more as a prerequisite for staying
competitive, with only 15% expecting a competitive advantage. Digitalization also depends
on openness, skills & resources, awareness and leadership.
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
20
42%
28%
21%
30%
25%
27%
23%
31%
30%
26%
34%
26%
36%
33%
34%
28%
29%
25%
27%
28%
0% 10% 20% 30% 40% 50% 60% 70% 80%
őtt álló digitális kihívásokat és
eket
ghatározta a szervezet digitális
iáját
olatos projektek megvalósítása
em esetlegesen) történik
ezéséhez és végrehajtásához
rásokat rendeltünk
zleti átalakuláshoz szükséges
s képességekkel
ulról jövő digitalizációs ötletek
arolására
n tudjuk az üzleti kihívásoknak
változtatni
atunkhoz képest kockázatokat
oldások bevezetésével
élenjáró digitális megoldásait
róbáljuk, hogy vizsgáljuk azok
gát
5 - Teljes mértékben 4 - Inkább igen
A vezetés
felkészültsége
Tudatosság,
tervezés
Képességek,
erőforrások
Nyitottság,
fogékonyság

21. Thank you for your attention!
peter.moricz@uni-corvinus.hu

22. Recommended readings
▪ Sebastian, Ina M., Jeanne W. Ross, Cynthia
Beath, Martin Mocker, Kate G. Moloney, Nils O.
Fonstad (2017) „How Big Old Companies
Navigate Digital Transformation”, MIS Quarterly
Executive 16:3, pp. 197-213.
▪ Vial, G (2019) „Understanding digital
transformation: A review and a research agenda”,
Journal of Strategic Information Systems 28
(2019) pp. 118–144.
▪ Kane, Gerald C., Doug Palmer, Anh Nguyen
Phillips, David Kiron and Natasha Buckley (2015)
„Strategy, not Technology, Drives Digital
Transformation”, MIT Sloan Management Review,
Summer 2015, pp. 1-25.
▪ Ross, J. W., Sebastian, I. M. and Beath, C. M.
“How to Develop a Great Digital Strategy,” MIT
Sloan Management Review, November 8, 2016.
Porter, M. E. and Heppelmann, J. E. “How Smart,
Connected Products are Transforming
Companies,” Harvard Business Review 93:10,
October 2015, pp. 96-114.
▪ Porter, M. E. and Heppelmann, J. E. “How Smart,
Connected Products are Transforming
Competition,” Harvard Business Review 92:11,
November 2014, pp. 64-88.
▪ Bharadwaj, A., El Sawy, O. A., Pavlou, P. A. and
Venkatraman, A. “Digital Business Strategy:
Towards a Next Generation of Insights,” MIS
Quarterly (37:2), June 2013, pp. 471-482.
▪ Bonnet, D., & Westerman, G. (2021). The New
Elements of Digital Transformation. MIT Sloan
Management Review, 62(2), 83–89.
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
22

23. Recommended readings (continued)
▪ Móricz, P., Marciniak, R., Baksa, M. (2022).
Excellence and Renewal. Digital Transformation
Patterns in the Hungarian Business Services
Sector. Vezetéstudomány 53(5):32–44.
▪ Horváth D., Szabó, R. Z. (2019) „Driving forces
and barriers of Industry 4.0: Do multinational and
small and medium-sized companies have equal
opportunities?”, Technological Forecasting &
Social Change 146 (2019) 119–132.
▪ Fehér, P., Szabó Z., Varga K. (2017) „Analysing
Digital Transformation among Hungarian
Organizations”, In: Andreja Pucihar, Mirjana Kljajić
Borštnar, Christian Kittl, Pascal Ravesteijn, Roger
Clarke, Roger Bons (szerk.) 30th Bled
eConference: Digital transformation, from
connecting things to transforming our lives:
conference proceedings.
▪ Hess, T., Benlian, A., Matt C., Wiesböck, F.
(2016) „Options for Formulating a Digital
Transformation Strategy”, MIS Quarterly
Executive 15:2, pp. 123-139.
▪ Müller, J. M., Buliga, O., Voigt, K-I (2020) „The
role of absorptive capacity and innovation strategy
in the design of industry 4.0 business Models-A
comparison between SMEs and large
enterprises”, European Management Journal.
▪ Fischer, M., Imgrund, F., Janiesch, C., &
Winkelmann, A. (2020). Strategy archetypes for
digital transformation: Defining meta objectives
using business process management. Information
and Management, 57(5), 1–13.
▪ Kindermann, B., Beutel, S., de Lomana, G. G.,
Strese, S., Bendig, D., & Brettel, M. (2021). Digital
orientation: Conceptualization and
operationalization of a new strategic orientation.
European Management Journal 39(5), 645-657
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
23

24. Recommended readings (continued /2)
▪ Zierhofer, R. (2016) „Digitization – Reality Check.
„Business Models, Processes, Performance
Management - The Status-quo of Transformation
in German Companies.” Horváth & Partners,
Frankfurt, October 2016.
▪ Zierhofer, R., Hiendlmeier S. (2016) „Digital
Maturity Assessment”, Horváth & Partners,
Stuttgart, 2016.
▪ Daubner, R., Lips, T. (2017) „Digitalisation –
Discussion Paper”, Horváth & Partners.
▪ Gill, M., VanBoskirk, S. (2016) The Digital Maturity
Model 4.0 – Benchmarks: Digital Business
Transformation Playbook, Forrester Reserch,
January 22
▪ IWI-HSG (St. Gallen-i Egyetem) / Crosswalk AG
(2015) Digital Maturity & Transformation Study
2015-2016 Questionnaire –
https://aback.iwi.unisg.ch/fileadmin/projects/aback
/web/images/swiss%20digital%20transformation%
20initiative/questionnaire_english.pdf
▪ Correani, A. et al. (2020) „Implementing a Digital
Strategy: Learning from the Experience of Three
Digital Transformation Projects”, California
Management Review, 62(4) pp. 37–56.
▪ CapGemini (2017) „The Digital Culture Journey:
All On Board”, Digital Transformation Review 10th
Edition, pp. 1-84.
▪ European Comission: EU businesses go digital:
Opportunities, outcomes and uptake. Digital
Transformation Scoreboard 2018. February 2018,
pp. 1-6.
▪ European Comission (2017) „Digital
Transformation Scoreboard 2017: Evidence of
positive outcomes and current opportunities for
EU businesses”, January 2017, pp. 1-120.
▪ World Economic Forum (2015) „Deep Shift –
Technology Tipping Points and Societal Impact”,
Survey Report, September 2015.
Lecturer: Péter Móricz
Corvinus MiML: Managing Information Systems
24