SPP Digital Transformation Strategy 2 — Questions and Answers
Question 1: A company's digital transformation initiative stalls because business units resist sharing data across silos. Which governance mechanism most directly addresses this?
- Appointing a Chief Digital Officer with P&L authority
- Establishing a cross-functional data governance council with executive sponsorship (Correct answer)
- Mandating uniform ERP adoption across all business units
- Outsourcing data management to a third-party vendor
Correct answer: Establishing a cross-functional data governance council with executive sponsorship
A cross-functional data governance council with executive sponsorship creates shared accountability and breaks down silos institutionally.
Question 2: In digital transformation, a 'two-speed IT' architecture is designed to address which fundamental tension?
- The cost difference between cloud and on-premise infrastructure
- The need to maintain stable core systems while enabling rapid innovation at the edge (Correct answer)
- The gap between IT staff skills and executive digital literacy
- The challenge of complying with different regulatory regimes across markets
Correct answer: The need to maintain stable core systems while enabling rapid innovation at the edge
Two-speed IT separates the stable, reliable systems of record from faster, experimental systems of engagement to resolve speed-versus-stability tension.
Question 3: Which metric is most appropriate for measuring the strategic value of a digital platform investment before revenue is realized?
- Net Promoter Score
- Platform ecosystem growth rate (developers, partners, users) (Correct answer)
- IT operational cost reduction percentage
- Number of digital projects completed on time
Correct answer: Platform ecosystem growth rate (developers, partners, users)
Ecosystem growth rate captures the compounding network effects that drive long-term platform value, even before direct revenue materializes.
Question 4: A strategic planner is evaluating whether to build, buy, or partner for a new digital capability. Which factor most strongly favors the 'partner' option?
- The capability is central to the firm's long-term competitive differentiation
- The capability is rapidly evolving and time-to-market is critical (Correct answer)
- Internal IT teams have excess bandwidth and relevant expertise
- The firm wants full control over data generated by the capability
Correct answer: The capability is rapidly evolving and time-to-market is critical
Partnering is favored when speed is paramount and a mature ecosystem partner can deliver faster than internal build or acquisition integration.
Question 5: What does the concept of 'digital debt' primarily refer to in a transformation context?
- Financing costs associated with large-scale technology purchases
- Accumulated technical shortcuts and legacy system workarounds that constrain future agility (Correct answer)
- The gap between digital investment levels and those of industry peers
- Customer data obligations under privacy regulations
Correct answer: Accumulated technical shortcuts and legacy system workarounds that constrain future agility
Digital debt (a form of technical debt) comprises the accumulated burden of quick fixes, legacy systems, and bypassed modernization that slows future transformation.
Question 6: When assessing digital transformation maturity, a company that uses data analytics for operational reporting but not for predictive decision-making is best classified at which level?
- Ad hoc / Initial
- Descriptive analytics stage (Correct answer)
- Prescriptive analytics stage
- Autonomous / Optimizing stage
Correct answer: Descriptive analytics stage
Using analytics for historical/operational reporting characterizes the descriptive stage, which precedes predictive and prescriptive capabilities.
Question 7: A firm pursues digital transformation primarily to enter new markets through digital channels. This strategic intent is best categorized as:
- Operational efficiency transformation
- Business model reinvention
- Customer experience enhancement
- Digital market expansion (Correct answer)
Correct answer: Digital market expansion
Using digital channels specifically to access new markets represents a digital market expansion strategy, distinct from efficiency, experience, or full model reinvention.
SPP Digital Transformation Strategy 2
A company's digital transformation initiative stalls because business units resist sharing data across silos.
Which governance mechanism most directly addresses this?