Business Question

Greetings,

This is a short E-Business Strategy Assignment where needs someone specialized in digital strategy and digital business. It is required to study the attached paper titled “ Digital service flexibility: a conceptual framework and roadmap for digital business transformation “ and present the findings of a research paper in PowerPoint slides that shall cover whole paper. In addition to the PowerPoints slides, you have to prepare a side speech with a good explanation to use it when I present the slides.

E-Business Strategy
Individual Assignment – Research Paper Presentation
Please read the following instructions carefully before solving and submitting the
assignment.
Task details:
You are required to study and present the findings of a research paper assigned to you..
Please refer to the attached research paper with below title.
Paper Title
Digital service flexibility: a conceptual framework and roadmap for
digital business transformation
Ensure the following;
•
•
•
•
•
No.
The presentation must be submitted as PPT with speaker notes for each slide.
Presentation must not exceed 15 mints
The presentation must cover all main topics in the research paper
Professional and Attractive slides and well organized
Below criteria must meet the expectations.
Criteria
Expectations
•
•
1
Organization
•
•
2
Content
•
•
3
Use of Supporting Media
•
Logical flow
Evidence to support assertions isclear and
correct
Demonstrates thoroughunderstanding
of topic
The content accomplishes the purpose of
presentation accurately and comprehensively.
All major topics covered thoroughly; supported by
specific, accurate, and relevant data.
Media is clear and professional and reinforces
the presentation.
Uses visuals effectively to clarify simplify, or
emphasize numericaldata or main point.
European Journal of Information Systems
ISSN: (Print) (Online) Journal homepage: www.tandfonline.com/journals/tjis20
Digital service flexibility: a conceptual framework
and roadmap for digital business transformation
Jiban Khuntia, Terence Saldanha, Abhishek Kathuria & Mohan Rao Tanniru
To cite this article: Jiban Khuntia, Terence Saldanha, Abhishek Kathuria & Mohan Rao
Tanniru (2024) Digital service flexibility: a conceptual framework and roadmap for digital
business transformation, European Journal of Information Systems, 33:1, 61-79, DOI:
10.1080/0960085X.2022.2115410
To link to this article: https://doi.org/10.1080/0960085X.2022.2115410
Published online: 07 Sep 2022.
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https://www.tandfonline.com/action/journalInformation?journalCode=tjis20
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
2024, VOL. 33, NO. 1, 61–79
https://doi.org/10.1080/0960085X.2022.2115410
RESEARCH ARTICLE
Digital service flexibility: a conceptual framework and roadmap for digital
business transformation
Jiban Khuntiaa, Terence Saldanhab, Abhishek Kathuriac and Mohan Rao Tannirud
a
University of Colorado Denver, Denver, CO, USA; bUniversity of Georgia, Athens, GA, USA; cIndian School of Business, Hyderabad, India;
University of Arizona, College of Public Health, Tucson, AZ, USA
d
ABSTRACT
ARTICLE HISTORY
Due to the growing need to continually generate customer value, firms must be flexible
to address changing business environments and customer expectations. Although
research has examined Information Technology (IT) flexibility, the nuances of IT flexibility
in services have received limited attention. This study uses a three-stage roadmap to build
digital service flexibility. First, using prior research on services and IT flexibility, we
articulate three dimensions for digital services flexibility (DSF): core DSF, transaction
DSF, and customer DSF. Second, we propose a theoretical customer-service value frame­
work as a blueprint for service firms to align their strategies along these three DSF
dimensions using four propositions. Third, for DSF to be applied in practice, we discuss
contextual and situational embeddedness to support digital transformation for services.
We use a practical application of DSF using a multi-year case study that aligns service
innovations inside and outside a patient room in a hospital setting. The main contribu­
tions of this study lie in a) conceptualizing digital service flexibility and identifying its
three dimensions, b) proposing a conceptual framework highlighting how firms can use
DSF in alignment with their business strategy, and c) illustrating how the concept of DSF
applies in a hospital setting.
Received 9 February 2021
Accepted 4 August 2022
1. Introduction
A key characteristic of today’s knowledge economy is
the increasing share of services delivered through
digital means (Barrett et al., 2015). Firms engaged in
developing and marketing services contribute an
increasingly large percentage of global economic out­
put. Even manufacturing firms are undergoing digital
transformations to design and offer product and ser­
vice combinations, realising that service is not merely
an “after-sale” activity but an in-depth engagement in
customer decision-making (Ovchinnikov et al., 2014).
This realisation has led many firms to expand their
network to extend service offerings using value chain
partners and exploit information technology (IT)
through digital transformation (Chen et al., 2017).
Additionally, the service-dominant logic (SD logic)
perspective advocates that firms view themselves as
service firms in developing and co-creating value pro­
positions by engaging customers (Lusch et al., 2010;
Vargo & Lusch, 2008), emphasising the significant
contribution of services to global Gross Domestic
Products (GDP).
The offering of services poses distinct challenges
compared to the offering of products. As services are
knowledge-intensive (Hertog, 2000), the value propo­
sitions needed to meet customer expectations of ser­
vices can change rapidly in today’s evolving
CONTACT Jiban Khuntia
jiban.khuntia@ucdenver.edu
© The Operational Research Society 2022.
KEYWORDS
IT flexibility; business
flexibility; digital
transformation; business
transformation; healthcare
case study; business value of
IT
technology landscape and growing consumerism
(Barrett et al., 2015; Rai & Sambamurthy, 2006).
Since many services are purchased frequently (e.g.,
restaurant, travel), firms must continually adapt their
value propositions to differentiate or maintain cost
competitiveness. The external ecosystem also signifi­
cantly impacts how customers perceive service value
(Randhawa & Scerri, 2015). Unlike products, the
development life cycles of new value propositions for
services are shorter (Peters & Saidin, 2000), thus
requiring that firms that offer services rely on external
partners to create complementary services to support
differentiation or cost leadership (Grönroos & Voima,
2013; Pinho et al., 2014). In addition, customer
engagement with firms providing services can be
longer and more frequent than with firms offering
products, thus creating opportunities and challenges
in developing value propositions aligned with the
firm’s chosen business strategy of differentiation or
cost leadership. For example, a hospital may want to
provide differentiated services to patients while in the
hospital and want that patients feel like the hospital
supports care post-discharge. In contrast, a restaurant
would like to provide customers with a low-cost value
proposition of menu items and service. Customer
engagement can change customers’ perceptions of
the service offerings, resulting in increased customer
62
J. KHUNTIA ET AL.
loyalty or losing customers to competitors (Kumar
et al., 2019).
In sum, the need to continually change value pro­
positions due to consumerism, the shorter develop­
ment cycles to create new value offerings, the higher
frequency with which customers purchase services,
and the multiple customer encounters can influence
perceived value demand flexibility in developing and
deploying services. Such flexibility may call for differ­
ent strategies, such as configuring service offerings and
associated business processes to create new value pro­
positions, using external partners to create and fulfill
value propositions for differentiation or cost leader­
ship, and developing technology platforms to engage
customers and partners. As firms undergo digital
transformation to address growing consumerism and
evolving technology, they need flexibility both in the
development of new service value propositions for
customers and in fulfilment of these value proposi­
tions in alignment with the firm’s strategy of differ­
entiation or cost leadership (Benitez et al., 2018; Chen
et al., 2017).
While service transformation is critical for busi­
nesses that desire to be on the leading edge, flexibility
in services or firm operations has been salient for firms
to succeed in service transformation. With emerging
times, many firms have achieved similar flexibility by
adopting IT or digital avenues aligned with processes
or strategies to change businesses or infuse overall
flexibility for firm success. Nevertheless, not all firms
successfully leverage digital avenues, proactive
changes, or flexibility – quite evident from the failures
of several service firms such as Pan American World
Airways, Vine, MoviePass, Teavana, Phones4U, and
others. Current survival struggles of StubHub,
WeWork, Frontier Communications, Hertz, Gogo,
and Gold’s Gym suggest a vital need for an approach
to align services to the strategic positioning of firms
while leveraging digital transformation. Such issues
raise questions such as: What is a roadmap connecting
for the success of digital service strategy? How can
such a roadmap be conceptualised at a fundamental
level to inform research and practice?
