BUSINESS DIGITIZATION: WHAT IS IT AND HOW TO CARRY IT OUT?
Business digitization is one of the biggest challenges faced by small and medium-sized enterprises (SMEs) today. 60% of companies do not know where to start, or how to evolve or change their own business so digitization helps them, according to a survey conducted by KPMG Business Services. Of those that have made some attempt at modernization, only 13% are happy with their results so far. But this does not mean that SMEs should give up trying.
In this article, we will explain what business digitization is and the steps that must be followed as an organization to carry it out efficiently, in line with the environment and with your collaborators. Regardless of the size of the company, whether you are a professional or an SME, or a corporation, the digitization process is always the same and only small nuances differentiate the way of approaching it.
WHAT IS DIGITALIZATION IN COMPANIES?
Digitization means evolving processes, systems, and people to connect the traditional with the digital so that any organization takes advantage of new channels and supports to optimize its business model by adapting its unique value proposition to the new opportunities offered by the market. Not all traditional businesses can adapt, therefore digitization cannot be done without first understanding why and how we earn money and without thinking about redefining the unique value proposition for which someone will be willing to pay us to obtain a product or service that we can to loan.
Digitization consists, once we have understood our business, of evolving all the elements: data, and infrastructure, It is the process of converting analog processes into digital processes and that requires evolving or replacing media and channels. It’s not just about using email instead of paper or going online, it’s about completely overhauling the entire business model, which is why companies often get overwhelmed by it.
How many entrepreneurs have never asked themselves or have asked their customers why they buy from me? What have I done or am I doing well for you to choose me? Have you thought about replacing me? Digitization, therefore, begins by stop looking at our navel and understanding that customers evolve and have new needs and that we either evolve with them or look for new products or services.
HOW HAS BUSINESS DIGITIZATION EMERGED?
Digitization has developed in recent years by leaps and bounds. It is the result of an increasing number of people having access to smart devices, which provide fast connectivity everywhere, even in areas where there are no broadband connections.
For example, the number of mobile phones connected to the network already exceeds the world’s population, according to Google’s Digital News Report, while Internet penetration worldwide reached 48% last year.
This digitalization makes the existing IT infrastructure of companies obsolete overnight. Therefore, companies must make a large investment when they decide to go digital
WHY IS THE DIGITIZATION OF COMPANIES SO IMPORTANT?
Digitization opens up opportunities for companies, whose growth potential soars beyond the physical borders of their country. 93% of companies surveyed by McKinsey identified growth as one of the top three benefits of digitization. Digitization can allow companies to reach new markets with lower costs and better products.
WHAT DOES THIS MEAN FOR SMES?
Many small businesses take their first steps toward digitalization because they see other companies in their environment doing it successfully and they think they should be able to do it too. They usually start with informal processes and do not necessarily contribute to the entire organization.
The recommendation for SMEs is that they do it gradually and with simple tools to implement.
WHAT ARE THE BENEFITS OF BUSINESS DIGITIZATION?
Companies that have successfully digitized have been able to successfully adapt their business models to the digital age. If they’ve done it right, they can have achieved impressive results in a short time, whether it’s increased product sales or increased productivity in their operations. Product development can be accelerated by collaborating with startup partners through crowdfunding platforms.
Porsche’s example demonstrates how agile processes help them develop individual vehicle components much faster than ever before. This gives Porsche a significant competitive advantage in the marketplace. Porsche also uses online platforms such as Facebook and Google to better understand the needs of its customers by analyzing user behavior. In this way, they can develop products that are better suited to customer preferences.
WHY DO COMPANIES DIGITIZE?
The decisive factor that determines whether a company is going to digitize or not is the degree of digitization of its sector. If a large part of a company’s competitors have already taken the necessary steps to achieve more efficient business processes, it is advisable that they too
WHAT STEPS SHOULD COMPANIES TAKE TO SUCCESSFULLY DIGITIZE THEIR BUSINESS MODEL?
First of all, they must define the objectives they want to achieve with digitization. Once they know what they want to achieve, they can make a detailed plan of how it is going to be achieved and who is responsible for each step. All employees should understand their role after following these steps.
HOW DO COMPANIES ENSURE THAT CUSTOMERS ALSO BENEFIT FROM DIGITIZATION?
Companies must listen to the wishes and needs of customers to take advantage of market opportunities. This does not mean that they have no say in the matter; however, this perspective is often lacking in large companies, whose main objective is to maximize shareholder value.
WHAT ARE THE RISKS?
However, companies that have not yet made the transition to digitization or have only made it halfway will find it increasingly difficult to survive in the coming years. They are giving up their ability to innovate. The risk for them is not being able to respond quickly enough to the different needs of customers.
Worse yet, when looking at success stories of digitization, what is often highlighted is that each company had already previously taken other steps in its industry toward innovative activity over a longer period. This makes it quite clear how important foresight and future-oriented actions are if you want to keep up with the pace of change.
WHY DOES DIGITIZATION FAIL?
As companies start to introduce new software, they often find that the old software is doing its job so well that there is no reason to change it. At a time when companies need to develop their IT infrastructure and introduce new applications or newly developed business models in a short space of time, this can be a huge disadvantage.
HOW SHOULD BUSINESS DIGITIZATION BE MANAGED?
Companies must follow 4 steps to successfully establish digitization in their organization:
1. Establish clear governance structures at the executive level.
2. Create an innovation unit within your company to manage your data and processes more flexibly.
3. Make sure you have the necessary resources, for example by hiring an innovation manager from outside your company who can think creatively about new technologies and methods.
4. Involve employees in the digitization process from the start using a bottom-up approach. You can start small and use pilot projects to gather more experience.
WHAT DO YOU NEED TO DIGITIZE YOUR COMPANY?
To start with, you need a clear strategy and an IT concept that ensures all elements work together. For example, the human resources department must be able to evaluate job applications online and be able to submit contracts electronically.
Employees need to become familiar with digital processes because this starts with the type of devices they use to work. Second, key performance indicators (KPIs) need to be established for each process so that every step of the way can be evaluated.
The most important thing to digitize your company is to be able to give your collaborators the necessary tools to be able to do their work better and make it easier. An example of this is digital networking cards. It is an alternative that is very necessary today in a world where digitization and hybridization of formats are here to stay.
With a digital business card, your collaborators will be able to carry the most valuable contact information and share it with clients and interested parties. You can use the service of Connectana Systems to create your attractive digital business cards.
Another very useful tool during business digitization is digital content through the use of open access or restricted access platforms. Depending on your needs, you can upload the necessary information to a platform to share what you need. Think about the time, resources, and above all impressions that you will save by doing so.
