To understand how digital transformation takes place in companies, we need to understand the differences between digitization, digitalization, and process automation. All of these elements can be part of digital transformation, but they are not the same thing!
Originally published on 10/13/2020. Translated by an ateliware's partner.
Many entrepreneurs recognize the importance of digital transformation for their businesses. However, there is a big difference between identifying something and actually being ready for it.
Digital transformation in companies goes through a few stages. First, we need to understand that the use of new technologies is not the end goal, but a means to achieve innovation. Then we have to change our mindset, business culture, and operations.
In other words, this process involves:
Digitizing documents, information, and processes;
Digitalizing the company, making the business model digital;
Automating whatever is necessary.
In the following lines, we explain the differences between each of these items and draw a brief "tutorial" for companies that want to go digital. It is worth remembering that there is no cake recipe. Each business is unique and has its own needs and demands. So, use this content as a guide and count on our support if you need help to co-create your own custom solutions.
Everything that happens within a company goes through a process.
In the past, many of these activities were 100% manual. There were no alternatives. Documents had to be printed and sent by mail. Businesses in distant regions required hours of travel and long phone conversations. These dynamics, besides taking a lot of time, increased business costs.
Today, with the Internet, cloud computing, and other technologies, the scenario is very different. In a few clicks, we can sign contracts, access data, and conduct transactions with far fewer obstacles. We gain agility and practicality and save resources.
This transformation was driven by a change in the behavior of both final consumers and the business ecosystem itself.
For example, suppliers currently negotiate in integrated systems. In addition, the tax authorities themselves have "forced" digital accounting to deliver documents such as Digital Tax Bookkeeping.
In other words, it makes no sense to remain oblivious to the digital transformation if everything around us is going digital. Those who insist on analog when there are options will certainly be in trouble in the future.
Right now, digital transformation is on the rise. We see companies of all sizes and segments looking for ways to readjust their processes to keep pace with the market.
However, its popularization has made the words "digitize", "digitalize", and "automate" become equivalent. We found many articles approaching these terms as if they were the same thing.
This relativization is wrong.
Let us explain the difference.
Digitization is the conversion of physical data to the digital format, or even, to perform activities, from start to finish, without the use of paper. In this case, all information is generated, transmitted, and accessed online.
Now, when we talk about digitalization, we are referring to the process of moving to a digital business, which requires changes in the operating model. To do this, the company must embrace new processes, systems, tools, and means of collaboration.
After digitalizing the company and digitizing data, we can move on to the next step: automation.
Automating processes is to make them more efficient and faster using technologies such as Big Data, Data Analytics, and Machine Learning, among others. With these tools, routine and repetitive activities can be performed automatically, reducing costs and errors.
These three parts acting in tandem with digital transformation drive the growth of companies, as we will see below.
A deep and significant change that involves structural modifications through technology to achieve your goals. This is digital transformation in companies.
In short, it is a process in which institutions use the latest technology to increase productivity and boost results. It is something broader, where technology occupies a central place in the organization.
So, yes, it can involve digitization, digitalization, and/or automation. But its purpose is to create value for customers and increase competitive advantage.
The company that wants to join the digital transformation needs to first re-evaluate its processes, change its culture, and then adopt new technologies.
Now that we understand the theory, let's get down to business! How can a company practice digital transformation? We suggest the step-by-step below. Evaluate what makes sense for you and adapt what you need.
The first thing that needs to be done is a re-evaluation of the business model. Is it compatible with the market? What is the current context? What disruptions do we see? How can we adapt to the changes?
It is worth remembering that digital transformation in companies is structural - and not just operational. This means that you need to review your current partnerships, key activities and resources, value proposition, relationship with your customers, and channels of operation, among other things.
Reflect on the questions above, do some research, and move on to the next part.
For our plans to get off the ground, all stakeholders need to buy into our new idea. After all, we will not get anywhere as long as we are stuck in a comfort zone.
Take a look at your performance indicators. Evaluate management practices, habits, and behaviors. What is preventing the company from reaching its full potential? What can we improve?
At this stage, we need communication to be as clear and transparent as possible, ensuring that everyone involved is on the same page.
Many of the activities we perform can be facilitated and optimized. Sometimes we do not use a tool optimally or we repeat patterns without realizing they could be different.
The only way to find out whether operations are consistent and effective is to evaluate their performance. So, analyze product cycles, sales flows, administrative procedures... Which processes need to be modified and updated? What technologies can we use for this?
The next step involves another thought: does your team have the necessary technical knowledge to work with the new technologies?
Friction like this can frustrate employees and hurt the results. Therefore, invest in your team. Develop a plan for everyone to develop the essential skills for digital transformation.
A good starting point for digital transformation in companies is to rethink the user experience. Where can we add value to delight and satisfy our customers? In the delivery? In the service?
The tip is to test some possibilities and analyze the implementation, adaptation, and user acceptance.
Technology cannot be seen only as a support to day-to-day operations. As we have already said, in the digital transformation it becomes the core of the company, that is, a fundamental tool for management and decision making.
Even today, many companies base their choices on the famous "feeling" or the experience of their managers. Of course, these options are interesting, but they are susceptible to errors and sudden changes in the economic model.
At this point, technologies such as Big Data and Business Intelligence are capable of collecting, processing and analyzing a large volume of data, drawing behaviors, and indicating trends, and market behaviors.
Based on this information, your company does not rely on luck to decide which product to launch and at what time. Data will bring this information, increasing the chances of success.
So, digitize your business intelligence. This is an important step towards digital transformation in companies.
When technology becomes the "heart" of a company, all its activities are influenced by it. We can exponentially improve the performance and communication of everyone involved.
By optimizing our operations, we avoid waste, reduce costs, and increase customer satisfaction. Furthermore, we have more control over processes, easily identifying where bottlenecks are and the decisions that need to be made.
We cannot forget, of course, the competitive advantage. If we follow and adapt to market trends, we have more chances to innovate and come out ahead. So keep an eye on the changes in behavior, especially concerning Consumer 4.0.
Of course, this is only a small overview of the benefits of digital transformation in companies. Now, the question is: based on what we have seen so far, do you think your company is ready for digital transformation?