Resource-based view theory argues that firms need
to leverage a network of resources from within and
from external partners to create new value proposi­
tions that are differentiated and thereby deliver busi­
ness flexibility for the focal firm (Barney, 1996). IT is
a vital resource that helps firms develop and flexibly
deploy such service value propositions (Benitez et al.,
2018; Overby et al., 2006; Saldanha et al., 2022). The
digital transformation of many service industries has
radically changed customer expectations and helped
firms offer differentiated services to customers. For
example, big data and sensor technologies have trans­
formed the automobile insurance industry by enabling
firms to provide differentiated and flexible pricing to
different customers. Thus, IT flexibility is essential to
achieving business flexibility (Benitez et al., 2020;
Benitez-Amado & Walczuch, 2012; Khuntia et al.,
2019; Tilson et al., 2010). Various types of IT flexibil­
ity, such as IT infrastructure flexibility (Benitez et al.,
2018; Byrd & Turner, 2000; Mikalef et al., 2021),
provide business flexibility that creates value (Byrd &
Turner, 2000; Sambamurthy et al., 2003) and support
market differentiation (Grönroos, 2011; Menor &
Roth, 2008; Ray et al., 2005).
Despite the need for firms to develop business flex­
ibility while delivering services and the importance of
IT flexibility, there is limited research on how this
relationship unfolds. More specifically, there is a gap
in our understanding of a roadmap connecting digital
service strategy to success. More relevant to current
times, there is a gap in understanding the nuances of
IT flexibility that firms need to develop to effectively
address the challenges in adapting their processes and
engaging their partners to meet evolving customer
service needs (Khuntia et al., 2019). We pose our
first research question: What types of IT flexibility are
required to engage customers in value co-creation,
adapt business processes to changing customer expecta­
tions, and connect with partners to fulfill value proposi­
tions in the context of services? Further, firms can
follow either a differentiation or cost leadership busi­
ness strategy. As discussed earlier, this requires that
firms offer appropriate service value propositions.
However, it is unclear how different types of IT flex­
ibility help firms execute different business strategies
by developing appropriately aligned value proposi­
tions. To address this gap, we pose our second
research question: How do different IT flexibility help
firms offer service value propositions aligned with vary­
ing business strategies?
To address our two research questions, as the first
step in the roadmap connecting service – digitalstrategy – success, we theorise the concept of Digital
Service Flexibility (DSF) as an IT-enabled capability
that enables firms to offer services to adapt to chan­
ging customer expectations by developing value pro­
positions using internal and external resources. DSF
represents IT flexibility to achieve business flexibility
in services aligned with business strategy. For exam­
ple, DSF enables credit unions to offer innovative lowcost services to address customers’ evolving financial
needs. DSF may also enable a health system to address
patients’ changing expectations of differentiated care
delivered inside and outside a hospital. We use prior
research on flexibility to develop the DSF concept
along three dimensions — core, customer, and transac­
tion. As the second step in the roadmap connecting
a path of service – digital-strategy – success, we map
the DSF dimensions on a theoretical customer value
framework to illustrate how DSF provides a blueprint
to support the digital transformation of the firm
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
offering services. In particular, we discuss how differ­
ent dimensions of DSF support different competitive
strategies of firms that offer services. Subsequently, we
use this blueprint to discuss how a hospital builds
flexibility to meet patient needs and improve hospital
performance, to drive the ultimate step of applying the
roadmap connecting service – digital strategy – suc­
cess in practice.
Our primary research contributions are three-fold.
First, our conceptualisation of three distinct dimen­
sions of DSF uncovers how firms can adapt their
business processes to offer value propositions in line
with their business strategies. Second, we contribute
by theorising how DSF, along the three dimensions,
has an essential role in ensuring that a firm’s compe­
titive strategy reflects the changing dynamics of the
marketplace. Third, we delineate a roadmap connect­
ing service – digital-strategy – success. Our conceptual
framework emphasises the focus of DSF along
a particular dimension to support market differentia­
tion. In articulating the service-digital-strategysuccess roadmap and illustrating how the concept of
DSF applies to businesses, this study has important
implications for service firms in the emerging servicebased global economy.
2. Background and conceptual framework
As a first step to the service – digital strategy – success
roadmap, this section builds on prior research on
flexibility concepts and conceptualises digital service
flexibility (DSF) as an IT-enabled capability, repre­
senting IT flexibility to achieve business flexibility in
services aligned with business strategy.
2.1. Flexibility
Flexibility has been an enduring topic of interest to
management researchers as it is a strategic imperative
for firms operating in uncertain and dynamic envir­
onments (Lin et al., 2020). The flexibility of processes
within and across organisations enables the develop­
ment of organisational capabilities through the recom­
bination of resources (Benitez et al., 2018). Likewise,
strategic flexibility helps firms engage in new courses
of action necessary to address organisational perfor­
mance when the external environment changes (Chen
et al., 2017). Similarly, market flexibility enables a firm
to implement practices and policies to adapt to market
changes (Claycomb et al., 2005). From an operations
perspective, manufacturing flexibility allows firms to
change production and operational resources to adapt
to environmental changes (Vokurka & O’Leary-Kelly,
2000). In prior research, manufacturing flexibility has
been conceptualised along with two attributes – range
and mobility – leading to effectiveness and efficiency
(Koste & Malhotra, 1999; Zhang et al., 2003).
63
Given the wider lens used to study flexibility in
prior research, it is not surprising to see multiple and
often conflicting conceptualisations and definitions of
“flexibility” (See Table 1 for select definitions of flex­
ibility from different research areas). However, two
common themes emerge. First, flexibility, in any con­
text, is a polymorphic, multidimensional, and complex
construct. For example, Sethi and Sethi (1990) empha­
sise the multidimensionality of flexibility in manufac­
turing, and Matthyssens et al. (2005) view strategic
flexibility as a multidimensional concept. Second,
dimensions of flexibility have varying impacts on
operational and firm performance, which are not
always positive. For example, Dreyer and Grønhaug
(2004) assert that not all dimensions are equally
important, and organisations may have to balance
varying dimensions of flexibility in different competi­
tive settings. For example, manufacturing volume and
organisational flexibility negatively correlate with pro­
ductivity (De Leeuw & Volberda, 1996; Dreyer &
Grønhaug, 2004). Further, while some dimensions of
flexibility hurt financial performance (Aranda, 2003),
others exhibit a hierarchical relationship; some
dimensions directly impact performance and others
indirectly (D’Souza & Williams, 2000).
In summary, flexibility is conceptualised in strat­
egy, organisational theory, operations management,
and marketing literature with some variations. IT flex­
ibility has been discussed more recently (Benitez et al.,
2018; Mikalef et al., 2021; Tafti et al., 2013), and we
will discuss this further in the later sections. These
conceptualisations emphasise the need for flexibility
in how a firm develops its product features, shifts to
different markets, alters its resource mix, and changes
organisational structure and manufacturing processes
to adapt to market conditions. However, given the
number of divergent views on how flexibility in dif­
ferent contexts influences firm performance, it is help­
ful to identify a few critical dimensions of flexibility,
especially for services.
2.2. Dimensions of service flexibility
Extant literature on antecedents and consequences of
flexibility in services is less mature (Aranda, 2003).
Firms that offer services use a combination of pro­
cesses to develop essential, peripheral, and supporting
services (Anderson et al., 2008; Butcher et al., 2003) to
meet changing customer needs. Prior research has
identified various dimensions of services (see Table 2
for a review of studies articulating different dimen­
sions of services).
As firms seek to become customer-centric and ser­
vice-driven, there is a need for flexible organisational
models with structure and governance to support
innovation (Aghena et al., 2015) and leverage internal
and external actors and resources (Lusch & Nambisan,
64
J. KHUNTIA ET AL.
Table 1. Representative definitions of types of flexibility.
Type of Flexibility
Business Flexibility
Strategic Flexibility
Organizational
Flexibility
Market Flexibility
Manufacturing
Flexibility
Definition
● “Business flexibility is the dynamic managerial capability to sense and seize opportunities for competitive action by changing
the operational processes, organizational structure and business strategies” (Benitez et al., 2018, p. 27; Sambamurthy et al.,
2003; Tallon & Pinsonneault, 2011).
● An organization’s ability to identify significant changes in the external environment, to quickly commit resources to new
courses of action in response to change, and to recognize and act promptly when it is time to halt or reverse such resource
commitments (Shimizu & Hitt, 2004)
● The ability of the organization to adapt to substantial, uncertain, and fast-occurring (relative to required reaction time)
environmental changes that have a meaningful impact on the organization’s performance (Aaker & Mascarenhas, 1984).
● “Strategic flexibility is the managerial capability to sense and seize business opportunities by changing strategies and
competitive actions” (Benitez et al., 2018, p. 28; Chen et al., 2017; Nadkarni & Narayanan, 2007).
