The Impact of Digitalization on the IT Department

In the digital age, innovative technologies such as social media, mobile computing, data analytics, cloud computing, internet of things (SMACIT), and more recently blockchain, artificial intelligence, and virtual reality significantly influence work processes, products, services, and business models. They connect individuals, organizations, machines, and other ‘things’ in new ways, and they enable novel working, collaboration, and automation models (Urbach and Röglinger 2018). The intensity as well as the speed of the resulting change are remarkable. Most of these digital technologies are not revolutionary on their own, but develop their innovative strength through increased efficiency, significantly better network possibilities, as well as their widespread dissemination and use. By combining the transformational power of these technologies, their business impact is even greater (Urbach and Ahlemann 2018). For companies, this development often poses a significant challenge. To succeed in this changing competitive environment, companies must unfold the potential of digital technologies in their business strategies, transform their work routines, processes and structures, rethink their business models as well as manage and govern IT infrastructures that are central to their value proposition (Legner et al. 2017). Digitalization has therefore increased the importance of information technology (IT), and it has transformed the demands placed on organizations’ IT functions. The business activity does not only become more efficient, but it is also no longer imaginable without IT. Since information technologies are now applied to realize innovations for businesses—something that will increase in the future—IT functions are required to cooperate proactively and early on with business departments to be able to develop and implement such innovations jointly. Besides ensuring regular IT operations, IT functions are increasingly required to identify technological innovations proactively and rapidly transfer them into marketable solutions, thereby directly contributing to the company’s central value proposition (Urbach et al. 2017). Chief information officers (CIOs) often like to address the digitalization topic themselves. This is not unexpected, because their departments are responsible for information technology in companies, and digitalization promises to expand their sphere of activity, or at least to strengthen their role. However, many CIOs and IT executives encounter problems. Their IT departments—in their current setups—are often seen as pure service providers with no dedicated innovation skills. The business departments often act independently from the IT department when developing IT-based business and process innovations. This is not Prof. Dr. N. Urbach (&) Project Group BISE of Fraunhofer FIT, University of Bayreuth, Wittelsbacherring 10, 95444 Bayreuth, Germany e-mail: nils.urbach@uni-bayreuth.de