Digital Transformation: The Evolution of the Enterprise Value Chains

Abstract

Market competition today has given a massive advantage for those who can better use data. The main reason is that they understand how to develop medium long-term correct strategies, with short-term pragmatic operational approaches. The challenge is not on how to get or how to produce data, but on how to use it and transform it oriented to get business focus and business value. For that reason, it is fundamental to understand the details on how companies apply the well-known Ackoff’s DIKW hierarchy (data, information, knowledge, and wisdom) in their value chains. This ability to transform data into wisdom in a real-time mode is pressuring companies to transform themselves, and that is an internal process change, commonly known as digital transformation. In reality, companies are turning their value chains since they understand the power and the use of information systems as a strategic value-added decision-making tool. That means it is more than a simple technological support activity like Michael Porter’s value chain defined initially. This paper, being a conceptual paper, intends to present the evolution that enterprise value chains need to face and the need they have to include information systems as a core activity nowadays. Doing so, they will achieve the best data to wisdom transformation in a real-time loop and continuous mode, leveraging their value chains to higher probabilities of optimization of company’s market value. Those who address digital and information systems strategies will be able to get faster optimization of their market value functions.