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Digital Transformation

How Apis Drive Business Model Change and Innovation

Written by S. Hellbe, P. Leung

Paper category

Master Thesis


Business Administration>Management




Master Thesis: Business Digitization and Information Value This section introduces digital transformation, discusses how information technology increasingly affects the flow of information within and between enterprises, and discusses related business value and driving factors. Although APIs and digital interfaces are not explicitly mentioned below, please note that they are fundamental technologies that further enhance the integration, networking, and information concepts discussed. 3.1.1 The increase of digitization rate Espada et al. (2011) proposed that more and more physical objects are available in digital format, they have a specific purpose, contain a series of data and can perform operations. In addition, Gershenfeld & Vasseur (2014) means that due to the rapid development of the Internet in the past two decades, the devices and products around us have started to go online. With the combination of a variety of objects and almost endless ways to connect objects, companies and consumers jointly pose huge challenges for managers; the challenge is to standardize the interfaces that they can connect to each other and networks such as the Internet (Leminen et al., 2012). Evans (2011) believes that more than 99% of physical objects that may one day join the network are still not connected. According to estimates, there are currently 10 billion connected devices, and there will be 50 billion connected devices by 2020 (IBSG, 2011). Westerlund, Leminen, and Rajahonka (2014) clarified that although these estimates are rough, they show that the number of objects connected to the Internet is increasing exponentially. Devices and products range from mobile devices to general household products, such as toothbrushes and refrigerators, and will use different technologies to embed functions such as sensing or communication (Evans, 2011; Oriwoh et al., 2013; Gomez et al., 2013). In addition, the degree of interconnection between devices and products is increasing, including identification, communication, sensing, and data collection (Oriwoh et al., 2013). 3.1.2 BusinessESCAN LEVERAGE DATA realizes the common purpose of API is to make data accessible, and there are various internal data access drivers in the organization. Barton & Court (2012) emphasized that data-based analysis is a strategic issue for two reasons: new business models have and will continue to be derived from data utilization capabilities, and data-driven strategies will become an increasingly important point for competitive differentiation. . Cohen et al. (2014) introduced how to use data to create value for customers and create business growth opportunities. They said that so far, the IT transformation of the business can be divided into three waves. First, by automating and reducing the cost of operations and management processes. Second, the Internet has created opportunities to establish new business models. The third and currently ongoing wave is IT-supported innovation. This is driven by three driving factors: the explosive growth of digital data and data tools, the improved ability to integrate, analyze, and utilize structured data, and finally the emergence of business in the cloud. As transactions move from physical space to virtual space, more and more complex processes can be handled by standard software and transformed into service products through low-cost, high-performance cloud computing. Cohn et al. (2014) proposed five models of how IT facilitates transactions to find new business value, which can be applied independently or in combination: Use the data currently generated (or possibly generated) by physical objects to improve products or services Or create new commercial value. For example, using physical sensors to intelligently meter energy usage. Digitize physical assets. For example, the introduction of digital magazines. Mobile technology has further promoted this trend. Distribution costs have been drastically reduced, more customer options have been introduced, and tailor-made services have become more and more important. Combine intra-industry and inter-industry data. Big data and new IT standards that allow for enhanced data integration make it possible to coordinate information across industries or departments in new ways. Wal-Mart and Dell are examples of companies that have successfully integrated supply chain data, while most other supply networks are relatively uncoordinated. In Germany, a company is integrating information from the entire healthcare industry to improve efficiency by facilitating the exchange of information between insurance companies and healthcare institutions. Transaction data. A company may have data that is valuable to other companies. The ability to combine different data sets allows the company to develop new products for adjacent businesses. The recent cooperation between mobile network operator Vodafone and satellite navigation equipment and services company TomTom is an example of this situation. Vodafone can collect information about traffic congestion, which is valuable for TomTom who buys information to improve its navigation products. Coding ability. It means that the company adopts first-class processes and sells them to other companies that use cloud computing. 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