A vision for digitalisation

The digitalisation of societies, economies and business is a new and different reality we all must face.

At the start of the century, companies focused their efforts on digitisation, establishing standardised business processes with a view to cost cutting and operational efficiencies. This was a process of modernising business through technology tools that streamlined and disciplined processes so that productivity would grow and enhance revenue. Led by integrated software tools such as Enterprise Resource Planning (ERP) software from SAP, Peoplesoft and others, digitisation heralded an era of tight integration from the shop floor to the head office, to deliver predictable outcomes.

For the most part, it worked.

But going digital today requires something else. Facing an array of technologies from social computing platforms to mobile, cloud, analytics and more recently, the Internet of Things, companies must do more than raise operational efficiency and integrate processes. They need to digitally transform the organisation by rethinking the company’s value proposition. A truly digital company innovates to deliver enhanced products, services, and customer engagement.

According to IDC, moving toward digital transformation is no longer an option but an executive mandate. In a recent Singtel-commissioned whitepaper ‘Digital Transformation in the Intelligence Economy’, IDC states “enterprises must respond to the accelerated rhythm of change largely created by the now almost continuous disruption brought about by digitalisation and be positioned to take advantage of current trends that foretell even further disruption.”

The problem is the view many business leaders have of digital transformation. They are in fact thinking of advanced digitisation, not digitalisation, so are more focused on increasing the automation of customer service operations with mobile technologies or optimising factory processes through just-in-time delivery systems. This is digitisation, not digitalisation.

Digitisation itself has no business value but creates the business cases that leverage the data. In other words, it’s the enabler to create business value, which needs data. For example, you scan a paper document and save it as a digital document (e.g., PDF), converting something non-digital into a digital representation or artifact. Computer systems and software can then use it for various use cases such as online filing of legal documents.

Digitalisation, on the other hand, enables, improves or transforms business processes by leveraging digital technologies (e.g., APIs) and digitised data. So digitalisation presumes digitisation has occurred or applied to the business process in question.

The benefits of digitalisation are significant: efficiency, operational excellence, predictability enhanced with business agility and real-time customer insights to reimagine business models.

Without digitalisation, companies cannot scale in the face of digital disruption; they cannot absorb the complexity of expanded product portfolios; they cannot personalise services.

Here are some steps to developing and realising a vision to digitalising your organisation:

Successful digitalisation efforts start by designing the future state for each process without regard for current constraints—say, shortening a process turnaround time from days to minutes. By challenging each constraint, many corporate myths can be quickly resolved through discussions with customers or regulators.

Digitalisation demands support from every function involved in the customer experience. Companies need a startup mindset to achieve this, seeking out multi-department support (including IT developers) involved in the end-to-end customer experience. The multidisciplinary team must have the mandate to challenge the status quo.

Successful digitalisation programmes require skilled, in-house capabilities so staff can be called upon to digitalise processes quickly. But there are times when companies will look externally for talent such as data scientists. Skillsets should be modular so they can be reused across processes, maximising economies of scale.

Digitalising end-to-end processes one by one can deliver improved performance in much shorter time. Complex IT challenges such as legacy-systems integration can be harder to move along quickly, but there are ways to mitigate the risks of delay such as employing a service provider to help with systems integration. This approach reduces the risk involved with digitalisation efforts and accelerates returns on the project.

In digitalisation, deployment is often difficult because much energy is expended on changing old habits and behaviours. Rather than roll-out a new programme and change processes radically, companies need to ‘roll in’ changes to the organisational systems progressively. One approach is to set up a new ‘digital’ unit internally to oversee the transition, absorbing and retraining employees systematically even as traditional systems and processes continue to operate. By the time these processes have migrated to the new digital process, the new organisational unit will have “taken in” all the required employees from the legacy units.

Companies that digitalise processes can improve their bottom lines and delight customers. The value achievable depends on the business model and the starting point. But by allocating costs to end-to-end processes and benchmarking against peers, you can estimate your potential returns from the process. To kick-start the approach and build capabilities and momentum, organisations can undertake one or two pilots and then scale rapidly.

Speak to us to find out more.