The phrase ‘Digital transformation’ has various definitions and perspectives. Regardless of the definition, it’s the intent behind the transformation that counts. The objective of any digital transformation initiative should be to use technology optimally, enabling a business to succeed in the future.
To understand how to optimally use technology now, you must predict what you will need to do to win in the future. How can we future proof our companies in these uncertain and unpredictable times? In order to demystify the future (F), here is a practical formula; F = D + P = V.
Let’s break it down.
D is for data
When people talk about data, they often refer to the information or insights that data provides, also known as “analytics”. It is important to know what you want that data to reveal or what decisions you want it to help you make. Making good decisions based on data will greatly increase your likelihood of success.
Simply, data tells you who is doing what, when and where. As a business, your data should tell you who your customers are, what they are buying from you, when they are buying it and where (this would be most valuable where you have several branches and/or online shops).
The more data you have the better and even greater the use of analytics to help you make sense of it. There are several types of analytics, such as; descriptive, prescriptive and predictive analytics. These are very useful. For instance, you may want to know how much your overall sales/profit would increase if you dropped your prices by 20%. This is an example of predictive analytics. Your data should always be able to answer a question. Be sure to ask the right questions.
P is for process
Every organisation and even our lives are run by processes. The way you wake up, the routines in your day, the policies and procedures of an organisation, how you serve your customers how you order supplies, manage stock, etc. It’s all processes. Life and business are a series of processes.
The challenge is to create processes that give you the output you want with as little input as possible, i.e. the most efficient and effective processes. Processes can be either be manual or automatic. “Manual” means a human must do it, “automatic” means a machine (or systems) do it.
The idea of machines doing what we once did can be disconcerting, however, the ultimate goal should not be to replace people but to assist them. People working side by side with technology will yield greater results than people working on their own.
Consider Namibia, we have one of the most sparsely distributed populations in the world. This is can seem like a good thing because it means we have space, but it is also a major disadvantage when that space results in a significant divide between those who have access to education or opportunities and those who do not. This is where technology can uplift an entire economy if used wisely to ensure that the space between our people is not a hindrance to ensuring equal opportunity for all.
D + P
The two common mistakes businesses make on a digital transformation journey are:
1) Investing in data without investing in the means to action that data and
2) Investing in processes without investing in the data to inform those processes.
The first mistake will often lead to an inability to monetise on the data investment and the second mistake results in a waste of resources by doing the wrong things. Data should tell you what the right thing to do is.
The future (F) will belong to those who are able to properly combine data (D) and processes (P) which creates Value (V). This is essentially what digital transformation is all about. Every new technology is simply a means to optimally collect, utilise or action (or “process”) data.
When considering any new decision, product, customer, market or change, you must address the whole value chain, i.e. from the beginning (data) to the end (Process). We must move past the basics of data and process to meticulously combine the best data models with the best processes. The two elements (D and P) of the formula are inextricably linked. Data without process is useless and process without data is guesswork.
There you have it, my formula to describe those who will succeed and thrive in future is F = D + P = V.
Value
One has the choice to act based on information, instinct or compulsion. The more information you have as a business, the more you should build your processes around actioning that information. Your processes should be agile. You can gain new data insights all the time. Stock prices and exchange rates are just some of the things that change on a daily and even minute by minute basis. Your processes should be geared towards quickly actioning any data insights you gain in order to capitalise on emerging opportunities. In every situation, start with data and end with processes. This is where exponential value lies. F = D + P = V.
*Sergio de Sousa is FNB Head: Digital Transformation