Convenience, cost effectiveness and productivity are said to be benefits of a more digitized business world. However, research by a renowned Clemson University information systems professor suggests increased digitization isn’t inherently good for companies or consumers in some cases.

Varun Grover

Varun Grover

The research, conducted by Varun Grover, Clemson University’s William S. Lee (Duke Energy) Chair in Information Systems, says if strategies to increase digitization aren’t properly assessed, the enhanced technology can actually hurt companies and not meet their customers’ expectations.

“Though we don’t necessarily disagree with the premise that more technology is better, our research does challenge prevailing myths that digitation enables companies to derive greater economic value from it, and that it creates greater value for consumers as well,” said Grover, one of the world’s most published information systems researchers. “The view that more is better can desensitize people to digitization’s caveat, that is, without understanding the contours of digital economics and consumer dynamics, companies will not succeed in realizing value from it.”

In his research paper, “Myths of Digitization,” Grover said before embarking on technology enhancements, companies must do their due diligence.

“Technology improvements involve a huge investment of resources and the company’s reputation is on the line,” Grover said. “It would behoove any organization considering a new technology to undertake socio-technical analysis, strategy analysis and a risk analysis before proceeding.”

Grover said there are many examples of failed technologies due to companies not adequately assessing potential customer or competitor reactions. “With some consumers, for example, cultural and knowledge barriers exist that can influence the success or failure of a technology,” Grover added.

Airport check-in and grocery check-out kiosks are good examples of companies intending to bring greater efficiency and value to the consumer. “However, in some cultures, consumers are reluctant to use them for fear of embarrassment if the transaction fails and they need assistance in the presence of other customers. Also, some people are uncomfortable with technology taking away work from an employee.”

According to the research, another issue companies implementing new technology must consider is overshooting the sophistication of their consumers and the infrastructure available for the new technology to be used.

Grover said Netflix did not initially make profits when it went from providing DVDs through the mail to a digital delivery system. The sluggish start to their digital transformation was tied to broadband penetration being low and that a large customer base still valued receiving their small, red video packets in the mail.

“Another example was when banks began offering check deposits via imaging. Unfortunately, when it was launched consumers’ smartphones didn’t have sophisticated cameras and the value to customers wasn’t realized.”

A company’s technology enhancement can also open doors for competitors who replicate it at minimal expense, thus eroding the breakthrough product’s value. “TomTom had built a strong customer base with its navigation and mapping technology,” Grover said. “But it was easily replicated on a general purpose platform on smartphones. It’s an example of how a company may launch a digital service and competitors with better infrastructure can take the idea and improve on it.”

Though Grover’s research takes a contrarian look at technology advancements, his research does acknowledge its many benefits to industry and consumers. But companies that don’t thoroughly analyze all the implications are shortchanging themselves and their customers.

“Too many times, huge investments in digital fail because companies misinterpret their customer or competitive reactions,” Grover said. “Digitization offers great promise for firms and high value for consumers but companies need to be cognizant of conditions when digitization can reduce value.”

Grover has been recognized as the 5th most published author in the MIS Quarterly’s Most Prolific Author List, and has more than 25,000 citations to his research. MIS Quarterly is widely recognized as the leading journal in Information Systems and one of the top academic business publications. The Association for Information Systems has named Grover as number one in the world for research productivity in top journals among more than 6,000 of his peers. He has made Clemson his research hub since 2002.

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