When you hear the term digitalisation, you immediately think about converting paper documents into digital files. However, this is actually only a small part of the wider meaning of the term.
A more accurate definition of digitalisation for businesses is the implementation of digital tools and technologies to make business processes more efficient and the firm itself more competitive.
The aim of digitalisation is to make the company more efficient and safer – and therefore more competitive – while saving resources and simplifying processes. To achieve these goals, various digital tools are used to alter:
1) the company’s processes and workflows
2) the way files are created and shared
As with any change, it is normal for digital transformation to cause a certain amount of conflict and a few headaches within businesses. However, in the next few years the drive to digitalise will become ever stronger. And there are numerous benefits to digitalisation, as we’ll see later on.
What does digitalising a business involve?
Let’s try to be more specific. What does digitalising a company really mean? There tend to be two interconnected areas where digital tools can improve a business’ efficiency:
- Documentation
- Processes
Digitalising business documents – orders, invoices, inventories, stock lists, business correspondence, etc. – means going paperless, or digitising: moving from analogue materials to digital technologies. This changes the essence of the files, and opens up countless opportunities for improvements, meaning that processes end up being digitalised too.
Digital platforms and technologies allow you to change your business processes, for instance sharing, approving, modifying and sending documents more quickly. You can collaborate on a single resource – such as a ledger or a collection of quotes – and integrate new online sales channels with existing data flows and structures more easily.
One major benefit of digitalisation is the large quantity of valuable data you acquire. Data is essential for understanding how your business is performing, choosing strategies, further improving processes and automating various activities, which frees up human resources and energy to dedicate to more valuable activities.
Here are a few practical examples of digitalisation in businesses:
- Using collaborative and digital tools: videoconferencing, instant messaging, social network and file-sharing apps.
- Digital files on the cloud, with user authentication mechanisms and the option to assign various roles and permissions to protect sensitive information and improve workflows.
- Online sales channels – e-commerce – integrated with management software (warehousing, stock lists, etc.)
- Platforms for creating, editing and storing files and sending them to customers, including bills, invoices and shipping documents.
- Data collection and predictive analysis tools, e.g. to work out the most successful parts of an online shop or shipping times for logistics companies.
- Ongoing staff training on business digitalisation and listening to the needs of colleagues, suppliers and business partners.
- Plus many more!
The pandemic and the leap into digitalisation
In many sectors, Covid-19 has sped up processes and trends that were already underway, and business digitalisation is no exception.
Remote working grew enormously during 2020, as did investments in internal communication technologies. In the UK, the proportion of working adults who did some work from home increased from an average of 27% in 2019 to 37% in 2020. Between 2019 and 2020 the proportion of businesses providing information on their product range on their websites increased significantly, but uptake of the most advanced technologies, such as smart devices, interconnected systems, robotics and big data analysis remains low amongst SMEs.
Why invest in digitalising businesses?
According to the : only 4.1% of digitally mature firms scaled back their operations due to the pandemic, compared to more than double that for businesses in other categories.
The increased competitiveness of digitally run businesses, particularly in crisis situations, is just one of several advantages of digitalising business processes.
Here are some more:
- Fewer errors: by streamlining the steps involved and automating certain processes, the risk of making mistakes or forgetting something decreases.
- Lower costs: after the initial investment, simpler and more efficient processes reduce management costs and the amount spent on staff carrying out low-value tasks. Companies can therefore use fewer resources more efficiently.
- Better control and greater transparency: digitalised processes, with properly managed accesses and permissions, allow better monitoring of events. When something goes wrong, it is easier to identify the causes and work out who is responsible. Digital workflows also ensure greater transparency and accountability for investors or beneficiaries.
- Increased customer satisfaction: digitalised firms are quicker and more efficient, meaning they can easily integrate sales channels with the rest of their business structures and so meet all their customers’ needs.
- Greater flexibility: digitalising business processes is no simple matter, but once implemented it is easier to change and adapt workflows to the current situation. A digitalised company is therefore better placed to respond to new scenarios.
- Better, data-driven strategies: analysing big data gives the firm’s management a solid base for taking decisions, solving problems and establishing growth strategies.
We should say that, as with all changes, digitalisation can lead to some conflict and resistance. This is completely normal: after all, it affects long-standing tools, processes and habits that have often served the business well for years.
Digitalising businesses must therefore be a gradual process that involves all stakeholders. You need to understand the needs of you colleagues, customers and partners and listen to their feedback, as well as setting up monitoring tools to assess the process and running ongoing training courses for staff.