● The degree to which an organization possesses a variety of actual and potential procedures and the rapidity by which it can
implement these procedures in order to increase the control capability of management and improve the controllability of the
organization and the environment (De Leeuw & Volberda, 1996)
● A firm’s ability to do new things quickly by recombining resources (Sahaym et al., 2007)
● The use of physical characteristics, operating policies, and managerial practices to cope with market change (Claycomb et al.,
2005)
● The capability of the service delivery system to adapt to market changes (Gupta & Somers, 1992)
● The ability to change or react with few penalties in time, effort, cost, or performance (Upton, 1994)
● The ability to implement changes in the internal operating environment promptly at a reasonable cost in response to changes
in market conditions (Watts et al., 1993)
● The ability to respond effectively to changing circumstances (Gupta & Gupta, 1991)
● A multidimensional construct that represents the ability of the manufacturing function to make adjustments needed to react
to environmental changes without significant sacrifices to firm performance (D’Souza & Williams, 2000)
● The ability of the firm to manage production resources and uncertainty to meet customer requests (Kathuria & Partovi, 1999)
Much of the text from this table is taken verbatim from the corresponding studies to represent the research most accurately.
Table 2. Review of service dimensions.
Citation
(Anderson et al.,
2008)
(Venkatesh et al.,
2012)
Service dimensions and definition
Context/examples/discussion
● Core: service that influences the operational performance
In airlines, flight type and time as the core; space and food as
● Peripheral: interactions and physical setting
peripheral
● Core: the fundamental cause of the existence of services.
Airline service: Core service is transportation; facilitating services
● Facilitating: essential services that make it possible for custo­
are check-in and tickets; supporting are cabin crew and inmers to consume a core service.
flight meals.
Online tax filing service: Core service uses the Internet to file
attractive to users and improve the service experience.
taxes; facilitating goods are software and hardware, and
supporting services are security measures and technical
support that improve users’ confidence in using the service.
● Core: The core of a service is that part of the service we think Core service examples are the dinner served at a nice restaurant
(Iacobucci &
of when we name the service.
Ostrom, 1993)
or the legal advice obtained from an attorney.
● Relational: The relationship aspect of service describes the
Relational examples would be a waiter’s friendliness or an
interpersonal process by which the service is delivered and
attorney’s trustworthiness.
is thought to be especially important in customer interactions
with professional service providers.
(Grönroos, 2011; ● Core: The core of a service is that part of the service we think Order taking, deliveries, installing, product specifications, and
of when we name the service
Khuntia et al.,
features, as well as product documentation, maintenance,
● Extended: An extended service offering is an interactive pro­
2021)
invoicing, complaints handling, and service recovery, are
cess consisting of several sub-processes and resources sup­
examples of sub-processes and resources included in an
porting corresponding customer practices in a way that helps
extended service offering
the customer create value in all its practices (operational
efficiency) and, through this, has a value-creating impact on
the customer’s business process (business effectiveness).
● Focus on the customer contact dimension of service
The potential efficiency of a service system is a function of the
(Chase, 1977,
degree of customer contact in creating the service product.
1981; Khuntia
et al., 2021)
● Supporting: optional services that make the core service more
2015). Such flexibility requires that organisations
demonstrate ambidexterity (O’Reilly & Tushman,
2013) in the way they govern supply chain relation­
ships (Im et al., 2019) and align the goals of internal
and external actors (Bogers & West, 2012) and pro­
cesses used to create differentiated value (Nambisan
et al., 2017). With growing consumerism, enabled by
digital transformation, firms need to develop dynamic
capabilities (Daniel & Wilson, 2003), including inno­
vative value propositions to support the customer
journey at a faster speed (Bossert et al., 2014) and
adapt resources and capabilities with the flexibility to
fulfill these value propositions (Wang & Ahmed,
2007). While flexibility is sought in fulfiling value
propositions, it is still internally focused or providercentric (Bowman & Ambrosini, 2007; Lepak et al.,
2007), even if providers use external suppliers and
partners (Dyer & Singh, 1998). The complexity of the
market dynamic implies using multiple leadership
processes to manage flexible organisational models
(Uhl-Bien et al., 2007) and entrepreneurial thinking
to develop innovative value propositions (Bharadwaj
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
& Sambamurthy, 2005). Nonetheless, all these notions
remain provider-centric and do not consider the flex­
ibility with which the firm engages customers in creat­
ing and fulfiling value and assessing value-in-use that
can lead to the customer’s next purchase cycle.
To address this gap, we classify flexibility in services
along three dimensions: core, transaction, and custo­
mer. The “core” dimension is fundamental to fulfiling
value propositions offered as a part of customer ser­
vice. For example, an airline needs to fly from point
A to point B to carry goods or passengers, an insur­
ance company must provide insurance policies, and
a restaurant must provide a meal. The “transaction”
dimension relates to various internal units and exter­
nal partners’ roles in communicating and sharing
information to support value fulfilment. For example,
a hospital may use several internal units (emergency
room, operating room, patient room, labs, etc.) and
external care providers (pharmacists, technology pro­
viders, behavioural therapists, etc.) to support care
delivery. The role of external care providers increases
once the value fulfilment moves outside the hospital.
The “customer” dimension features all processes used
to engage customers in value creation, fulfilment, and
value-in-use. The flexibility with which these pro­
cesses react to an evolving customer experience is
key to sustaining value over multiple purchase cycles.
These three dimensions (core, transaction, and custo­
mer) form the fundamental components of service
flexibility.
The three DSF dimensions of flexibility are differ­
ent, albeit related to similar dimensions of flexibility
identified in prior studies (Venkatesh et al., 2012).
While extant conceptualisations view service dimen­
sions from the perspective of customers (e.g., whether
the services are core, facilitating, or supporting to
customers (Venkatesh et al., 2012)), our conceptuali­
sations of service flexibility view it from the perspec­
tive of the focal firm in terms of how it delivers
services to customers. In other words, core, transac­
tion, and customer DSF dimensions represent flexibil­
ity in service offerings and interfaces with partners and
customers to create value propositions. We also note
that these three dimensions of flexibility are salient for
pure service firms and product (manufacturing) firms
that provide services. While product firms engage
customers before and during purchase, the product
development lifecycle to fulfill value propositions is
long and has many internal units (design/develop­
ment, manufacturing, logistics, etc.) that do not
directly interact with customers. However, their flex­
ibility (core and transaction) is still vital in ensuring
value creation and value-in-use post-purchase con­
tinue to support customers. Manufacturing firms can
also have DSF for their supplementary service offer­
ings. For example, the three dimensions of DSF apply
to television manufacturers offering after-sales
65
services to customers. Thus, our concept of DSF,
although more salient for service firms, also applies
to manufacturing firms. Given the volatility of custo­
mer perceptions of value created and the level of
engagement of customers in fulfiling the value, our
focus is on digital service flexibility on the customer,
core, and transaction dimensions. We examine prior
research on IT flexibility to understand how IT can
support DSF on these dimensions.
2.3. Prior research on IT flexibility
Information systems literature on IT flexibility has
focused on understanding the antecedents and conse­
quences of IT flexibility on a firm’s performance in
evolving market dynamics. Often conceptualised as an
IT capability, IT flexibility includes a technological
(Sabherwal & Kirs, 1994) and a managerial (or
human) capability (Sambamurthy & Zmud, 1997)
and is measured along multiple dimensions such as
technological, human, and organisational (Kim et al.,
2011; Schäfferling, 2013).
The literature has often alluded to at least two types
of IT flexibility: functional IT flexibility and architec­
tural (infrastructural) IT flexibility. Functional IT flex­
ibility refers to IT configurations that support business
process flexibility and impact a firm’s cross-functional
and cross-organisational capabilities, such as digital
reach (Sambamurthy et al., 2003) and partnerenabled knowledge creation (Malhotra et al., 2005).
Functional IT flexibility includes automating IT (i.e.,
automation of manual tasks for efficiency using IT),
informing IT (i.e., providing information to empower
management decisions), or transforming IT (i.e., IT
that fundamentally alters ways of doing business).
Architectural (or infrastructural) IT flexibility is used
to support the connectivity, compatibility, and mod­
ularity of IT infrastructure (Benitez et al., 2018;
Mikalef et al., 2021; Ray et al., 2005) so that firms
can respond quickly to environmental demands (for
a review, see Byrd & Turner, 2000). The more modular
and configurable the IT infrastructure components
are, the more technology-agnostic their connectivity
is with the rest of the interfacing systems, and the
greater the architectural IT flexibility (Mikalef et al.,
2021). For instance, modular and flexible IT infra­
structures such as SOA can integrate disparate sys­
tems, ensuring greater architectural flexibility
(Schilling, 1999; Tafti et al., 2013).
