MAC4866/504/0/2021

Tutorial Letter 504/0/2021

Information Strategy
MAC4866

Year module

Department of Management Accounting

IMPORTANT INFORMATION
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myUnisa module website for MAC4866-21-Y1.

Note: This is a fully online module and therefore it is only available on myUnisa.

BARCODE
CONTENTS

Page

INTRODUCTION ...................................................................................................................................... 4
STRATEGIC MANAGEMENT (E3) .......................................................................................................... 4
PART F DIGITAL STRATEGY ................................................................................................................ 4
1. LEARNING UNIT 1: DIGITAL STRATEGY – DIGITAL TECHNOLOGIES ..................................... 4
1.1 Introduction ................................................................................................................................... 4
1.2 Digital disruption ........................................................................................................................... 4
1.2.1 Disruptive technologies ................................................................................................................. 4
1.2.2 Surviving digital disruption ............................................................................................................ 5
1.2.3 Key trends (Accenture Technology Vision 2015) ........................................................................... 5
1.2.4 Myths to overcome if disruption is to be seen as an opportunity not a threat ................................. 5
Summary .................................................................................................................................................. 6
Relevant articles ....................................................................................................................................... 6
References ............................................................................................................................................... 6
2. LEARNING UNIT 2: DIGITAL STRATEGY – GOVERNANCE AND ELEMENTS OF DIGITAL
STRATEGIES ............................................................................................................................... 7
2.1 Introduction ................................................................................................................................... 7
2.2 The roles and responsibilities of the board and senior leadership ................................................. 7
2.3 Strategies to build disruptive business models (This comes from E2) ........................................... 8
2.3.1 Digital Business Models (World Economic Forum (WEF) – Digital Transformation Initiative) ........ 8
2.3.2 Digital Operating Models (World Economic Forum – Digital Transformation Initiative) .................. 8
2.4 Economics of digitisation............................................................................................................... 9
2.5 Digital ecosystems ........................................................................................................................ 9
2.6 Digital consumption..................................................................................................................... 10
2.6.1 Drivers of the digital revolution .................................................................................................... 10
2.6.2 What does the digital customer want........................................................................................... 10
2.6.3 Keeping ahead of customer expectations ................................................................................... 10
2.7 Data and metrics ......................................................................................................................... 10
2.8 Leadership and culture ............................................................................................................... 11
2.8.1 Attracting and retaining talent in the digital age ........................................................................... 11
2.8.2 Becoming an employer of choice ................................................................................................ 11
2.8.3 Creating a workforce with digital skills ......................................................................................... 12
2.8.4 Bringing leadership to the digital age .......................................................................................... 12

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2.8.5 Fostering a digital culture ............................................................................................................ 12

Summary ................................................................................................................................................ 13
Relevant articles ..................................................................................................................................... 13
References ............................................................................................................................................. 13

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INTRODUCTION
Dear Students

We have now covered Parts B and C and E4 from E1 Managing Finance in a Digital World and
part B1 from the P2 syllabus. Information that students should know from the Enterprise pillar in
the old study guide has also been covered in Tutorial 502. While evaluating the relevant digital
information in Part A3 of E2, Analysing new business models in digital ecosystems, I have
noticed that most of the information is repeated in E3 so I have decided to combine everything
from E2 into this tutorial with E3.

STRATEGIC MANAGEMENT (E3)

PART F DIGITAL STRATEGY

1. LEARNING UNIT 1: DIGITAL STRATEGY – DIGITAL TECHNOLOGIES

Learning outcome: Analyse digital transformation.

This learning outcome relates to the UNGC principle 9

Component outcomes:

1.1 Introduction

Organisations need to consider digital transformation when they consider their strategies. Digital
strategy focuses on technologies to improve business performance and create new competitive
advantages with technology.
1.2 Digital disruption

1.2.1 Disruptive technologies

The definition of disruption can be described as “disruptive technology relates to instances

where technology is used to fundamentally change and ‘disrupt’ the existing business model in
an industry” (Kaplan Publishing, 2019).

