Andreas Grundsell explains why business digitalisation is here to stay and gives readers three tips on how to get the most out of taking their operations digital.
The buzz around digitalisation
After almost three decades in the business, I’ve seen my fair share of buzz words, and generally, I support them — they often capture a vision, brilliantly and crisply. However, many buzz words hold empty promises. Is “digitalisation” a buzz word of the latter category?
I think not—it’s just that many businesses don’t yet know how to fully embrace the digital transformation. In this article, I’ll answer some lingering questions surrounding the topic and give three pointers to keep in mind for the successful digitalisation of your business.
What is digitalisation?
Digitalisation is the conversion of written and oral communication to electronic messaging that everyone understands. This transformation is achieved through business networks and wireless networks. Simply put, you can say that everything in the old world that required a written business document is digitalised by business networks and everything that was earlier managed by a phone call is digitalised by wireless networks.
“The outcome of digitalisation is higher process efficiency, lower transaction costs and better control.”
A common misnomer that I’d like to clear up before going too much deeper is the difference between digitise and digitalise:
To digitise refers to the act of converting a physical document into a digital one. Scanning a paper invoice and creating a PDF document is an example of digitisation.
To digitalise is to transform and improve an entire business model using digital processes, e.g. making the decision that all of a company’s financial documents be handled and processed digitally.
Why should I digitalise my business?
The main reason to digitalise your business is because digitalisation is not a trend, but the way the whole world is heading.
The purpose of digitalisation is to enable automation, increase data quality, and collect and structure all that data so we can apply advanced technology, such as better and smarter software.
The outcome of digitalisation is higher process efficiency, lower transaction costs and better control of business operations, both for the individual company and for the network of connected businesses.
Three pointers for successful digitalisation
Digitalisation is not a specific manufacturing, warehousing or logistics issue; it’s a business-wide challenge. Thinking of digitalisation as many separate projects complicates the process and belittles the value it can bring to your business. To reap the full benefits of digitalisation as described above, here are three tips to keep in mind as you set out to successfully digitalise your business.
1. Start from the bottom up by establishing a business network
Most digitalisation showcases are singled out projects. The tendency is to start with wireless networks because the source is limited in scope, tangible, and “techy”— and we like “techy” things!
Self-driving electric cars and trucks, fully automated warehouses, and robotics in production are all incredible examples of wireless networks in action. However, these applications are confined by space and fully dependent on propriety IoTs within that space, be it a yard, a warehouse or a production facility.
Why does that space not extend further between businesses at a faster pace, considering the technology to do so is already available? That’s the result of not having an established business network, or a network of companies strategically working together to improve business operations between suppliers, customers, distributors, and other third-party entities.
“Without a business network, your data quality will not be good enough for your business to reach full potential.”
Robotics in manufacturing opens many doors — new career paths for employees, economic gains, business growth opportunities — but it is a business network that takes your innovation and success beyond your company walls.
Therefore, it’s better to embrace the business dynamics and build your digitalisation strategy around networks that connect your different ERPs and applications. Why? Because without a business network, your underlying data quality will not be good enough for the rest of your business applications to reach full potential.
2. Tap into the power of high-quality data
The crudest way to start digitalising written business communication is to scan physical documents and digitise these business transactions. Today the infrastructure, regulations and technology to implement end-to-end digitalisation of your business transactions already exist in most places across our globe.
Once you have all your transactions digitised, you can start collecting data. And this is when it starts to get interesting. Essentially, any business is a small step from realising a digitalisation strategy and tapping into Big Data or “the new oil.” Most stop after digitising the transaction and thus miss the opportunity of digitalising the complete business network to start harvesting the vast amounts of data which resides in the transactions.
For each order and invoice, there is so much more information stored than any one person or department might realise — trends, patterns, pricing insights and buyer preferences are just the beginning. The data will flourish, enabling the entire C-level to tap into new insights, and allowing the company as a whole to move forward making better business decisions.
3. Opt for the holistic approach to digitalisation
Business leaders seldom see the promised or expected benefits of digitalisation from a holistic view, but if we continue to work with digitalisation in siloed approaches the full benefits will remain untapped.
Take the life cycle of a single transaction. The accounting department is usually concerned whether the amount is correctly booked to the right accounting code or if the invoice or order is compliant to accounting rules and legal requirements. The IT department is more concerned about the transaction getting stuck somewhere, lost or even stolen. The supply chain department is busy digitalising its flow of goods and production sites with IoT gadgets and is not necessarily concerned about the financial settlement. Meanwhile, the CEO is wondering what happened to the digitalisation strategy the board decided on a while back…
“For each order and invoice, there is so much more information stored than anyone might realise.”
As a business leader, the strategic benefits of a holistic approach to digitalisation are immense – visibility over operations leads to better control, the cost of acquisitions drops dramatically, the opportunity to identify and harvest arbitrage in both revenue and cost increases significantly, transaction costs drop, environmental impact from operations decreases, and that’s just the tip of the iceberg.
Harnessing the synergies of digitalisation
More and more business leaders are starting to understand the importance of digitalisation and the benefits that come with approaching it with the big picture in mind. A business network lays out the groundwork for all your communication; a wireless network and business applications demonstrate your ability to deliver innovation. Once that is accomplished, combining the data collection from both business and wireless networks, your business reality is truly about to change. Not tomorrow. Now.