The Business Case for Digitizing Processes
Forget Boris Johnson for the moment. In this case “do-or-die” could be true. If a company fails to keep up with digital trends and corporate digitalization, it will be handing a huge advantage to its competitors that do so.
“Eighty seven percent of senior business leaders say that digitalization is now a priority and in many cases is a do-or-die imperative.” (Gartner, HBR Nov18)
All companies have been focussing on the efficiency of their operating processes during the Operational Excellence wave. The front-line digital impact checklist for business processes may look a bit different:
- how customers are treated and interact with the company
- how the company monitors and reacts to events and the market
- how staff, management and the board interact and work
- how suppliers are treated and interact with the company
- how the company complies with regulators and serves shareholders and the community
Digitalization of all these core processes can improve performance and enhance the experience for stakeholders. A company that truly makes the most of the digital world will connect digitalisation, strategy and change management to bring about digital transformation. A digitally transformed company will be in the optimum position to retain and attract customers, staff and investors and to maximize profits. To recognise and realise the potential for digital transformation requires clear strategic planning. Boards and management must be prepared for real change and they must put the building blocks in place to bring this about.
The payback for digitizing the Business Model
- Customers today expect a company to have a captivating website and offer online services, shops, bookings and related one-stop services. Front runner companies give us app-based services too – All of this not only provides streamlined 24hr access for customers, but also furnishes businesses with a wealth of data to tailor the future offer to individual customers and inform the wider strategy.
- Using big data to monitor and analyse markets and the political/natural environment – enables companies to predict potential problems allowing them to react to supply chain and market fluctuations, adapting to the situation in advance, thereby mitigating or avoiding difficulties.
- Employees can benefit from digitalization in many ways – more professional development – fewer routine tasks, smoother operations, fewer customer complaints, better communication with management – more positive, less hierarchical working environment, institutionalised innovation, more motivated staff, better results.
- State of the art materials control and sales forecast systems linked to ordering – will mean lower levels of inventory pipelines, but fewer stock shortages – healthier cash flow, happier customers and suppliers.
- Digitalization for corporate governance can mean board decisions are forward pointing, company policy and reporting are more transparent and easier to understand, the whistle blowing process is clear and easy to use, and sustainability is a topic – stakeholders and regulators can evaluate the company’s corporate governance practice and the board is more accountable.
Organisations that have led the way in digital transformation include certain banks, travel and betting companies. Few businesses can get away with sticking their heads in the sand. Morrisons UK thought it didn’t need to offer online shopping, but performance suffered, investors got impatient and Morrisons had to play catch-up. M&S has also come very late to online food shopping and has paid a huge amount for a joint venture with online delivery firm Ocado in what some see as a risky bid to make up for an earlier strategic mistake. Some ponderous European banks may not even survive the digital transition.
Digitalization is surely relevant to every business today to a greater or lesser degree. What is now clear, is that whatever the immediate benefits of digitalisation, it is those companies that lever the process to create digital business transformation that will reap the greatest rewards.
Tony Harvey & Rose Edwards