Go to the link below this YouTube clip gives a good explanation of disruptive
technologies.
https://www.youtube.com/watch?v=Cu6J6taqOSg

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Examples of technology-driven disruption

Go to your E3 prescribed textbooks under digital strategy – digital technologies there is the
example of Uber as a disruptor and the Fintech examples with the advantages that Fintechs
have.
Further examples of disruptive technologies include:
Cryptocurrencies – these aim to be a digital form of money
Blockchain – this aims to get rid of the extra link for example the bank
AI – for example semi-autonomous vehicles
3D printing – making of hearing aids, dental crowns, surgical implants etc.
Drones – Amazon plans to deliver using drones
1.2.2 Surviving digital disruption

Go to your E3 prescribed textbooks under digital strategy – digital technologies study the five
emerging trends according to the Accenture report and the myths about digital technology.
1.2.3 Key trends (Accenture Technology Vision 2015)

 The Internet of Me

 Outcome economy

 The Platform (r)evolution

 The intelligent enterprise

 Workforce reimagined
1.2.4 Myths to overcome if disruption is to be seen as an opportunity not a threat

 Myth 1 – those organisations that are not digital already have missed their chance.

 Myth 2 – becoming a digital business is an administrative exercise that focusses on

achieving operational efficiencies.

 Myth 3 – digital transformation can be successfully achieved just by creating a digital

business unit headed up by a Chief Digital Officer.
Read the report below on page 6 the key trends are discussed in more detail and page 7
to 8 the above three myths are discussed in detail.
http://reports.weforum.org/digital-transformation/wp-
content/blogs.dir/94/mp/files/pages/files/digital-enterprise-narrative-final-january-2016.pdf
Note to Students
The rest of this chapter is dedicated to all the different technological developments
namely AI, Cloud computing, IoT, Big Data, Blockchain, Data visualisation, 3D printing

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and Process Automation which were first introduced to you in Tutorial 502. Please make
sure you refer to the Tutorial 502 and your E3 prescribed textbook when studying these.
Summary

In the above section the key technologies that are driving change in organisations today are
covered. These technologies are increasingly being viewed as a new industrial revolution
namely the 4th industrial revolution.
Relevant articles

https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Cor
porate%20Finance/Our%20Insights/Strategy%20and%20corporate%20finance%20special%20
collection/Final%20PDFs/McKinsey-Special-Collections_DigitalStrategy.ashx
https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/why-digital-
strategies-fail

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-
insights/strategy-to-beat-the-odds

https://www.mckinsey.com/featured-insights/artificial-intelligence/how-artificial-intelligence-and-
data-add-value-to-businesses

References

Kaplan Publishing, 2019. Official study text. Strategic Management. Strategic Level. E3.
Berkshire. UK. Kaplan Publishing.

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2. LEARNING UNIT 2: DIGITAL STRATEGY – GOVERNANCE AND ELEMENTS

OF DIGITAL STRATEGIES

Learning outcomes: Describe the governance of digital transformation and discuss the various
elements of digital strategies.

This learning outcome relates to the UNGC principle 9

Component outcomes:

2.1 Introduction

We will now go through governance of digital transformation by analysing the roles and
responsibilities of the Board and senior management, or a common expression used “leading
from the top down”. We will also look at digital transformation and the elements of digital
strategies. Section 2.3 Strategies to build disruptive business models, comes from the E2
textbook, I know that students do not have this textbook so I have included a link to the World
Economic Forum (WEF) document that was used to compile the information in the prescribed
textbook.
Please refer to your E3 prescribed textbook, below I have added interesting articles and
YouTube clips to enhance and add to what is already in the textbook.

2.2 The roles and responsibilities of the board and senior leadership

 Inspirational leadership

 Competitive edge

 Establishing a strategic direction

 Influence external

 Collaboration

 Business judgement

 Execution

 Building talent

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Read the articles below:
https://image-src.bcg.com/Images/BCG-The-CFOs-Vital-Role-in-Corporate-Transformation-Jan-
2018_tcm9-181754.pdf

https://www2.deloitte.com/uk/en/pages/public-sector/articles/decoding-digital-leadership.html

https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-seven-
decisions-that-matter-in-a-digital-transformation

https://www.bcg.com/publications/2018/most-innovative-companies-2018-how-digital-
transforms-strategy.aspx

2.3 Strategies to build disruptive business models (This comes from E2)

Organisations wanting to become digital enterprises face two main challenges:

 The business model that has worked for decades has been disrupted by digital innovation
and no longer works as before.
 Unless the organisation is willing to disrupt itself, all attempts to create a new viable
business model for the digital age will struggle.

This problem has been termed “the innovator’s dilemma”.