IT flexibility can enhance business flexibility by help­
ing the firm adapt to marketplace changes (Benitez
et al., 2018; Chen et al., 2017; Sambamurthy et al.,
2003; Tallon & Pinsonneault, 2011). For example, func­
tional IT flexibility can influence firm manufacturing
flexibility (Vokurka & O’Leary-Kelly, 2000) and service
flexibility (Matthyssens et al., 2005). Architectural IT
flexibility helps a firm develop several options to fulfill
66
J. KHUNTIA ET AL.
customer needs while providing an integrated frame­
work for functional IT systems to improve organisa­
tional performance (Benitez et al., 2018; Tiwana &
Konsynski, 2010). For instance, IT architecture flexibil­
ity combined with IT governance decentralisation
enhances IT-enabled dynamic capabilities, driving
firm competitive performance (Mikalef et al., 2021).
IT portfolios that support distinct resource combina­
tions are often considered a competitive advantage
(Barney, 1991; Benitez-Amado & Walczuch, 2012),
and the more aligned the IT is to business goals, the
more excellent the opportunity for the firms to mobilise
and deploy the organisation’s resources and capabilities
(Bharadwaj, 2000).
Consider IT flexibility to design and integrate inno­
vative products or services to meet evolving customer
expectations. To accomplish this, IT flexibility is
needed on both the human and technological dimen­
sions, such as gaining intelligence from customer
experiences and analysing data to create new value
propositions and support agile business processes
(Gebauer & Schober, 2006; Hostmann et al., 2007;
Petrini & Pozzebon, 2009; White, 2005), as well as
improve business decision making (Buchanan &
O’Connell, 2006; Massa & Testa, 2005). IT capabilities
are viewed as “operant” resources that enable busi­
nesses to develop distinct competencies (Ngo &
O’Cass, 2009) to sustain competitiveness as they are
firm-specific (Amit & Schoemaker, 1993) and support
collaboration (Bryson et al., 2006). They require agile
technology platforms (Yoo et al., 2010).
In summary, IT flexibility is a capability needed to
support core functional areas, collaborations within and
across business functions and suppliers/partners, and
customer interfacing functions if a firm is to compete
effectively in today’s changing business and technology
landscape through digital transformation (Benitez et al.,
2018; Gosain et al., 2004). The following section will
elaborate on this concept using three dimensions.
2.4. Conceptualising the dimensions of digital
service flexibility
IT flexibility is critical for delivering services since
firms delivering such services are knowledgeintensive and engage deeply with partners and custo­
mers. Prior research has integrated modular systems
theory, and the dynamic capabilities view to elaborate
on how IT flexibility drives the formation of ITenabled dynamic capabilities, which are antecedent
to competitive performance (Mikalef et al., 2021;
Tiwana & Konsynski, 2010). Recall that we conceptua­
lise digital service flexibility (DSF) as an IT-enabled
capability that enables firms offering services to adapt to
changing customer expectations by developing value
propositions using internal and external resources. We
classify DSF into three types:
● Core DSF represents a firm’s ability to deliver
essential or core services, enabled by functional
IT flexibility. Core DSF provides adaptability to
basic service activities.
● Transaction-oriented DSF (transaction DSF)
represents a firm’s ability to support transactions
within and outside the firm, enabled by crossfunctional and cross-organisational IT architec­
tural flexibility. Transaction DSF helps improve
the speed with which information can be shared
and activities coordinated within and across part­
ner firms.
● Customer-oriented DSF (customer DSF) repre­
sents a firm’s ability to create service value pro­
positions to address customers’ evolving needs
using functional IT flexibility and crossfunctional and cross-organisational IT architec­
tural flexibility. Customer DSF enhances the
firm’s ability to adapt to changing customer
expectations quickly and effectively.
Thus, DSF encapsulates the use of IT flexibility to
achieve business flexibility in service offerings. DSF
leverages IT modularity’s technical and organisational
facets, encompassing decoupling, standardisation, and
scalability, which are reflected in IT Flexibility to
achieve this business flexibility (Mikalef et al., 2021).
The critical value proposition of DSF lies in the nuan­
ces in which IT flexibility is utilised in diverse ways
(core, transaction, and customer) by the focal firm to
deliver business flexibility in services. It is important
to note that a firm may use these different DSF dimen­
sions to varying degrees (See Table 3 for examples).
The following section provides a blueprint for deter­
mining the role of DSF dimensions in digital transfor­
mation in services.
2.5. Executive perspectives on dimensions of DSF
To gain further insights and validation for the three
dimensions of digital service flexibility (core, transac­
tion, and customer), we discussed our framework with
five IT executives and professionals: (1) a senior strat­
egy consultant at a large consulting firm (ConsultCo),
(2) an IT consultant at a major IT services firm (ITCo),
(3) a digital marketing and sales executive at large
multinational online portal (OnlineCo), (4) an inter­
national service operations manager at a primary
online travel agency (TravelCo), and (5) an academic
expert who runs a boutique operations consulting firm
with service and manufacturing clients (OpCo). The
organisations they represent are a mixture of large and
small online and offline service firms. ConsultCo is
a renowned multinational firm with over 250,000
employees. ITCo is a publicly listed IT services firm
with more than 200,000 workers. OnlineCo has over
15,000 employees, TravelCo has less than 1000
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
67
Table 3. DSF Dimensions and examples.
Examples of DSF
Service Dimension
DSF Dimension
Dimensions
Explanation
● Core Service: The core of ● Core DSF: IT-enabled process improvisation ● Auto-pilot sys­ ● Auto-pilot and electronic banking are
a service is that part of the
to deliver basic or core services
tem in a flight
Core DSFs because they provide flex­
● Electronic
service we think of when we
ibility in the core service offerings of the
name the service.
respective firms.
banking
● A call through
a mobile phone
● Transaction Service: The busi­ ● Transactional DSF: Enhanced digitized pro­ ● Digital media­ ● These uses of IT facilitate flexible trans­
ness-to-business transaction
cesses that enable transactions with other
tion for flight
actions with partner firms.
aspect of service.
firms
reservation
● Automated
check clearing in
banks
● Mobile payment
systems
● Airlines partner­
ing with hotels
● Customer Service: Focus on ● Customer DSF: Digitized processes that ● Online check-in ● These uses of IT facilitate flexibility in
customer access, contact,
expand options for customer access, con­
for airlines
transactions with customers.
● ATM access in
and support dimensions of
tact, and support that help render service
banks
service.
and support to customers.
● Cell phone cus­
tomer support
for payment or
call resolutions
employees, and OpCo has 10 employees. The ages of
these firms vary from 5 to 45 years.
One of the authors presented the three DSF dimen­
sions and engaged in subsequent discussions. The
discussions explored the components of digital flex­
ibility and the characteristics of firms that possess such
flexibility. The interviews lasted 45 minutes, and some
respondents were interviewed more than once. The
diverse choice of industry experts helped us capture
varying perspectives and confirm one interviewee’s
views with those of the others, thereby limiting possi­
ble informant bias (Eisenhardt, 1989). The interviews
and discussions’ results were consistent with the con­
ceptualisation of the DSF dimensions, except for a few
refinements to the underlying description of the three
dimensions, as elaborated in this study.
3. A blueprint for digital service flexibility
This section directs attention to the second part of the
roadmap connecting service – digital strategy – suc­
cess. As already highlighted, service firms must align
their strategies, services, and the three DSF dimen­
sions. We elaborate on this alignment process to pro­
pose a customer-service value framework as
a blueprint, encapsulating four propositions regarding
a mix of the three DSF dimensions – core, transaction,
and customer. The subsequent discussions in this sec­
tion can help firms deliver service value to customers
in line with the firm’s business strategy.
In high-performing firms that offer services, value
is created by understanding the customer journey and
offering innovative value propositions to support
organisational strategy. Value fulfilment in such
firms leverages organisational structure, technology,
and process transformation. At the same time, valuein-use feedback is analysed using data analytics to
assess gaps for developing the next value cycle
(Desmet et al., 2016). These services call for process
automation through digital transformation (digital
services). The more susceptible a firm is to evolving
service expectations, the more it has to rely on digital
service flexibility. Such digital service flexibility is cri­
tical for firms that co-create value propositions with
customers and leverage a mix of resources from multi­
ple actors to fulfill these value propositions (Lusch &
Nambisan, 2015). A firm is said to have a high digital
quotient if it can rapidly deliver digital services to meet
customer needs (Bossert et al., 2014; Catlin et al., 2015;
Kuk & Janssen, 2013). However, the challenge is to
know which DSF the firm should focus on.
