Before identifying the advantages of digitization, it’s worthwhile to define it, as digitization is attributed to many different processes. An article in Forbes highlights the need for the distinction between some of the three most common buzzwords in this context.
Gartner defines digitization as “the process of changing from analog to digital form.” In concrete terms, it is every process that returns information that can be read by a computer. There are several examples of this in a business context, from payroll management to sales performance monitoring, and data analysis, all functions that have gone through a strong digitization process.
Digitalization, on the other hand, is often used interchangeably with digitization. The article defines it through the human dimension as “the way in which many domains of social life are restructured around digital communication and media infrastructures.” Regardless of the definition that is considered most appropriate, the fundamental point is its ability to bring about impactful changes that benefit both companies and individual users.
Finally, digital transformation takes on a broader meaning of digitization, as it is a dimension of change that impacts all business functions, with a strong customer orientation. In concrete terms, a set of digitization projects can lead to the digital transformation of a company. Gartner says that it can “refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.”
Digital transformation of business processes
Like any major change in business dynamics, this requires time both at the implementation level and at the level of results (or profitability), also for the commitment in terms of resources to be invested in the process.
However, efforts to fully transform processes to digital are largely repaid at the revenue and transaction cost level.
If we look closely, of the many positive aspects of digital transformation of business processes, we can identify five points that sum up the main advantages that come from taking one’s business into a digital dimension.
1. Ability to reach new markets
For SMEs and large companies, finding new outlets for goods and services they produce can be the most important driver of growth.
Communication is foundational when it comes to expanding your business. The use of technology to track interactions with prospects in a new market, and the ability for real-time monitoring in order to fine-tune your messaging or the product itself, are key for ensuring ROI. In addition, the ability to create connections with your target audience—whether it be the end customer or a C-level partner prospect—requires a constant web presence and an omnichannel perspective.
The digital world has made it possible to break down cultural and organizational barriers of communication that in previous decades were unimaginable to overcome.
Using digital transformation of business processes to face new markets does not only mean facing new geographical areas, but also new opportunities for new products and new segments. In the first perspective, about 99% of new products do not even pay back the development costs once they are marketed. At times, these aspects can be used as a basis for reactive action by the company in relation to the market (number of product features, future trends, high competition).
A proactive approach to marketing is one that must be supported by the appropriate digital tools. In this sense, there are various organizational methodologies allowed by digital. One, in particular, employs many of the tools currently used by small teams or integrated in the processes of large multinationals: Design Thinking. Through tools like the “Sprint” and “Creative Problem Solving,” companies can provide teams with greater versatility and at the same time, can improve how they interact with end-users; the feedback gained through this interaction can then be incorporated to improve work processes.
2. Increased productivity through process automation
Business Process Automation (BPA) consists of the use of technology to automate internal processes that are:
- consistent over time
- and those that must be error-free
The goal of BPA is to reduce the manual effort in repetitive processes, making them less prone to human error and freeing up resources for higher-level tasks where more creativity and other capabilities that cannot be replicated by a machine are required.
There are a number of examples of this: CV pre-selection processes in the context of human resources, the automatic invoice payment process, and contract management are just a few phases in which a large part of the related tasks (from filling in to sending documents) can be digitized and automated.
3. Improved Employee experience
Work structures change over time, depending on the type of products and services produced, as well as the need to reach different markets, with flexibility and the ability to organize resources remotely, with teams working from different locations. Digitalization of the resources needed to develop and plan the distribution or delivery of a service is the first condition for the development of a true digital transformation of business processes and of the organization.
The following are some examples that can improve the concept of the Employee Experience (EE):
- Corporate VPN: access to corporate platforms from anywhere, in a secure and verified way, is the first condition for a concrete and widespread development of digitization
- Company Academy: internal training is one of the first forms of retention, as employees increasingly appreciate being able to add new skills. Having a corporate academy online also makes it possible to train employees no matter where they are.
- Remote support services: similar to company academies, the possibility of having immediate remote support for internal processes can make an important contribution to efficiency and resilience.
- Agile work: while according to ISTAT, only 8% of the Italian workforce had access to smart working hours, the COVID-19 emergency situation has given an important boost to the adoption of new infrastructure
4. Continuous improvement of business processes and customer relations
The sum of the above points leads to the viability of the company through a reduction in fixed costs and an increase in the capacity to offer products and services. However, it is necessary to include these improvements within a broader framework of how all business processes are organized, from production to performance monitoring.
The customer journey mapping process, i.e. tracking the entire consumer experience from the first contact with the brand to the purchase, differs significantly from one sector to another, but has some constant elements:
- Identification of individual touchpoints in the experience: what are the occasions where the company comes into direct contact with current or potential customers? From physical advertising (from billboards to temporary stores) to digital customer care, identify the critical issues and key elements of each individual touchpoint.
- Multichannel and omnichannel dimensions: the ability to cover a single point of contact on multiple channels (e.g. customer care through a territory network associated with an online customer care platform) along the entire buyer’s journey.
Many of the processes that can interrupt the purchase journey, i.e. negative customer feedback, can result from calls to external call centers or requests for assistance from physical locations or touchpoints. Even complex payment processes or a non-linear journey to the corporate website can compromise conversion.
However, thanks to digitization processes, it is possible to reduce the need for support by resolving the most common concerns through chatbots, effective FAQs, or guided journeys (e.g. through the use of tooltips).
The many changes in customer interaction brought about by digitization require changes in business processes. According to McKinsey’s Barr Seitz, “culture is the hardest part of the organization to change. Shifting technology, finding the right talent, finding the right product set and strategy—that’s all doable, not easy, but doable. Hardest is the cultural transformation in businesses that have very deep legacy and cultural roots.”
Digitization at the company level is, therefore, a wide range of technological, cultural, and organizational changes, leading to improvements in internal efficiency and greater responsiveness to external stimuli. Therefore, it is not just a mere provision of tools and technologies, but it translates into a profound change in the way companies do, see, and think, which require new ways of approaching the market and the customer, new organizational and managerial structures in the production chain or in the offer of a service, and new ways of managing employees.