According to Kaplan Publishing (2019) organisations need to essentially change the way they
identify, develop and launch new business ventures. They have to improve their strategic toolkit.

2.3.1 Digital Business Models (World Economic Forum (WEF) – Digital Transformation
Initiative)

Research conducted at the WEF on “Digital transformation of Industries” suggests that

organisations need to adopt one of five approaches or a combination of build, buy, partner,
invest and incubate/accelerate. These five approaches are each discussed in the report
below on page 13 and 14.
http://reports.weforum.org/digital-transformation/wp-
content/blogs.dir/94/mp/files/pages/files/digital-enterprise-narrative-final-january-2016.pdf
Also note that the report above contains most areas of discussion in this chapter so it is
important that you read it.

2.3.2 Digital Operating Models (World Economic Forum – Digital Transformation

Initiative)

In order to compete, organisations will need to also change their business models and how they
deliver that model. The WEF identified five successful digital operating models. These models
encourage a culture that is open to innovation that interacts with customers and partners and
that are more flexible. These five models include:

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 Customer-centric
 Extra-frugal
 Data-powered
 Skynet
 Open and liquid

These five digital operating models are discussed in the report below on page 19 and 20.
http://reports.weforum.org/digital-transformation/wp-
content/blogs.dir/94/mp/files/pages/files/digital-enterprise-narrative-final-january-2016.pdf

2.4 Economics of digitisation

In the digital age the capability to earn an income should be viewed in a broader context by
organisations. It is not simply a function of volume x price. Organisations should be prepared to
adjust by looking how networks, sales channels and customer engagement can add value.
The following nine revenue models are possibilities for an organisation:
1. Transaction
2. Capacity leasing
3. Licensing
4. Subscription
5. Commission
6. Advertising
7. Trading
8. Donations
9. Subsidies
These nine revenue models are discussed in the report below on page 11 and 12 and you need
to refer to your textbook for a detailed discussion.
http://reports.weforum.org/digital-transformation/wp-
content/blogs.dir/94/mp/files/pages/files/digital-enterprise-narrative-final-january-2016.pdf

2.5 Digital ecosystems

Digital ecosystem can be defined as “a group of interconnected information technology

resources that can function as a unit. Digital ecosystems are made up of suppliers, customers,
trading partners, applications, third-party data service providers and all respective technologies.
Interoperability is the key to the ecosystem's success” (TechTarget).
Three key questions need to be asked with regard to each of the participant that makes up the
ecosystem, namely:

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The precise role of the participant – e.g. unique software skills, distribution function, cloud
computing capacity.
1. The reach of each participant – e.g. can it operate globally or only locally. Can it deal with
B2C transactions or limited to B2B.
2. The capability or key value proposition – e.g. what is the key value that each participant
is able to deliver?

2.6 Digital consumption

In order to satisfy the rapidly changing expectations of customers, organisations need to

constantly reinventing what they have on offer.
View the slides and watch the video at the link below on Digital consumption: The race to meet
customer expectations.
http://reports.weforum.org/digital-transformation/the-race-to-meet-customer-expectations/
The report below takes you through the white paper that was developed in collaboration with
WEF and Accenture on digital consumption.
http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/files/pages/files/dti-
digital-consumption-white-paper.pdf
2.6.1 Drivers of the digital revolution

See page 7 of the above report.

2.6.2 What does the digital customer want

See page 8 of the above report.

2.6.3 Keeping ahead of customer expectations

See pages 11 and 12 of the above report.

2.7 Data and metrics

Students, spend a bit of time on this section as this is a key function of accountants. How to
measure success in a digital age. Read the article below on this topic.
http://reports.weforum.org/digital-transformation/how-to-measure-success-in-the-digital-age/
Organisations need to adopt a suitable mix of both financial and non-financial metrics or KPI’s,
this will be no different in an organisation operating in the digital age. Relevant measures are
referred to collectively as digital traction metrics.
Digital traction is a mixture of metrics in the following three areas:

 Scale – the number of people showing interest in a product

 Active usage – the frequency with which a user interacts with the organisation

 Engagement – the degree to which the user has engaged with the organisation

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There are two metrics that measure the financial impact of attracting and keeping customers:

 Cost to acquire a typical customer (CAC)

 Lifetime value of a typical customer (LTV)

LTV must be greater than CVC for the organisation to be profitable.