While firms have aligned business value chain
activities to address their competitive strategy with
different variations (Porter, 1980), the speed with
which these value chain activities must transform,
often using technology, varies depending on how
rapidly customers’ perceptions change. For example,
firms focusing on a differentiation strategy must con­
tinue to gain insight into how customers perceive
value in evolving technology and competitive land­
scape to rapidly co-create new value propositions to
stay competitive. On the other hand, firms focusing on
low-cost strategies must continue transforming their
core and transaction operations to reduce costs. DSF
has to support firms differently by aligning the IT
flexibility to reflect the business strategy (Sabherwal
& Chan, 2001, p. 17). We argue that the three dimen­
sions of DSF (customer, core, and transaction) are
68
J. KHUNTIA ET AL.
essential to a firm’s ability to compete. For example,
core DSF helps a firm assess the flexibility of its pro­
cesses to adapt to changing value propositions.
In contrast, transaction DSF helps assess the
flexibility needed to support cross-functional and
cross-organisational communication and coordi­
nation. Low core DSF implies that the current IT
level in business functions does not offer sufficient
configuration to meet evolving business function
needs. Nevertheless, high core DSF would indicate
the opposite. An example here is the configurabil­
ity of a “loan service”. Suppose the loan evaluation
process has a low core DSF. In that case, it may
imply that the bank’s IT does not allow it to offer
different loan options (e.g., fixed or variable lend­
ing rates, loan approval for different amounts
requested, loans under other collateral agree­
ments). However, if the IT flexibility in the bank
enables the loan evaluation process to be modu­
larised, standardised, decoupled (Mikalef et al.,
2021), and appropriately automated, several
options for configuration may be feasible to sup­
port customer needs.
With today’s social media-supported communica­
tion and smart mobile device-empowered consumer
apps, digital services are being designed continually to
generate innovative value propositions. A firm with
a “differentiation” strategy must constantly look for
digital services that create new customer value (Chen
et al., 2015). High customer DSF becomes critical to
sustaining such differentiation. For example, as part of
their differentiation strategy, Southwest and Delta
Airlines have high customer DSF with several custo­
mer touch-points (e.g., websites and mobile devices)
to enhance the consumer’s air travel experience. Even
firms that do not use differentiation as a strategy (e.g.,
physician clinics and pharmacies) look to build high
customer DSF to enable patients to plan their appoint­
ments (e.g., appointment schedule and cancelation,
reminder notices, form filling, etc.). In other words,
a differentiation-focused strategy demands that the
firm align its customer support and value creation
with high customer DSF. In line with these arguments,
we propose:
Proposition 1: High customer DSF enhances the
ability of a firm to co-create value propositions to
support differentiation or focused differentiation
strategies.
Transaction DSF is intended to support the integra­
tion of front-end and back-end processes with business
operations and interact with suppliers and partners
(Braojos et al., 2020). For example, a credit union custo­
mer exploring financing options in a car dealer’s facility
can have the dealer provide car information to a credit
union to check credit availability. Similarly, a dealer
checks the credit worthiness of a buyer using a digitisedlender exchange to check the credit while negotiating
with a buyer on car models and creditworthiness before
finalising the car purchase. While some digital services
developed with trading partners are intended to support
differentiation, the primary focus of transaction DSF is to
enable operational integration along the supply chain to
realise transaction efficiencies (Koste & Malhotra, 1999).
Reduced time and cost to conduct business-tobusiness transactions are emerging aspects. These
can influence a firm’s mobility or business reach (i.e.,
ability to reach a broader customer base) are feasible if
digital transformation (e.g., Internet of things) can
facilitate the co-production of value propositions to
create value for customers. For example, financial
services firms use high transaction DSF to exchange
shares and payments with merchandise firms and pro­
cess payments with other firms. Such high transaction
DSF is enabled by design-oriented modular plug-ins,
exchange-based standardised facilities for effective
integration across systems, and third-party vendors.
Western Money Transfer, for instance, uses plug-ins
with other banks or credit unions to manage interna­
tional money transfers. Even a firm not competing on
cost (e.g., an automobile firm) may use a focused cost
strategy to support specific customer segments with
special dealer discounts available to employees and
family members. This leads us to suggest:
Proposition 2: High transaction DSF in partner­
ship with suppliers/partners helps a firm pursue cost
leadership or focused cost strategies.
A firm can transition from low DSF to high DSF on
any dimension as per the needs of its competitive strat­
egy. For instance, a financial institution can seek high
core DSF using IT-based analytics engines to predict the
propensities of an individual customer to switch quickly
to a competitor and proactively alter its core services to
reduce the customer churn rate. Aviva Life Insurance
enhanced its core DSF by using IT to match customer
profiles with service agent skill profiles globally and
dynamically. It used this knowledge to flexibly route
customer service requests to different parts of the world.
This high customer DSF enhanced its customer service.
For instance, cable television service firms in Singapore
(StarHub) and the Philippines (Parasat Cable) offered
prepaid cards and digital web-based accounts so custo­
mers could pre-load their accounts with television time.
Cable service-providing firms could then use digital
devices to track television use (Prahalad & Krishnan,
2008). Such high core DSF helped the firms to charge
customers on a “pay-per-time used” basis.
As another example, consider ICICI Bank. Like
many nationalised banks in India, ICICI Bank was
operating at a low customer DSF, low transaction
DSF, and low core DSF by simply offering standard
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
banking services to customers. However, by becoming
the first bank in India to introduce solar-powered
ATMs, connect ATMs through wireless networks,
and provide access to financial services via biometric
cards, Internet banking, and digital kiosks (Prahalad &
Krishnan, 2008), ICICI Bank moved to operate at high
customer DSF. In addition, the digital transformation
of its partners (e.g., pharmaceutical companies, local
gymnasiums, doctors, and nutritionists) helped ICICI
provide personalised insurance for diabetic customers,
thus operating at high transaction DSF. By expanding
its core service offerings from basic banking to online
brokerage services, ICICI has moved to high-core
DSF. Such examples lead us to suggest:
Proposition 3: Firms can use advanced digitisation
in any dimension and transition from a “low” DSF to
a “high” DSF to meet focused business strategies.
A firm with a “differentiation” strategy with a high
customer DSF need not always operate at high DSF on
other dimensions. For example, high customer DSF
(e.g., customer engagement in IT-enabled configur­
able services) can be supported using standard parts
provided by established suppliers/partners (low core
DSF and low transaction DSF). Similarly, a firm with
a “cost leadership” strategy can use high transaction
DSF to reduce costs without influencing its core and
customer support functions (low customer DSF and
low core DSF). However, suppose customer DSF
needs active tracking of changes in customer orders.
High customer DSF must be complemented with high
core DSF (i.e., dynamically changing customer orders)
and high transaction DSF (i.e., leveraging partner/
supplier interactions to allow customers to track
orders). For example, referring back to the two airline
examples, Delta and Southwest support high transac­
tion DSF as they allow booking hotels and cars on
their websites and airline tickets. However, these two
firms differ in their core DSF. Southwest has high core
DSF as it permits customers to change flights with
greater flexibility (e.g., no fee penalties, cancellations
permitted). In contrast, Delta does not provide similar
flexibility in the core services (i.e., low core DSF).
These concepts are summarised in Figure 1.
Customer DSF and transaction DSF are used to cocreate or co-produce value that is either differen­
tiating or cost-reducing. Both can be enabled by
core DSF if a firm wants to extend the role of
digitisation to its internal functions through flexible
service offerings and enhance customer value or
alter functional and cross-functional exchanges to
take advantage of changing supplier offerings. The
dashed extension (in Figure 1) of customer DSF
and transaction DSF across core DSF indicates the
dependency of core DSF in addressing a business
strategy.
69
Figure 1. Level of DSF along competitive strategy dimensions.
For example, can Southwest Airlines allow custo­
mers to change reservations on its plane and change
their reservations with their partners (like hotels)
without penalty? Similarly, can an office supply store
like Staples allow its partners/suppliers to manage the
printer cartridge inventory of Staples and those of its
major customers (e.g., an educational institution),
thus reducing cost or improving convenience for
these consumers? While both these extensions may
continue the existing business strategy (differentiation
of Southwest and cost leadership of Staples), they can
also help a firm use different business strategies for
select customers. This is referred to as boundary span­
ning and is discussed next.
