“Digitalization” is the buzzword for doing business in the modern world. All enterprises want to become digital, there’s no question about it, but without fully understanding that the concept of digital transformation really means they are destined to fail. Large enterprises entering the digital future need to fully comprehend the term “digital” and everything it entails.
Perhaps the most important thing one must know about digitalization is its continuity, i.e. digitalization is a process. Digital transformation is based on the continual improvement of a company’s IT infrastructure, data, networks, and digital apps.
The business model of existing companies isn’t altered in any way to become “digital,” but rather mapped to accommodate the development of novel, digital products and services. For example, a clothes store remains a clothes store after digitalization but customers now have the extra option to order discounted apparel via an online shopping platform.
In a nutshell, digitalization is the fine fusion of online and offline business operations. Digital optimization and automation create room for individuality, flexibility, and general autonomy of products and services.
Although digitalization is a broad term, its application across different business sectors varies significantly.
In management, digitalization enables the reaction to market trends to be more flexible and quicker. If you wish to maintain a competitive edge, then digitalization is a must.
The same is true for the marketing industry since digital marketing became more popular than traditional marketing methods. From better ad targeting to personalized content, marketers welcome digitalization, as it makes their work a whole lot easier.
Salespeople are also having an easier time selling their products, as online shopping platforms made their wares available across the globe.
As a result, customer service improved across all sectors, not just sales. From web portals to faster support times, the overall quality of production has increased significantly.
Digital transformation affects the whole company but not every segment of its business is digitalized. As mentioned earlier, business activities such as marketing, human resources management, customer service, etc., are almost always digitalized.
In fact, the whole business model is transformed, including the value proposition, often considered the most “offline” section of any business. After rethinking its business model, a digital enterprise can count on novel sources of revenue.
In fact, the transformation could be so compelling, that the owners or the board of directors drop the traditional core business entirely. This is precisely what has been happening in the media market, with more and more newspapers and magazines opting for online-only editions.
Finally, company assets can become digital as well. We are not referring to real estate but rather tangible assets, such as information, intellectual property, and the customer base.
The common fallacy is that companies harvest the ideas of the entire staff when commencing the digital transformation. Although it helps to have employees with innovative suggestions and ideas, digitalization actually starts from the top.
In most cases, stakeholders are the initiators of the digitalization process but it doesn’t necessarily have to be so. Depending on the ownership structure, boards of directors, CEOs, or the chief digital offices can initiate the transformation as well.
As mentioned earlier, digitalization is a process that requires time to complete, making some enterprises reluctant to initiate it. Procrastination in the 21st century doesn’t end well, as companies who hesitate to go digital long enough, start losing the edge in the market.
The expectations customers have is based on a digital service offered by all industry players, so non-digital enterprises find it impossible to adapt quickly. Furthermore, staying “analog” leads to inefficiency interruptions in day-to-day business operations, and increased expenditure to upkeep an outdated infrastructure.
The European Union measures the digital competitiveness of its member states and publishes the annual digital economy and society index (DESI). According to the 2020 data, Denmark is still number one when it comes to digital performance, sharing 1st place with the Netherlands, but what does this title imply?
The digital transformation of an entire country and its society involves the digitalization of both businesses and public services. The five main dimensions of digitalization include:
The biggest advantage of becoming a digital hub, for instance for Copenhagen, is that it draws in companies from across the globe who want to jump on the digital bandwagon. A favorable “digital” business climate opens the way for tech startups to open and for cities to become “smart.”
Once owners of large enterprises fully understand what digital transformation entails, they can’t wait to initiate the process. However, it takes a lot of time and effort to digitalize a small business, let alone a multinational corporation.
From the firm decision to transform the company digitally to looking up the positive example of countries and companies alike, it is better to start digitalizing for the future, rather than remain in the analog past.