Innovations in technology have allowed digitalization to pick up momentum. But what does it all mean, and more importantly, how does it affect your company?
The term Digitalization has been defined in several ways.
Gartner sees digitalization as "an emerging business model that includes extension and support of electronic channels, content and transactions, created by blurring of digital and physical worlds" whereas the Business Dictionary has termed it an "integration of digital technologies into everyday life by the digitization of everything that can be digitized'.
My experience as a Digital Banking Consultant has taught me that digitalization is actually a little bit of both.
Digitalization is the creation of innovative business models designed to drive outstanding customer experience and operational efficiencies with a view to creating a Digital Ecosystem with other digital partners. Or more simply put, it's a journey toward making the digital world aware of the physical one and one in which a digital entity either
replaces a physical entity, or simply
duplicates it. (Here I deliberately use the term 'journey', because there will always be some aspect of the physical world that the digital world is not aware of, but would like to know more about.)
Below are a few other basic principles I picked up along my journey toward a deeper understanding of digitalization.
From Physical to Digital
Boiled down to its bare essentials, there are three common forms of digital interaction: Human-to-Human (H2H), Machine-to-Machine (M2M) and Machine-to-Human (M2H). Only once a digital presence has been established can an entity begin to interact with others in the digital world. These interactions are then digitized through Internet-Of-Things (IOT) and Social Media.
In order to connect the IOT and Social Media worlds, every product entity needs an equivalent social presence, and every human requires a consumer profile in the IOT world. A user can also connect directly with an organization's digital presence through its website and/or mobile app.
Mobility and wearable technology can play a role by digitalizing by recording physical activities in digital format. For instance, Nike introduced wearable gadgets to track & score your progress and LECHAL shoes come equipped with a GPS to navigate the user.
The Latent Value of Data
Large amounts of data generated through Social Media and IOT can only be leveraged through Analytics. While a product-making company may generate and collect all data related to its own product, an in-depth analysis of the
raw data is required in order to gain further insight into its operations.
An organization may have to gather insights from multiple sources and/or conduct its own research to make an informed decision for a defined agenda. For instance, the sales team might collect insights to improve its customer service and marketing in order to improve product design. The organization will have to make an informed choice as which data source to trust and which one to consider as irrelevant noise.
Digital Ecosystem for Consumer Experience
Not all aforementioned technologies are required by a company. The extent of IOT, mobility & wearables depend on the type of industry and its customer touch-points. However, it is largely driven by consumers interacting at various service delivery touch-points. The consumers are becoming empowered by the number of choices available to them, and they are looking for a superior experience across the value chain.
A product company might collect data that has a better use outside its organization and will extract value through data monetization. For instance, an automotive company may monetize data on user driving habits by partnering with an insurance company. Much like gold mining, quite a bit of sifting, sorting and extracting is required before one can make use of the end product. The key to success is in realizing the potential value of this information for external parties.
Organizations will share this insight in the form of subscription services (real-time API or data feeds) so as to create a sort-of 'Insight Exchange' and subsequently learn to rate such insight-based services by Accuracy, Relevance and Depth. Several partnerships will be fostered through such an exchange—the result of which is an integrated digital ecosystem.
To succeed in a digital world, it's imperative that organizations strengthen their Analytics and API competence to make sense of raw data and APIs and develop an interchange with other players.