Boundary spanning supports firms in leveraging
the flexibility of high customer DSF and high transac­
tion DSF to span their strategic boundaries. For
instance, in a significant digital transformation,
ICICI Bank in India developed a corporate Cash
Management System to personalise its systems for
large customers such as Bajaj Auto and Indian Oil. It
automatically processed checks and integrated Bajaj
Auto’s ERP system by recognising the dealer network.
The integrated system provides ICICI Bank with digi­
tal service flexibility resulting from its “stickiness”
factor with premium customers, thus bringing signifi­
cant performance benefits to ICICI Bank (Prahalad &
Krishnan, 2008). The digital transformation shifted
the bank from a cost-focused strategy with high trans­
action DSF and core DSF to a differentiation strategy
with high customer DSF.
The better a firm is in leveraging its DSF on one
dimension, the broader its opportunity to extend this
DSF to other dimensions. For example, high customer
DSF can provide opportunities for deepening this
differentiation using a firm’s partners, thus calling
for high transaction DSF. On the other hand,
enhanced interaction with customers may also lead
to the discovery that some customers are “costconscious”, thus leading the firm to explore “focused
cost” strategies using suppliers/partners. For example,
a hospital that differentiates itself as a “cancer
70
J. KHUNTIA ET AL.
specialist” may discover that some patients seek
cheaper hip replacement options. This may lead the
hospital to explore a “focused cost” strategy using
“medical tourism partners”. Similarly, a firm focused
on “cost leadership” may discover a customer segment
that will pay a premium price for their products
bundled and distributed to a customer warehouse,
thus enabling the firm to develop a “focused differen­
tiation” strategy. Such a shift in business strategy is an
example of boundary spanning.
Figure 2 illustrates the boundary-spanning strate­
gies. Paths A and B allow a firm to take advantage of its
co-creation and co-production capabilities with cus­
tomers and suppliers/partners and use advanced digi­
tisation opportunities and appropriate DSF to span the
strategic boundary. For example, a firm can move
from Q1 (upper left quadrant) to Q4 (lower left quad­
rant) using customer interactions on value cocreation. It can identify a cost-focused customer seg­
ment and develop a focused cost strategy for these
customers using its current (Q2) or new (Q3) suppli­
ers. This is shown as path B.
Similarly, a firm can detect unique products/ser­
vices for customers by building relationships with
suppliers/partners and offering value-added services
to its customers, possibly using a focused differentia­
tion strategy. Again, such a differentiation strategy
may indicate the firm’s ability to leverage its current
(Q3) or new (Q2) partners. This is shown in path A.
Boundary spanning through digitisation calls for
a firm’s collaborative and outreach competencies
(Lindgren et al., 2008; Patnayakuni et al., 2007).
Flexibility in information integration within and
across partner firms, improved communication and
coordination of services, and enhanced customer ser­
vice quality form the basis for a “network effect”. Such
an ecosystem helps a service firm leverage transaction
DSF to add more service partners to the network and
increase digital service flexibilities (Tucker, 2005).
Also, collaborative boundary spanning increases
a service firm’s ability to leverage market and custo­
mer information (Claycomb et al., 2005) and use this
high customer DSF to seek collaborative competencies
afforded by transaction DSF. For example, hotels can
Figure 2. Boundary spanning strategies and digital service
flexibility.
partner with local car rental businesses and make
customers offers at online bookings. Based on these
arguments, we suggest:
Proposition 4: Boundary-spanning competencies
help a firm shift its business strategy by leveraging
a mix of its customer, core, or transaction DSF.
In summary, we propose that the following four
principles provide a blueprint (framework) for build­
ing firm-level flexibility through DSF.
(1) High customer DSF enhances customer value
and can help a firm pursue differentiation or
focused differentiation strategies (Proposition 1).
(2) High transaction DSF in partnership with suppli­
ers/partners can help a firm pursue cost leadership
or focused cost strategies (Proposition 2).
(3) Firms can use advanced digitisation in any
dimension and transition from a “low” DSF to
a “high” DSF to meet focused business strate­
gies (Proposition 3).
(4) Boundary-spanning competencies help a firm
shift its business strategy by leveraging a mix of
its customer, core, or transaction DSF
(Proposition 4).
In the next section, we use this framework to dis­
cuss the case of a hospital that has moved from a costfocused business strategy to focused differentiation
using several innovations and associated customer,
core, and transaction DSFs.
4. Application of DSF concept in a hospital
The third element in the roadmap connecting service –
digital strategy – success is practice level implementa­
tion and gaining performance or success from the
roadmap. Practice applications differ from firms in
different sectors, situations, and contexts. However,
some elements in this concept would be similar. To
elucidate the practice aspect of the roadmap, we take
the example of the service innovations inside and out­
side a patient room in a hospital setting. We note that
the patient room is a customer-interacting serviceproviding unit in a hospital, similar to the customer
interfaces of several other firms. However, this lastmile service rendering unit may have a different con­
notation, context, or situational presentation for other
service firms. Nonetheless, this example of the practice
and last-mile customer-provider interface of the road­
map connecting service-digital-strategy-success high­
lights the recent move in the digital transformation of
the healthcare sector for service provisioning.
Hospitals have seen dramatic changes in the way
reimbursements are tied to improved use of IT for
sharing patient information and improved
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
coordination in support of continuity of care (e.g.,
patient satisfaction incentives, patient readmission
penalties, bundled payments, etc.). These changes
require broader transformations in hospital opera­
tions, but they also need strategies to enable the hos­
pital to look for a competitive advantage. Digital
transformation of health care provides opportunities
for cost leadership and differentiation if such digitisa­
tion is used to bring flexibility in how a hospital can
adapt quickly to various environmental changes
(Dobrzykowski & Tarafdar, 2015). Some of these flex­
ibilities are needed to improve patient satisfaction and
engagement in managing their health (customer DSF)
and reduce costs within unit operations such as emer­
gency departments and patient rooms (core DSF).
Similarly, flexibilities are needed to address costs
attributed to cross-functional processes (e.g., patient
flow delays between the emergency department and
patient rooms) and cross-organisational operations
such as hospitals and extended care facilities (transac­
tion DSF). The rest of the section will illustrate how St
Joseph Mercy Oakland (SJMO) in Pontiac, Michigan,
USA leveraged various DSF dimensions to improve
cost performance and competitive differentiation.
The study’s context is St Joseph Mercy Oakland
(SJMO), a 443-bed community teaching hospital, and
its operations between 2010 to 2015. The hospital has
embarked on several advanced digital transformation
initiatives since 2010 to achieve excellence in quality,
safety, performance, and patient satisfaction. These
initiatives have transformed the hospital from
a highly regarded community hospital with clinical
expertise, which provided quality care using digital
technologies such as electronic medical records
(EMR), to a hospital recognised as the most-wired
hospital for its many digital innovations.
4.1. Data collection and interpretation for the St
Joseph mercy case study
We used multiple sources of evidence to ensure the
reliability and validity of our observations. After
a preliminary observation of the hospital, operating
processes, and approaches, one of the authors was
engaged in a two-year effort for deeper observa­
tions. Semi-structured interviews were used to
inquire into the work context, experiences, and the
use of technological and managerial approaches in
the digitisation of the hospital. We used several
internal documents, minutes, presentations, and
interviews to collect data and glean insights. We
analysed the hospital’s anonymised IT equipment
log files (such as the call and alert tracking systems)
to derive essential details. Following the theoretical
sampling approach (Miles & Huberman, 1994),
select respondents were chosen to interview, coop­
erate with the organisation, and extend or replicate
71
the theory. These selected respondents were from
various hospital units, representing diverse hierar­
chy levels and work contexts. Those interviewed
include the CEO, CIO, four different unit heads,
two physicians, the chief medical informatics offi­
cer, three nurses, two IT specialists, and a quality
and safety manager.
4.2. Transformation of patient room services for
flexibility using multiple DSF dimensions
4.2.1. Moving from low core DSF at corporate
performance management to high core DSF
The SJMO leadership has recognised that environ­
mental changes pose challenges for hospital perfor­
mance, notably if its employees continue to operate
“in silos” with no transparency in sharing information
and engaging in collective decision-making. To
address this challenge, the first digital transformation
effort at SJMO was to introduce a performance dash­
board (rtDashboard) that supports the exchange of
unit-level performance and organisational goals with
greater transparency. Through transparent sharing of
performance data, SJMO has used daily rounds at the
management and unit levels to discuss alignment
needs with drill-down capabilities. Such open discus­
sion and conflict resolution on the unit and organisa­
tional goals has helped SJMO bring about a cultural
change among its employees and allowed SJMO deci­
sion-makers to adapt their actions to address external
environment changes and compete successfully
(Weiner et al., 2016).