2.8 Leadership and culture

The culture of an organisation may be one of its main barriers to success in the digital age.
Read the article below by McKinsey on culture for a digital age.
https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/culture-for-a-digital-
age

2.8.1 Attracting and retaining talent in the digital age

Students, this also refers to you as an employee you need to ensure that you keep up-to-date
with digital technologies in order to make sure that you are retained in your companies and
marketable in the workplace.
With regard to employing staff there are two key features that need to be taken into account:

 The need to embrace transparency

 Increased competition for digital talent

Read the below WEF report on fostering a digital workforce
http://reports.weforum.org/digital-transformation/fostering-a-digital-workforce/
Watch the below YouTube clip on Talent attraction and retention in the digital age.
https://www.youtube.com/watch?v=MdlDLRG6MVE
Below is an interesting report by Mckinsey, the stats relate to 2014 it would be interesting to see
what they would look like in 2020. South Africa’s unemployment is a lot higher now.
https://www.mckinsey.com/~/media/mckinsey/featured%20insights/Employment%20and%20Gr
owth/Connecting%20talent%20with%20opportunity%20in%20the%20digital%20age/MGI%20O
nline%20talent_A_Labor_Market_That_Works_Executive_%20summary_June%202015.ashx
2.8.2 Becoming an employer of choice

The WEF proposes how to become an employer of choice in a digital age:

 Formulate a long-term working strategy for millennials

 Work with staff to formulate company values together

 Empower the workforce

 Build workspaces that attract digital talent

 Create policies that support collaboration and knowledge-sharing

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Students, please make sure you understand what each of these mean, you can refer to your
prescribed textbook. A list of bullet points in the exam or assignment won’t score any marks you
need to discuss each.
2.8.3 Creating a workforce with digital skills

Below is the PWC report that the textbook refers to:

https://www.pwc.com/gx/en/hr-management-services/publications/assets/people-strategy.pdf
There are new roles that are being developed due to digitisation, have a look at the table in your
textbook. Who has heard of a Chief Listening Officer?
“Chief listening officers specialise in monitoring both external and internal communications
about organisations. Their primary focus is on gathering information from customers and
employees in order to develop ways for an organisation to enhance their relationships with both”
(Study.com).
Read the article below:
https://www.weforum.org/agenda/2019/03/the-digital-skills-gap-is-widening-fast-heres-how-to-
bridge-it/

2.8.4 Bringing leadership to the digital age

Leaders need to adapt to the digital workplace. Leaders need to realise that the traditional
approach will not attract or retain the right skills.
According to the WEF, CEO’s should fulfil six key roles in the digital age:

 Creator of vision and mission

 Strategic planner

 Diver of information-based business models

 Enabler of the shift to on-demand operating models

 Innovation promoter

 Operational excellence driver

Please read the detail on the above in your prescribed textbooks and the article below.
https://image-src.bcg.com/Images/BCG-A-CEOs-Guide-to-Leading-and-Learning-in-the-Digital-
Age-Sep-2018-NL-2_tcm9-201826.pdf

2.8.5 Fostering a digital culture

Culture is defined as “the shared set of beliefs, values and mindsets that guide a group’s
behaviours” (Kaplan Publishing, 2019)
Leaders must appreciate what makes a digital culture different e.g. a strong mission statement,
a clear sense of purpose, lean business structures and a diverse workforce with good digital
skills.

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Read the below WEF report which gives the four key areas that leaders need in order to move
towards a digital culture.
http://reports.weforum.org/digital-transformation/fostering-a-digital-workforce/
https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-to-build-a-data-
first-culture

Summary

Strategy comes about within specific organisational contexts and ecosystems. The current
context is digital transformation and organisations need to think through their approach to
strategy within this perspective. This section also covered important issues of leadership and
culture in a digital age.
Relevant articles

https://www.ibm.com/downloads/cas/ZQRNRRMY
https://www.ibm.com/downloads/cas/B6QOPLVV
http://reports.weforum.org/digital-transformation/digital-enterprises-established-players-must-
reinvent-themselves/

References

Kaplan Publishing, 2019. Official study text. Managing Performance. Managerial Level. E2.
Berkshire. UK. Kaplan Publishing.

Kaplan Publishing, 2019. Official study text. Strategic Management. Strategic Level. E3.
Berkshire. UK. Kaplan Publishing.

https://study.com/articles/chief_listening_officer_job_description_salary.html

https://searchcio.techtarget.com/definition/digital-ecosystem

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