Business Digital Platforms

Business Digital Platforms

Introduction

Companies that can incorporate Information Technology in their operations stand better chances of digitalization. The use of digital technology in physical items has become a tool to outdo the competition in the modern business world. Business transformation to digitalization involves the use of platform-based enterprise models. Internal digital platforms refer to the incorporation of digitalized resources that support different functions in a firm. Multi-sided platforms include digitization around the production of a single item, which is owned by an individual. An internal digital platform comprises of technology infrastructure and data that are conceptualized through interfaces to enable a firm’s systems to operate independently. These internal digital platforms often enhance digital innovation in a firm.

In the LEGO group, Systems Theory is applied to evaluate the existing internal digital platforms and the contribution they make towards digital innovation in the business. Systems theory entails the assessment of the features of internal digital platforms that enhance problem-solving techniques and illustration of the benefaction towards digital innovations. Digital platforms in the business are attributed to three generative mechanisms that include modular upgradability, economies of substitution, and reproduction. Therefore, System Theory provides insight into business digital platform features, which enhances innovation through the experience of firms. Using the case study in LEGO Group, internal platforms under the theory are established with their role towards innovation in businesses.

Background

Systems Theory suggests that simple structure used in a business will develop faster into complex ones where stable intermediate forms exist. Nearly decomposable systems in businesses progress through selectivity, where they become complex as they learn cumulatively after every stage (Törmer, 2018). The features of the nearly decomposable systems are established through a modular architecture. This planning procedure places each functional part of a complex system into distinct subcomponents, which have to work together. The modularity ensures that changes made in one subsystem do not affect the operation of other components of the complex systems. Such changes in system configurations enable a business to serve its customers better while benefiting from the economies of scale. Also, products which can be upgraded in distinct sections through innovation enable the firm to enjoy economies of substitution. The upgradability of such systems or products means that a business will save the costs of upgrading the entire systems. Technological platforms present in a firm link the market transactions, enabling a smooth exchange of goods and services. Technological engineering in platforms present in a business establishes the systems that promote platform innovation.

Additionally, digital platforms allow a business to utilize digital components that support various functions. For instance, Enterprise Resource Planning systems act as an underlying platform on which other digital components are added to promote technological innovation in a firm. Digital innovation in a business involves the use, assimilation, and adoption of new management strategies, methods of production, and upgrading the quality of the products through digital components (Törmer, 2018). The innovation promotes the efficiency of the products or the production process. This innovation includes several aspects regarding the digital products, service innovation, and management or operational use of digital components. Application of such technological strategies will result in time and cost-efficient processes, the establishment of new methods of production, and the creation of new management systems.

Method

An approach to establish the components in internal digital systems, which leads to digital innovations, is used. Specifically, the generative mechanisms are studied to identify their role in digital innovation in companies. Besides, a case study is investigated to outline the mechanisms present in a business and the role they play towards innovation. Evaluation of the generative mechanisms results in the relationships that tie to build a system theory in digital innovation. In this case, the LEGO Group has internal business platforms, which show the application of digital technologies that change the internal business environment (Törmer, 2018). Research of the digital innovation began with data collection on the observable features under digital platforms, which directly link to innovation. Individual information systems were evaluated to relate their evolution into complex ones, which speed up the process of digitizing products. Finally, the relationship between the three generative mechanisms was established, and the impact the links had on the growth of digital innovation.

Results

The case evidence provided from the LEGO Group was sufficient to prove the incorporation of digital platforms towards innovation. These platforms aimed at improving both the quality of products and the efficiency of daily processes. Therefore, LEGO Group company applies Systems Applications and Products in Data Processing, which enables smooth operational transactions in their activities (Törmer, 2018). Also, Enterprise Resource Planning (ERP) systems, which are established faster than other systems, such as Oracle or Microsoft, help to support the core business processes. The company has utilized the SAP platform through proprietary point-to-point (P2P) connections to integrate data into the ERP to record transactions. Before the ERP systems, transactions in the business came from a data provider, which consumed a lot of time, whereas now, Application Programming Interface (API) accesses data from all the processes, including manufacturing, engineering, and supply chain management services.

On the other hand, the increase in transactions is affecting the upgradability of the information systems landscape in the company. Also, changes and updates on the software are difficult to implement on the custom Enterprise Service Buses (ESB), where numerous applications, such as sales and management information systems are incorporated. To solve the upgradability challenge, the company purposes of integrating cloud-based systems for the data storage and retrieval. Besides, the company’s information system architecture had previously not focused on long-term flexibility and predicted the functional requirements.

Discussion

LEGO Group Company has established digital experiences, which include monument information systems and websites for customer interaction. Digital presence through the platforms and customized applications has granted the company a broad customer base, and it has received awards for being innovative in consumer electronics and online interactions (Törmer, 2018). The architectural design of digital platforms has improved the company’s digital experiences by making technological decisions by the product teams. The technological department teams can adjust services in digital platforms independently. Through service-reuse across the company’s digital platforms, the strategy has enabled the enterprise to save costs of creating new service platforms. LEGO Group outsources technical services, such as external cloud providers, to maintain the digital platforms in the business. Additionally, ESB software used incorporates architectural designs to integrate data to do more in an engagement society. The company’s ESB also engages digital SMACIT (Social, Mobile, Analytics, Cloud, and Internet of Things- IoT) that integrates data for quality control of information systems software.

The generative mechanisms form part of the information system landscape in the company. A complex hierarchical system of digital platforms is applied in the company, such as large scale ES and single-purpose software-as-a-service (SaaS). The first generative mechanism is an emphasis on the interaction between individual subsystems of any complex system. Interaction between the subsystems is done through interfaces and the application of a modular architecture framework (Törmer, 2018). Consequently, the second mechanism involves the reuse of services and data in all software to assess digital components. Each component of the systems can solve separate problems, and where required, they can be assembled to be reused towards digital innovation. The last generative mechanism implies that technology can be used to improve subsystems without starting the whole complex system over. Through selective upgradability, the company will enjoy economies of scale. Digital innovation associated with such upgrading strategies promotes the reproduction of external services from the central systems in the company. The acquisition of custom software has enabled the advancement of digital innovation in the company’s operations.

Conclusion

Companies require to integrate information technology into their daily operations to upgrade their products, processes, and customer interaction. Digitalization in business involves Internal digital platforms and Multi-sided platforms. Establishing the use of digital platforms in any enterprise involves the use of the Systems Theory. This theory establishes the features and capabilities of existing digital platforms in a firm towards digital innovation. The use of technology in production depends on the integration of such platforms as the internet, websites, management information systems, Application Programming Interface (API) software, and single-purpose software-as-a-service (SaaS). In this case, a study conducted in the LEGO Group company provided an insight into the use of Enterprise Resource Planning (ERP) systems and Enterprise Service Buses (ESB). The software used is run through the three generative mechanisms that include modular upgradability, economies of substitution, and reproduction, which are the drivers towards digital innovation.

References

Törmer, R. L. (2018). Internal Digital Platforms and Generative Mechanisms of Digital    Innovation. In Proceedings of the 39th International Conference on Information Systems           (ICIS). Association for Information Systems. AIS Electronic Library (AISeL).