4.2.2. Extending high core DSF of corporate
performance to patient room management
Developing high core DSF in corporate decisionmaking led to extending this to core activities in
patient rooms, where it engages many of its patients.
Building core DSF within patient rooms has two
advantages: (1) It allows value creation and cocreation with customers and impacts customer DSF,
as patient satisfaction is becoming a key challenge and
an opportunity for hospitals, and (2) It contributes to
significant cost reductions within the patient rooms,
such as reducing patient falls from beds and hospitalacquired infections. Using advanced digitisation, the
goal is to extend high core DSF to patient rooms and
support differentiation using high customer DSF. In
other words, these patient room innovations lever­
aging technologies helped the hospital reduce costs
(focused cost reduction) and seek differentiation
through patient engagement (focused differentiation).
Several services form the basic core services within
patient rooms. These include intravenous therapy (IV)
treatment, bed position, telemetry, and other vital
condition monitoring (e.g., blood pressure, skin tem­
perature, respiratory rate, oxygen saturation levels,
72
J. KHUNTIA ET AL.
etc.). Others include patient/nurse interaction for
some services, such as bathroom breaks, pain manage­
ment, and general information support. The transac­
tion services connected to the patient room include
moving patients to other facilities to undergo tests,
catering support for diabetic patients through glycae­
mic control, drug prescription through physician/
pharmacy interaction, etc. Today, primary customer
(patient) services include basic entertainment (e.g., TV
and Internet access), customised food catering,
friends/family visitation, and quicker responses to
a patient’s call for care-related items such as pain
control and bathroom visits.
4.2.3. Transitioning from low core DSF and low
transaction DSF to high core and transaction DSF
Table 4 shows how low core DSF and transaction DSF
services have been transformed into high core DSF. It
also shows high transaction DSF within patient rooms
to support focused cost reduction and improve patient
services through digital transformation supported by
the Intelligent Care System (ICS).
4.2.4. Transitioning from low customer DSF to high
customer DSF
Improvement in the core DSF offered by a hospital can
be broadened through various hospital mergers or
acquisitions. EMRs can support functional integration
in support of information for decision making. SJMO
has engaged in several customer value creation oppor­
tunities and began helping them using various tech­
nologies and operational innovations, thus moving
from low customer DSF to high customer DSF.
These innovations have improved patient satisfaction
through flexible food service options that allow patients
with diabetic conditions an oral or insulin-based treat­
ment before eating. This calls for coordination between
catering services and care delivery staff within patient
room operations. SJMO has built a new south tower
with 443 patient rooms, with a “healing environment”
that is patient-centric and comfortable. See Table 5 for
some of these patient-centric features and how they are
digitised. The transformation of patient service encoun­
ters using advanced digitisation has provided unique
opportunities for the hospital to differentiate its services
in the eyes of patients, physicians, and family members.
4.2.5. Patient room DSF supporting flexibility since
2017
Since the introduction of ICS in all patient rooms,
several discussions with patients and an analysis of
call response data have led to opportunities to cocreate value with patients to improve care and comfort
through better communication. Leveraging ICS as
a platform and technology edifice, new digital services
(e.g., mobile apps) are being developed to support
purposeful rounding and anticipate patient needs.
Others are being planned (e.g., alerting patients on
scheduled call response times when these calls cannot
be answered immediately).
These digitisation efforts are supported by several
external technology partners outside the hospital’s
current suppliers. An intelligent business architecture
using Cerner iBus connected external technologies to
flexibly interact with the EMR system managed using
Cerner. This flexibility was critical as SJMO recently
moved from Cerner to Epic without influencing
patient room services.
One of the critical goals of SJMO today is to extend
care services to patients post-discharge. Some fre­
quently mentioned activities include scheduling fol­
low-up visits with their primary care physician,
reminding patients about prescription intake and diet­
ary regulations, etc. SJMO is partnering with
a technology vendor Vivify and home care providers
to extend its patient monitoring and communication
services to critical care patients. The goal is to reduce
patient readmission costs (supporting focused cost
strategy) and enhance patient satisfaction by monitor­
ing them after leaving the hospital (supporting focused
differentiation). Using wrist monitoring and real-time
communication technology with external suppliers/
partners illustrates how high core DSF within patient
rooms combined with high transaction DFS can lead
to different strategies.
For all these innovations and the effective way it
used technology to support patient care, SJMO has
been recognised for its superlative efforts in instituting
technology-enabled processes to support care quality
and was recognised by popular press (Wired
Magazine, 2015).
5. Discussion
The objective of our study was to conceptualise and
define digital service flexibility (DSF) and develop
a blueprint to enable firms to leverage DSF to achieve
digital transformation and subsequently deliver ser­
vice value propositions to customers by addressing
changes in the marketplace effectively. The study
took a perspective to provide a three-stage roadmap,
connecting service – digital strategy – success for firms
trying to leverage digital transformation for services.
Drawing on theory and existing discussion on dimen­
sions of flexibility from management and IT literature,
we conceptualised three dimensions of digital service
flexibility: core, customer, and transaction. We then
proposed a blueprint that shows how the DSF dimen­
sions can be mapped to a customer’s perception of
value created and the firm’s value chain activities to
fulfill this value. This allows the firms to align their
DSF with their business strategy. We then offered four
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
73
Table 4. SJMO hospital’s digitized core and transaction services.
Core Services
Transaction Services
Intravenous Therapy (IV) treatment
Telemetry
Pain management
Bowel movement (bathroom)
support
Tests conducted in the room
EMR system
Bed position
Vital conditions
Transportation for tests
Dietary support
Treatment-related education
Drug administration
Physician consultation
Nursing staff support
Digitization of Core and Transaction Services
Status reminder alert (both in-room and remote)
Computerized control with an operator in another room/remote
30 and 60-minute alerts; Nurse Call button
Nurse Call button
EMR system
Remote fall-risk indication
Attending physicians/specialists
Patient transfer unit and labs
Catering Staff
EMR linked to education on disease and
treatments
EMR and Pyxis CPOE systems and
pharmacists
Attending physicians/specialists
Patient care providers outside the
hospitals
Electronic Medical Record
(EMR) entry
Smart Bed
Digital device monitoring five vitals
Handoff reminder alert
Glycaemic control alert
EMR-linked and patient-controlled educational network
EMR linked to computerized physician order entry (CPOE) system
provided by Pyxis®
Nurse call alert
Nurse call system with escalation, code blue, and other alerts
Technology-Artifact-Integrated Digitization of Core and Transaction Services in SJMO Hospital
Smart Bed Integration
Hand-Hygiene Unit
Centrak Badge
Wrist-Worn Device for Vital Sign
Monitoring
An iPhone for Nursing Staff
A Portal at the Nursing Station
Smart bed (provided by HillRom) not only takes input from EMRs to provide information on bed positions for fallrisk patients but also recognizes the movement of patients on these beds and triggers an automatic alert to the
nursing staff so that they can call a patient to stay on the bed until they can arrive to help.
To minimize hospital-acquired infections, a wash-in and wash-out protocol was introduced to ensure that all staff
uses the hand hygiene unit when caring for patients. A badge and an RFID unit that automatically dispenses
hand-washing gel remind staff to wash their hands before and after attending to a patient.
A name badge with a real-time locator sensor worn by health care staff helps identify the staff to the patient and
helps locate the team when needed to attend to a patient.
This device monitors five vital signs of a patient, including blood pressure, pulse rate, skin temperature, oxygen
saturation level (% of oxygen in the blood), and arrhythmia (heart wave forms). These will be fed into another
software tool that computes a wellness index monitored remotely at the nursing station portal by attending
staff and triggers an alarm when conditions deteriorate.
A personalized iPhone communication system is used by nursing staff attending a floor and has several
customized buttons for managing patient requests (e.g., pain, bathroom breaks, and general information).
Each nursing station has a portal that shows all rooms with indicator signals for high-risk patients (e.g., fall risk)
and a touch screen to indicate specific information on patient, diagnosis, physician, and nursing assignments.
Table 5. SJMO hospital’s digitization efforts and customer DSF.
Customer
(Patient) Services
Digitization Efforts
Food request
Food can be ordered at any time using a patient room monitor with several
choices
Entertainment
Patients can select not only traditional TV but several other health education
materials to self- manage health post-discharge
Bathroom
Remote calling of nursing staff while in the bathroom is enabled with wall
support
control units
Chair to Bed
Automatic support with staff assistance as needed
Transition
Family support
A raised platform to set up laptop and wall plug-ins for family use along with
a guest wireless network ID
Security Box
Personalised control of security box
Related Features to Support Customer/Patient care
Support insulin in-take before a meal as opposed to
a 30-minute delay
Awareness, motivation, relaxed environment, and
educational support
Just-in-time/urgency service flexibility
It supports flexibility in patient movements to
reduce redundancy or complexity.
