Potential risks and benefits of business digitization

I should have studied history instead of computer science. At least history remains the same. Keeping up with new technology is a real challenge, but as they say, time marches on, and change is the only constant.

Deciding whether or not to apply digitization to a business is probably one of the hardest things to do. If a company is successful, why change? It’s all about ‘new’ versus ‘tried and true’. And this can be overwhelming, but I think we will see how important it is for the future of any business.

Why is there hesitation in moving to digital?

Continuing to use a legacy system does not mean that the company wishes to fail. There are many considerations to make, and if it isn’t broken, why try to fix it?

But if it isn’t broken now, it will be in the future, and how soon is difficult to predict. Hesitation is understandable, as business leaders can be engulfed by panic when thinking about transforming their mission-critical systems. Security, costs, loss of business and other unknowns come into the picture.

Legacy systems cannot keep pace with the newer digital business tools. Figuratively speaking, using duck tape and wd40 to keep an old system going is merely extending the inevitable, and does not generate much appreciation from IT staff.

Transformation is not about handing out new applications for departments to use, it is about changing the business culture, and that is one of the main reasons for hesitating. Business leaders do not like failure, and if a sound strategy is not in place, the failure could be catastrophic. Digital transformation only provides the possibility of moving forward, it is not the panacea, therefore plans and strategies have to be prepared in advance.

Planning ahead

Digital transformation is a long term process, hardly a sprint, more of a marathon. I think the most important aspect of any strategy is the staff. They have ‘special’ knowledge about how their working world works, they know the problems and how to get around them. They are crucial to the business and must be involved from the very beginning.

However, the first thing to establish is the transformation director, someone with enough knowledge and clout to drive the change forward and be supported by the executive branch. They must be able to communicate with all the siloed departments effectively, while listening for suggestions. Perhaps several members of staff have been advocating change, and have seen the advantages of it, for them and for the business. Once the director has been appointed, a support team should be built around him/her to strengthen the planning stages.

An implementation plan will let everyone know what needs to be changed and when it will happen. Every part of each project in the plan, including sub-projects, should have clear objectives, scope, timeframes and budgets.

A Project Management Office should be set up to manage all parties involved, and to adapt to changes to keep the project on track. Department heads should be involved, and must have the ability to inspire and motivate their teams to make changes happen.

It’s pretty unrealistic to assume that the transformation team will be able to handle all aspects of the project, and it is usually necessary to employ external consultants to assist. That combination of expertise will allow the company to reach their target operating model. A completely integrated approach must be used to avoid departmental clashes and misplacing of data.

Risks

‘He who hesitates is lost’. No, I can’t really invoke idioms to deal with a situation this serious.

One of the reasons for not moving forward is the potential for negative consequences. Here is a list of possible risks.

Disharmony in the workplace

I strongly believe that staff are the backbone of any company, and it is so important to keep them happy and motivated. If a digital transformation is proposed, some, perhaps many will feel their jobs at risk, and look for a way out. Big changes can be a disruption to the company, and all the new hardware and software in the world will not be successful if they are rejected by the employees.

Wrong tools for the job

It is rarely ‘one size fits all’ and thus software that is considered best practice in one particular industry may not be suitable for another. Investment in unnecessary software and hardware is something to avoid.

Unreal expectations about improvement

If a company already has problems, going digital will not improve them. Digitalization improves a stable business, but it is not the ideal solution if there are flaws in the business practices.

Financial burden

Buying new hardware and software for a business is expensive, and it will prove to be a wasted investment if the end result is not as expected and the results fail to show.

Security of data

Every business leader’s nightmare is having their data hacked, attacked with ransomware, or dumped by data leaks from internal sources, either accidentally or on purpose, resulting in a loss of customer confidence, system integrity and the possibility of lawsuits from affected groups. Putting data into the cloud is a huge step for some companies who have built up a reputation for confidentiality.

Benefits

My neighbor’s son, who is 18, often chats to me about technology, and he offered up this quite remarkable insight — he said that he and his peers are probably the last age group to be able to switch back and forth between digital technology and analogue. Anyone younger than he will be totally reliant on digital. Smartphones, smartwatches and tablets are the main sources of entertainment, communication and games, all of which are heavily sponsored by advertising.

If a company is 20 years old, and has been operating the same hardware and software for that time, it is not going to have the same advantages as one that is fully digital. It may be a recognized leader in a particular field, but unless it adapts to modern life it will soon become unproductive and fall by the wayside, as competitors ramp up their marketing and social media presence.

The benefits of digital transformation are numerous, but I will list what I think are the three biggest.

It makes a business more competitive

More flexible, more productive, more efficient. It allows the company to stay on the cutting edge, using data more accurately and wisely. It allows for growth without any real changes, and redundant processes will be spotted and removed quickly. Future planning and budgeting will become a much simpler task by using business intelligence software and ERP.

More engagement from employees

By giving staff fast access to necessary information, and removing the repetitive tasks by automation, the company will benefit from a streamlined workflow, boosting productivity and allowing employees to fulfill their potential. They’ll be happier as well.

Better customer service

After all, the business is there to provide a service to the customer, end user or client. With digital transformation, customer relationships are definitely improved, as their experiences with the company will be far more transparent and engaging. Adding mobile services will bring in more users to the fold, as the vast majority of information today is available ‘on the go’.

Final thoughts

Digital transformation is not an option anymore. Companies must stay at the top of their game, and that means using the full power of the internet and cloud services. A reduction in mistakes connected to business planning and workflow will make a big difference. Careful planning will reduce any problems with integration, and will keep employees tuned in and engaged.

If security is an area of concern, then there are hybrid cloud solutions where a company can maintain its critical data outside the public cloud, but businesses must be aware that they are singularly responsible for data breaches. Just because a cloud provider says that their security is top notch, it’s not good practice to simply accept that fact.

Remember, though, that if a company has internal problems before deciding to switch, it will probably affect the transformation in a bad way. Identify the internal and customer pain points, correct them, then prepare for transformation. If it all goes to plan, a nod to Mercury, the Greek god of commerce, wouldn’t go amiss.

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iteo is an international technology consultancy & software engineering company, founded in Poland. Visit us on www.iteo.com

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iteo

iteo

iteo is an international technology consultancy & software engineering company, founded in Poland. Visit us on www.iteo.com

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