CIO Folder: Decisions, decisions…
One of the most common phrases in recent years in the ICT industry is ‘digital transformation’. It is almost a mantra for medium sized enterprises of all kinds, but not so common in large corporations/multinationals or small firms. All sectors have adopted ICT and depend on it, but certain industries are online all the time, 24/365. They vary from digital services to online retail, often combined with bricks and mortar shops, to professional firms and state services.
Like computing from its inception, the choices are to be ahead or on the curve, to be just behind it or to wait until the new technology has settled down and adopt the second generation. It does not really matter. All kinds of businesses tend to make strategic decisions as their position in the market demands or as their finances allow. Since modern business universally operates on a digital platform, digital transformation is an upgrade.
“Today, digital transformation is really digital optimisation. The goal is to adopt software and systems that will carry out every process in the business or organisation and automate as much as possible”
In many cases it is a logical progression from ERP and CRM, those suites of applications that are tailored to handle almost all aspects of administration, finance and customer service. The size of the business is largely irrelevant, since a successful ERP implementation is inherently scalable to many times the original installation. ‘Think big, start small’ is a well-known slogan for the kind of enterprise wide systems that is epitomised by ERP. From another point of view, ERP is a digital transformation in itself, an all-encompassing suite of systems.
Today, digital transformation is really digital optimisation. The goal is to adopt software and systems that will carry out every process in the business or organisation and automate as much as possible. The exceptions require human judgement, but the systems will present the decision to the appropriate person with authority to decide. If the decision maker is absent (or slow to respond) the system will escalate the decision to a qualified substitute. Optimal systems will seek human judgement seldom because the business rules are built in and constantly revised, from customer credit limits to automatic ordering from suppliers to expenses claim validation. Automatic messaging is the mainstay of the system’s interaction with people, often requiring no more than one click.
But digital optimisation has a wide remit. It is essential to support strategic plans, new products or services. Changing business models is the norm for healthy businesses. Diversification, acquisitions, exporting are only a fraction of what the company’s digital platforms may be expected to cope with. Every business or organisation is individual. It may share broad characteristics but it will have differences that make it unique. The choices of systems and software, built up over years, will generate a digital ‘personality’ that reflects its leadership/managerial style and its attitude to customer service.
Back to enterprise software, the choice of an ERP system is the anchor of the company style. CRM is a first cousin of ERP, often with a style of its own to contribute to the mix, while all of the chosen applications contribute to the distinctiveness of the business ‘personality’. That fact has a subtle effect on customers, including the online ones. Corporate personalities have an impact on business success that is seldom recognised. The ones that are easy, user-friendly gain the market while the ones that are ‘sticky’ and rigid in interactive processes (often for security reasons) are less attractive to the market. What is on offer affects consumer response. Bargains overcome unfriendly web sites while familiarity eases the negative response—people have one or two bank accounts.
We are now unequivocally in the Digital Age, so all users of systems—staff, business customers and consumers, partners—expect accuracy, security, performance. That means all organisations, business or otherwise, have to invest in good systems. State-of-the-art is something to aspire to but in the meantime ICT systems should be as effective as the organisation can choose or afford. From multinationals to small businesses that employ less than a soccer team, every enterprise should have a vision of where it wants to be in our digital age.
Detailed plans are for medium sized enterprises and above. Smaller businesses can and ought to have a general vision or aspiration as to where they want to be in digital terms. Whether it owner-manager or the de facto ICT manager, the leaders ideally would have a vision of where they want to be in the near-term future. It’s what they want to succeed in as a business, not a technical specification. Quality customer service is the objective, combined with smart and smooth internal administration. When the time comes for ICT investment they will understand what they want to achieve, which is then a brief for an outside consultant or for the supplier/installer.
Incidentally, the investment for a small firm in a bog-standard step forward in ICT is, comparatively, buttons. Compared to buying or leasing a new premises or the gross cost of a salaried employee, technology is cheap. It is largely a commodity, perfectly adequate for a smaller firm that has no need to be leading edge. If the nature of the small business involves tech ambitions a hybrid solution using cloud, SaaS and such services is a small step up in cost terms and involves monthly payments rather than capital expenditure. Financing then keeps pace with revenue streams.
Economical restraints do not necessarily mitigate against digital optimisation in SMEs: it is the choice of ICT systems and software that counts. Neither is the scale of replacement. An enterprise with thousands of employees is more inhibited in replacing systems. Not really for the cost but the possible level of disruption. A small business can, if necessary, rip and replace systems in one weekend if the upgrade costs agree with the business objectives.
But in organisations of any scale, appropriate decisions and choices have to be made. In large corporations the decisions are complex and tangled, each element of the technology influencing the broad or minor decisions. Sometimes legacy systems are of such importance that they have a profound influence on the enterprise-level decisions. On the other hand, the setting up of a new line of business often gives an opportunity to be state-of-the-art, digitally optimised from Day One.
It is the same or comparable with SMEs. They are by and large inherently flexible, all the more so because of ICT. Only a weekend’s work may be an exaggeration, but the salient point is that SMEs are more open to change than their larger counterparts. With the economy in recovery, the majority of smaller enterprises are looking to improve their systems. Digital optimisation may not be a generally recognised term, but SMEs are open to it.
Where small companies adopt ERP, it is then a platform for all-round improvements in ICT, from mobile systems to better internal processes and customer service through smart automated technology. There are endless varieties of ERP but all of them have one overriding characteristic. It is comprehensive, an enterprise wide digital platform that is a route to optimal systems. Once an ERP system is in place the organisation has limitless opportunities for improvement. Change can be permanent, in the sense that improvement in all aspects can be continuous. New functionality is relatively easy to introduce because ERP is a stable digital environment.
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