1. The Strategic Business Challenge: Realizing the Digital Firm: How can businesses use
information technology to become competitive, effective, and digitally enabled? Creating a
digital firm and obtaining benefits is a long and difficult journey for most organizations. Despite
heavy information technology investments, many organizations are not obtaining significant
business benefits, nor are they becoming digitally enabled. The power of computer hardware and
software has grown much more rapidly than the ability of organizations to apply and use this
technology. To fully benefit from information technology, realize genuine productivity, and take
advantage of digital firm capabilities, many organizations actually need to be redesigned. They will
have to make fundamental changes in organizational behavior, develop new business models, and
eliminate the inefficiencies of outmoded organizational structures. If organizations merely automate
what they are doing today, they are largely missing the potential of information technology.