Difference between “digital strategy” and “IT strategy” [Archived version]

In this article, we will touch on the difference between “digital strategy” and “IT strategy”, which are often asked by human resources. What exactly is a digital strategy? What is IT strategy? I will tell you about the basics and the differences between them.

【 Table of contents】

1. What is a digital strategy?
2. What is IT strategy?
3. Difference between digital strategy and IT strategy
4. summary

What is a digital strategy?

Here we will discuss what digital strategy is.
Nowadays, it is often included in the term DX strategy (digital transformation strategy), but it can generally be interpreted as DX strategy and digital strategy.

A characteristic of digital strategy is that it is not necessary to have a business strategy in advance.

Can it be read as a digital strategy or digital business strategy?
Unlike the IT strategy described below, a digital strategy is characterized by the fact that a business strategy does not necessarily have to exist in advance.

In addition, digital strategy involves formulating how to update existing business using digital technology or what kind of business model to build, so in other words, all departments in a company can be the main body that executes the strategy.

Therefore, for example, there are many cases where a new digital organization is established to both update existing business and create new business. By establishing an organization that will be responsible for analysis and new business creation, it will be important to create a system that allows for the appointment of human resources from other business departments and the flexible allocation of human resources.

By making the digital organization independent and consolidating digital human resources, and by having a system that allows for highly fluid promotion of human resources from departments, it is possible to bring digital initiatives back to departments to strengthen existing organizations, and to take new initiatives as a company. You will get the benefit of being able to easily expand horizontally.

On the other hand, when assigning digital human resources to individual departments, for example, when department A builds a new business model that utilizes digital technology and attempts to roll out similar initiatives to other departments, governance between departments may be affected. This may create a barrier and prevent smooth horizontal development.

The goal of digital strategy is to create a business model using digital technology.

As mentioned in the example above, while a digital strategy does not require a business model in advance, the goal is to transform existing business models and create new business models using digital technology.

For example, in the case of a business model such as providing a digital platform, the goal is only achieved when the PDCA cycle is completed to monetize and increase profits through the operation of the platform.

What is IT strategy?

Next, let’s talk about what IT strategy is.

It is based on the premise that a business model and business strategy first exist.

The term IT strategy can be interpreted in various ways depending on the company, but in most cases, IT strategy refers to a policy for utilizing technology (IT services, tools, solutions).

It is assumed that a business model and business strategy exist, such as how technology can be used to support the business model and what kind of investment should be made to maximize the effect. Therefore, it is characterized by the fact that it is based on business strategy and business model first.

Furthermore, IT strategies can be broadly divided into two categories: “offensive IT” and “defensive IT.”

Offensive IT refers to IT strategies that directly lead to increasing corporate value and strengthening competitiveness, while defensive IT refers to IT strategies that lead to improving existing business models, internal operational efficiency, and convenience.

Aggressive IT is a strategy that leans toward the digital strategy mentioned earlier, so each department may be responsible for implementing it. However, it differs from a digital strategy in that the department that takes the lead in utilizing such IT services, tools, and solutions across departments is likely to be consolidated into one department, such as the information systems department. I can say that.

The goal of IT strategy is to realize an efficient business model

The goal of IT strategy is to optimize and improve the efficiency of existing business models. Therefore, our KPI is how we can make our operations more efficient by utilizing technology.

Of course, when building a new business model, a company should not use technologies from similar fields separately, but if there is a technology that is already in use, a system such as having other departments use that technology. Taking advantage of governance from this perspective is something that should be considered in IT strategy.

Difference between digital strategy and IT strategy

IT strategies that require “direction and optimization of IT investments” and digital strategies that require “transformation of the business itself”

Based on the idea of ​​defensive IT, IT strategies that optimize existing business models but do not require major changes in direction, are digital, which includes changes in direction as an option. You can call it a strategy.

For example, if you are using an IT solution in a certain business model and assume that the solution’s maintenance period is about to expire, you may want to investigate whether there is a better solution and replace it with another solution, or “negotiate a maintenance contract for the solution.” Defensive IT is the decision to update and continue using the system.

On the other hand, can we call it a digital strategy to make decisions such as, “Due to the expiration of the solution’s maintenance period, we will change the business model to not utilize the solution in the first place,” or “The transformed business model will utilize solutions from a completely different field?”

IT strategies that require overall optimization and digital strategies that do not necessarily require total optimization

Digital strategy only requires one business model to be optimized. As a result, departments in charge are often not required to optimize digital technologies used in multiple business models. If multiple business models are being developed within one department, there may be a move to standardize the technology used between the models, but if the business model is for each department, there may be a move to standardize the technology. is rarely taken.

On the other hand, the information systems department’s responsibilities include the optimization of company-wide systems and governance. In particular, as business models that utilize digital technology are expected to proliferate in each department, it is expected that information systems departments will be required to take advantage of the governance of corporate system usage policies.

Although a company’s overall digital strategy and IT strategy are different, departments and members responsible for IT strategy must be conscious of smoothly promoting digital strategy from a governance perspective.

Digital strategy that mainly targets content, IT strategy that targets other than content

In a digital strategy, the content and data generated using digital technology itself are often important strategic elements, and software and hardware such as system infrastructure and solutions are often important strategic elements. Can this be called an IT strategy?

Of course, there are exceptions. For example, when considering a business model that provides a platform for distributing the above content and data as part of a digital strategy, all elements such as content and non-content system infrastructure, solutions, and APIs are important elements.

However, even in this case, the difference between digital strategy and IT strategy is whether “the act of providing system infrastructure/solutions itself leads to value” or “the act of constructing and using system infrastructure/solutions leads to value.”

summary

The differences between digital strategy and IT strategy that have been discussed so far can be summarized as follows.

・IT strategy is a strategy that specializes in the technology used by a company. Digital strategy is a strategy for business models that includes technology.
・IT strategy is based on business strategy. Digital strategy is not necessarily based on business strategy.
・Until now, most of the departments implementing technology-related strategies were information systems departments, but now all departments will be implementing digital strategies, so it will no longer be possible to remain unrelated to technology.
・The key point of digital strategy is to shift from thinking that technology is necessary for business from the perspective of efficiency to thinking that technology is an essential element of business structure.