In Affärsmodellbloggen

You have all been a victim to it, you have all whished that you knew more, that you could have shined, challenged, provoked or rejected. Or at least had the guts to stay and be an active listener in the dialogue. You know what they are talking about, you know enough to know that you are interested, maybe even to the extent that you feel you ought to have an opinion in the matter. Then you get ill-tempered and leave…

When it comes to these so called buzz words, your ignorance says so much more than just the fact that you lack knowledge in the subject, it says that you are not updated, or worse, not enlightened. This might sound a bit harsh but let’s face it, these things got their own names! But we humans are a lazy animal, with some exceptions, so we usually don’t take time to enlighten ourselves until we really have to.

So for all those occasions when you thought to yourself, I should know this! I need to be in this discussion! This blogg post is for you and is structured as a series where we list the 5 most relevant buzzwords today and tomorrow.

First up: Digitalization

What is it?

  • Its turning paper and thought into bytes, hence modernizing the way of working by optimizing processes and cutting cost. Some studies say that if you weigh all data in the world (since data is in fact electrons which have mass although it’s extremely small) you get the total mass of about 131 grams which equals roughly the weight of 26 A4-papers or an McDonald’s cheese burger . The data on internet weigh approximately 40 micro grams, the mass of a grain of sand. You might also want to know that the largest search engine today have only indexed about 4% of all web pages on the Internet.
  • There are many examples of this type of transformation through the entire process life cycle. One example from the customer interface in retail or public sector is the way these companies or institutes today let the customer access and/or request information electronically via internet and mobile apps, eliminating the need for telephone operators and mail handling. In the other end of the cycle the billing process is digitalized through the use of specialized players that really have disrupted the whole business areas by their innovate business model and effective processes for handling billing and claim.
  • In the car industry digitalization has helped the manufactures disrupt the whole resale industry by letting their customers designing their car online and with the combination of strategically placed show rooms replaced the need for common retailing. I wonder what Henry Ford would have thought about that, considering he introduced resellers to the car industry.
  • In a report made by Capgemini digitalization is divided into four different technologies; analytics, mobile, social media and embedded devices – all used for transforming either the internal processes or the customer interfaces.

What is the purpose?

  • The digitalization frenzy is less about saving weight and saving the environment than it is making your processes faster, more efficient and more controllable.
  • The example with the car industry shows the purpose of transforming the customer experience with the use of modern solutions for either improving the customer experience or in order to find out more about the customer need and satisfaction through analytical technologies.
  • A less common but highly recommended is to find ways to digital transformation the business entirely, changing or adding new business models by offering new products, reaching new customer segments or accessing new channels.
  • Another reason is to help your business be more compliant. Making your information digitalized will help you manage it and keeping track of its life cycle.

Why now:

  • The number one reason for this frenzy is in my opinion on one hand the technology readiness and on the other hand the trend of focusing on core business and letting service providers as well as the customers take over a large part of the order to cash process lifecycle. Here are three more specific motivators:
    • Data and technology is extremely cheap today. The price of a terabyte has gone down several times faster than the demand has risen and complex webpages with on line ordering capabilities are created by the minute.
    • The demand for traceability from governments has probably never been higher and puts a lot of pressure on the financial industry to answer questions regarding their information.
    • The technology for handling this immense amount of data is here. Big data is coming and we will look into this buzz word next time.

Road to success:

  • As with all major change initiatives it is very important that the benefits of the change is communicated to all stakeholders which in these cases could be the entire organization. The purpose of this is not just to inform but to engage, and for that insight and will is key. To envision the transformation focus should lie in the value and not in the technology, minimizing the risk of confusion and misunderstanding. The next step is the investment of skill and competence and to define the initiatives and their roadmaps, making sure that all needed capabilities are realized and breaking down the journey in optimal phases incrementally, thus patiently closing the gap to the vision. The final step is the leadership that should be formed to suite your organization and culture in order to maximize the engagement on all levels. If the transformation is led from the top which is recommended in most cases, communication and governance is still the weak spot that needs to be handled and decided early and clearly.
  • Inside and out rather than outside and in. A more straight forward way to success is to avoid looking externally for new technology to implement, and rather look at the capabilities you already have in order to find the technology and transformation that suits your organization, starting of course with the strategic intent and business models and then working your way down to the capabilities and other needed structures.

Sources and further reading:

  • Digital transformation: a roadmap for billion-dollar organizations by Capgemini Consulting.

Next word: Big data

Coming: Crowdfunding, Lean, Agile and Disruption

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