Support patient family with a folding bed and
a small closet – can enhance patient comfort
Patients can leave valuables when they are
transported to other locations
Drug
Secure location for a patient to store drugs that were prescribed before
Such a facility can also help medication
administration
hospital admission
reconciliation with any new drugs prescribed
Physician/Staff
Centrak tracking helps the TV monitor introduce the physician/staff attending Familiarity of health care staff enhances
introduction
to a patient with their names
relationships and encourages asking questions
without inhibition
Nursing call
A nurse call system with escalation and nurse call back via iPhone enhances Reduces health-related stress and anxiety
system
customer support
propositions as a blueprint and theoretical model,
highlighting the need for firms to develop DSF along
three dimensions and influence its performance in line
with the firm’s business strategy. We then illustrated
the concept of DSF using care delivery in a patient
room in a hospital and how such DSF was used to
differentiate services to influence customer value and
hospital performance.
5.1. Theoretical contributions
This study makes three main research contributions.
First, our conceptualisation of three distinct dimen­
sions of DSF can help firms adapt their value chain
activities to quickly change customer value percep­
tions and sustain their competitive differentiation.
This adds to the burgeoning literature on IT-enabled
74
J. KHUNTIA ET AL.
capabilities and business value (e.g., Goh & Arenas,
2020). Building on prior theory on flexibility, the three
distinct dimensions can help firms: (1) use customer
DSF to create or co-create value that is consistent with
their competitive position (differentiation to cost lea­
dership); 2) use core and transaction DSF to develop
strategies and adapt value chain operations to fulfill
the value; and 3) use insights from customer feedback
on value-in-use to transition from low to high DSF as
needed when customer expectations change. Using
DSF to learn and adapt to customers’ perceived value
may lead, in some cases, to boundary spanning in
competitive strategies: moving from cost leadership
to focused differentiation or from differentiation to
focused cost. In other words, DSF can make IT and
business strategy co-contribute to aligning firm and
customer goals – representing an essential contribu­
tion to the IT and strategy literature.
Second, we contribute by theorising how DSF,
along the three dimensions, plays an essential role in
ensuring that a firm’s competitive strategy reflects the
changing dynamics of the marketplace. Value cycles –
creation, fulfilment, and value-in-use assessment – fre­
quently occur in firms that offer services. DSF is vital
to aligning the firm’s competitive strategy with
a changing customer ecosystem. Dawson et al. (2016)
of McKinsey argue that modest or extreme transfor­
mation of a business in any value chain activities –
customer interfacing (demand), operations, or supply/
partner interfacing (supply chain)—is needed and is
often dictated by gaps in customers’ perceived value
and the next entry of digital competitors. In other
words, a firm’s digital strategy in aligning customer
and firm goals should determine the focus of DSF.
Designing DSF in singular or multiple dimensions is
thus the shared goal of business-IT partners and their
relevant strategies. This is a novel contribution to the
IT value co-creation literature (e.g., Trang et al., 2021).
Third, the strategic management literature posits
that competitive advantage and, thereby, a firm’s per­
formance is dependent on how well the firm is posi­
tioned to address various market factors and
competitive threats (Porter & Millar, 1985; Porter,
1980). Value chain activities are used to support
a firm’s competitive differentiation. A cost advantage
is achieved when a firm can offer a comparable but
lower-cost product. In contrast, a differentiation
advantage is achieved when a firm can provide super­
ior quality, brand, or service (Zhou et al., 2008). Our
conceptual framework emphasises the focus of DSF
along a particular dimension to support such market
differentiation. It underlines the importance of con­
tinual adaptation to changing customer ecosystems in
an evolving technology landscape. It shows how com­
petitive strategies can and should change when
needed, or new business models may be created to
support different markets, each with its competitive
strategy. The IS literature proposes several reasons IT
can influence firm performance and competitive
advantage (e.g., Daniel & Wilson, 2003; Gerow et al.,
2015; Yayla & Hu, 2012). The discussion on boundary
spanning, where insights from one DSF can lead to
opportunities in other DSFs and associated market
differentiation, supports this premise, i.e., IT helps
create new business models and potentially change
business strategies (Bharadwaj et al., 2013; Wieland
et al., 2018). Our contribution here is to highlight the
role of DSF in facilitating business strategy and
enabling organisational change.
Our distinctive contribution to integrating IT and
business flexibility through DSF and focusing this
flexibility on a particular part of the value chain (cus­
tomer, core, transaction) supports the alignment
between IT and business strategies. This alignment
does not follow the other, but each informs the other
to create and sustain value for customers collectively.
The need for alignment is made transparent by loca­
lising digital service flexibility for internal prioritisa­
tion and resource allocation, primarily when external
partners generate such resources (Goh & Arenas,
2020; Trang et al., 2021).
5.2. Managerial implications
Our study provides two critical managerial implica­
tions. First, our study uncovers three crucial dimen­
sions of digital service flexibility. IT investment in
services is often influenced by industry trends instead
of the specific benefits realised. While managers must
be proactive in IT decisions, they must also explore
where IT creates value that supports a firm’s compe­
titive differentiation. Our proposed framework pro­
vides a useful approach for business and IT
managers to co-lead in assessing the right DSF (core,
customer, or transaction) needed to generate the most
value from services. Our study underscores the need
for managers to use IT flexibility in the firm to develop
business flexibility to achieve competitive advantage.
Second, our propositions for how the different
dimensions of DSF support different competitive stra­
tegies are helpful for managers who have to often
balance the provision of service flexibility vis-a-vis
their firm’s competitive strategy. The differentiation
and cost leadership strategies can create tension for
managers because they have different implications for
DSF. By suggesting how firms can use DSF in align­
ment with the strategy of differentiation and cost, our
study can serve as a beacon for managers seeking to
achieve their goals of service value propositions in line
with their firm’s business strategies.
EUROPEAN JOURNAL OF INFORMATION SYSTEMS
5.3. Limitations and future research
Our study has limitations that can offer a starting
point for future research. First, as any study focused
on developing a concept and framework, our frame­
work needs to be empirically tested using a large sam­
ple of firms. Future research can empirically build on
our insights and potentially push the relationships
proposed in this study. Second, future research can
theorise or examine whether there may be subdimensions of each of the three dimensions of DSF,
which could behave differently across various kinds of
services. Third, future research can use case studies to
examine the individual characteristics and interplay of
core DSF, transaction DSF, and customer DSF that
may influence firm performance.
In the context of this study’s objective of articulat­
ing digital service flexibility and its usage through
a roadmap for digital business transformation, we
need to rely on multiple years of data that could
showcase a firm’s business transformation. Business
transformation takes time, and is often not reflected
in an annual sales or or performance indicators.
Observing the health system in this study for five
years while being engaged as consultants was an
arduous and lengthy task, spanning several hours
dedicated to discussions, ethnographic and caserelevant data collection, and access to several ele­
ments as discussed in this study. Indeed, this is
a study in retrospect capturing the information and
data from a hospital through several sources, but
doing that could reflect that the health system did
not perish, could leverage on the business transfor­
mation and sustain, and, most importantly, continue
the process. Our 2–3 years of lag from the hospital’s
transformation reflects on the continued sustenance.
Along with this, the study’s process had also taken
time. Further data on health systems can reflect several
relevant DSF insights. Regarding the contemporariness
of this research, the concept of DSF dimensions and
role in business transformation is conceptually livid to
be applied for decades to come; and we believe still
firms are scratching on the tip of the iceberg on this
concept – otherwise, all services would have been great
to meet one hundred percent of customer satisfaction.
Specific to our study, patient-centeredness service is
still a far cry in the healthcare sector, thus establishing
this study’s recency and future application aspects.
In conclusion, this study provides one of the first
conceptualisations of digital service flexibility and
starting point for further research on the nature of
digital transformation that can lead to more substan­
tial outcomes in firms that offer services. As the global
economy becomes more service-based, firms need to
develop business flexibility through IT flexibility while
delivering services, necessitating the deployment of
digital service flexibility. Our paper, therefore,
75
presents a conceptual framework and roadmap for
business and digital transformation for organisations
of the present and future.
Disclosure statement
No potential conflict of interest was reported by the
author(s).
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