using the results of digitalization and automation to increase commercial potential and increase profits. Main «effects» of digital transformation:
– a multiplier reduction in processing costs (receiving, transmitting, processing, analyzing);
– change of organizational structure, functions, culture;
– creating new products and business models;
– actively using cross-sectional analytics for decision making;
– «direct» digital channels of communication with customers;
– development and testing of new products based on hypothesis research results.
That is, the key effect here – the creation of new personalized products for «target audience» in combination with multiple reduction of internal costs.
Examples:
– exclusion of intermediate stages from the chain «manufacturer – consumer»; direct communication and delivery directly to the buyer (e.g. through the use of Amazon, Aliexpress platforms, etc.);
– bringing a new product or service to the market (for example, making parts to individual order size) without the need for complex negotiations;
– moving to a new business model (for example, instead of selling chemical fertilizers, switching to pay for the treated area and the results achieved or a subscription model).
In the end, the essence of transformation is not to introduce some IT systems or to abandon paper, but to completely rebuild the business model and organizational structure. Some of the divisions will cease to exist, so the digital and classical business will always a priori compete for the future.
Stages on the Path of Transformation
We have defined the concepts and objectives of transformational change, and now we need to understand the way to go, what are its main stages?
First, let us look back and recall that digital transformation is the final step in the complex transformation of an organization. Thus, the main stages of complex transformation are: automation, digitalization and re-engineering of business processes, digital transformation.
In this case, the first and second stages may switch places (personally I consider this replacement the best option).
Consider these steps in more detail.
1. Automation, process conversion to IT
For example, electronic workflows often duplicate existing paper practices and only complicate the work. Without optimization, the process gets worse (those who worked in large corporations, probably faced with SAP or 1C systems).
Pros:
– acceleration of current processes;
– new ways to perform operations;
– process control may appear;
– integrates the work of less connected divisions and departments.
2. Digitalization
Rewriting, including with IT, active use of process optimization technologies. First, re-engineering techniques are applied to build optimal processes, and then they are translated into «digit».
Pros:
– optimizes the organization. structure and job responsibilities;
– simplifies processes and provides flexibility, reduces costs.
In addition, if you initially deal with digitalization, and only after this automation, you will save money, because when you re-invent processes, eliminate losses and implement the first digital tools, automation will be easier and cheaper, and the effect is higher.
A simple example. Now you have a process with a large number of agreements that you have decided to automate. We did a good deal of work, we spent money, everything works in the IT system, but the process is still the same as it was. You still have to wait for the key man to put his visa or delegate the task.
In the principles of lean production, all this is considered a loss – actions that do not create value for the end consumer, but increase the internal costs.
Additionally, there will be many such trials.
Additionally, if you initially think about how to simplify this process, do the simulation and selection of the necessary scenarios for automation, then you have to automate less, which is cheaper. And once again you don’t have to automate after optimization. That is, you won’t pay twice for solving the same problem.
3. Digital Transformation
I repeat a key point: unlike automation, TP does not focus on internal processes, but allows you to use new technologies for business and growth.
However, personally, when working with small and medium-sized businesses, I start with an analysis of the. structure. It often turns out that there is no clear and unified understanding of who does what, what is responsible for, what authority, responsibility, resources. Additionally, how do you work on business processes when everything changes weekly? What’s the point of introducing and automating something?
Below, in chapter 4, you will be familiarized with one case of restructuring and without system configuration. The result was paralysis of production and chaos. Now imagine that such changes are constant. There is more harm than good.
Business benefit
Well, we’ve discussed a few details, but I guess a large number of people still have some questions about why the hell would I? What’s in it for me? Explain on your fingers!». Let me try.
1. Increased efficiency and productivity
How: reducing transaction losses by simplifying and optimizing operational tasks and processes, increasing productivity (including eliminating duplication of functions), eliminating intermediaries (effective value creation) reducing transaction costs for obtaining information and services, simplifying the organizational structure.
Example: It is estimated that every year companies with about 1,000 employees lose an average of $1 million just because of duplication of previous work.
2. Increasing the turnover rate
How: reduction of contract execution time (acceleration of the process of purchase of own goods, acceleration and simplification of documents circulation, procurement processes, deliveries), introduction of new products and services on the market, introduction of direct communication and reduction of communication time with customers and clients.
3. Realizing the potential of staff
Such as: reducing the operational burden on repetitive and simple operations, increasing flexibility for staff, including attracting the most talented staff, including from other regions; reducing staff turnover.
4. Improving the quality of management decisions and responsiveness to changes
As follows:
