If you are connected to Automation, IT or Finance in any way, you must have heard about digitalization. But, why should we use it, how to go about it and finally, when should we embark on this digital journey.
These are the major questions in the mind of many people concerned with digitalization.
Let us try to understand this in a simple way.
To simply answer this, let us understand first another closely related term – “digitization” to understand digitalization and hence, appreciate the difference between these two similar terms. Digitization is, to simply put, automating a manual system. In some cases, people also refer to digitization as a process to store any paper-based information into a computer. This process is, of course, nothing new and the IT industry has been doing this for the past several decades. A good example of digitalization is automating the Indian Railway reservation system.
Digitalization, on the other hand, is solving a complex business problem using the available latest tools and technologies. The major difference here is that we are using the available tools and technology to solve the complex business problem rather than developing from scratch (which will be the case of digitization). For example, if the business problem is to prevent credit card fraud, you can use any tools supporting Complex Event Processing. These tools process the events at high speed and can take appropriate actions using pre-defined rules. For example, if you use a credit card today in Delhi at 10:00 AM and the same card is used at 10:30 AM in Chennai, the Complex Event Processing tool will deny this transaction, because it is not possible for a person to travel from Delhi to Chennai in half an hour. If we have to build the same logic in digitization, we will end up spending huge money and effort. On the other hand, digitalization provides this tested solution at a fraction of cost which will work with almost 100% accuracy.
The next question which comes in the mind is, why should I go for digitalization. There are multiple reasons and many times it is a combination of several things. I will highlight some of the important reasons below which are compelling for organizations to go for Digitalization:
These three reasons are fairly generic in nature and apply to several verticals and organizations. Having said so, in real situations, there could be many more reasons for going digital. Each industry has its own issues and there could be specialized tools available to address the issues.
This is the most important question which comes up in the mind of decision-makers. Unfortunately, there is no clear and simple answer to this. Your digitalization journey (million-dollar) should be driven by the business issues faced in your organization. The first step is to identify the most important business issues concerning your customers, ease of doing business, cost reduction using the tools or any other pressing issues which can help your organization to improve your top line, cost reduction and increase in the bottom line. There is a need to spend an extensive amount of time to identify the issues. There is absolutely no harm in taking help from independent consultants in your domain. This may cost but you may be able to get some perspective as to what can do what for you.
After identifying the business issues, the next step will be to identify the right tool to address the issues. Unfortunately, again, this is not very simple and straightforward. There could be several tools available (in many cases, hundreds or even thousands). Which one should you pick, is not an easy decision? The complexity is increased because all the Big Companies like Microsoft, Oracle, Google and IBM would have tools to resolve your issues, and many small players may have the tools to address some specific Industry. If you talk to one company, they will only promote their own tools (because of obvious reasons) and undermine the competition. In such situations, it is not easy for a usual organization to shortlist the best available tools to solve the issue and the minimum cost. I usually recommend taking the help of an Independent Consultant (who is not tied to any big company) for independent advice. I have myself advised several organizations to use specific tools with proper justification. In fact, this is advice is totally independent (we are tied to any organization (and usually it is free as well. If you need any such help, please free to ask me any such advice.
As I think if you have understood what is digitalization, why should we go for digitalization and what we need to do for digitalization. I am sure all these are really very complex. However, when to go for digitalization is the simplest to answer. Because, if know you need digitalization, you must do it as soon as possible. This is because, in the majority of the cases, the payback period is very less, usually 3 years and many cases less than this. Of course, you need to assess the criticality of your business issues and your cash flow. You need to look at your cash flow because digitalization will need the cash to spend in the beginning, the benefits will accrue later.
I have tried to answer all the doubts/questions which many people have in the path of digitalization. However, if you still need some information or an answer to a specific question, you are most welcome to reach out to me and I will try to answer as best as I can.