FIVE STAGES OF DIGITALIZATION: HOW THE FULLY DIGITAL ENTERPRISE WORKS?

23 September 2020
FIVE STAGES OF DIGITALIZATION: HOW THE FULLY DIGITAL ENTERPRISE WORKS? Getty/Gajus

The digital company in five steps: Which stages and processes will be gone through and what this means for your own digitalization strategy.

• The five levels of maturity help to determine where your company wants to be at the end of the process.
• To this end, digitalization is divided into stages, which serve to give an idea of the level of digitalization a company has reached at each stage.
• In stage five of digitalization, efficiency and productivity are determined almost exclusively by optimizing the software

While collecting material for this article, I noticed that the idea of an autonomous company that runs its business fully automatically unsettles and frightens many people. "Where is the human being?" is the most common question.
This question is not easy to answer, because the role man will play in the society of tomorrow is an unwritten book. What remains is to believe that man will find his role. Although this is a difficult debate, which is usually conducted with a great deal of emotion, I would nevertheless like to attempt to draw a sketch of a company that will consistently push the much-vaunted digitalization process to the point where digitalization ends.
The term digitalization is one of the biggest topics of our time. We have been familiar with the use of information technology in companies for over 50 years. And one thing must be anticipated: Digitalization is not a one-off measure, but a constant process of renewal and change. What strategy a company develops to manage this process is a topic worthy of a separate article.
This article is intended to help you take stock and decide where your company wants to be at the end of the process. For this purpose, digitalization is divided into stages, which serve to get an idea of the degree of digitalization a company is facing in each stage.
Processes can be divided into four categories
The individual processes can be divided into four categories: from completely manual to completely software-driven.

The term digitalization is one of the biggest topics of our time. We have been familiar with the use of information technology in companies for over 50 years. And one thing must be anticipated: Digitalization is not a one-off measure, but a constant process of renewal and change. What strategy a company develops to manage this process is a topic worthy of a separate article.
This article is intended to help you take stock and decide where your company wants to be at the end of the process. For this purpose, digitalization is divided into stages, which serve to get an idea of the degree of digitalization a company is facing in each stage.
Processes can be divided into four categories
The individual processes can be divided into four categories: from completely manual to completely software-driven.

Every company has a finite number of processes that are supported by software to varying degrees. Basically, the degree of digitalization of a company corresponds to the sum of the digitalization levels of its processes.
For clarification and better classification, the digitalization levels of companies are divided into different levels. The levels represent the development from a completely analog to a completely digital company.

Stage 0: Manual processes without IT

A stage 0 company does not need IT. All processes run manually. Even in external communication, people rely on the spoken word and the handwritten letter. The accounting does not exist or is written by hand into a book as in the past. The production is a pure manufacture, everything is done by hand.

 

Stage 1: First steps in computer-aided work

In stage one, companies work with a computer in the first areas. Usually these are the accounting departments, because this is where electronic data processing offers the greatest advantages. In addition, the software is usually very simple in structure, since only read and write operations need to be performed. Data is managed but not yet processed on a large scale. In production, software is also used to control machines, but even this software is very rudimentary, since it usually executes the simplest control commands. Communication in the company is in writing by letter or by telephone.

 

Stage 2: Use of information systems and evaluation of data

Here, data processing is becoming more complex as more and more logic is now being built into the software. Accounting programs perform complex calculations. So-called management information systems are used to condense and evaluate business data. In production, machines can perform more complex process steps.
Communication is increasingly taking place via e-mail, although paper cannot be dispensed with. There is a printer in each department. Advertising is carried out using print media, but also with classic electronic media such as TV and radio. Workstations are increasingly equipped with PCs, and IT operations install the necessary software. The company maintains a static website for presentation on the Internet.

 

Stage 3: Internet technology is introduced

Internet technology finds its way into the company. All employees have access to a personal computer. Each department uses software for communication, for example portals for the distribution of information within the company, but also to support its internal processes. The company has a website through which it can communicate with customers.
A CRM system manages all customer data. But information on paper is not rare, because in addition everything is still printed out. In production and also in the supply chain, everything is organized using software. Large parts of the production are automated. IT operations are organized centrally, software is provided either as a browser application or via remote installation.
Planning in the departments is done by software, for example with a marketing planning tool for activities and campaigns in marketing. Decisions in the departments are increasingly being made on the basis of data (for example, employees are hired based on their better profile). Meetings usually take place at a common location or by telephone.

 

Stage 4: First automation steps in individual departments

Department-internal processes are completely controlled by software, for example via a ticket system. Everyone knows when who has to do what. This enables a high degree of networking and agilisation of the company. Knowledge is constantly externalized via knowledge management systems. Individual processes are also already highly automated, e.g. the accounting department automatically books with an error rate of less than one percent.

Abolition of the "information islands": Internal departmental systems are networked with each other so that they can automatically exchange data. Each department provides one or more software services for this purpose so that other departments can connect to them. Data from different departments is combined into a data hub, also known as a "data lake", so that evaluations, scenarios and forecasts can be calculated using Big Data algorithms.
Advertising is exclusively digital and personalized. New forms of communication are used for internal communication, in which messages are always summarized according to topic or group. Messengers are used for 1:1 communication. Meetings usually take place virtually.
In this stage, decisions are largely data-driven. They are made automatically where it brings a speed advantage and is ethically justifiable. In some cases, planning is automated by software. Many processes run automatically and are monitored by software.

 

Stage 5: The digital enterprise

Here the company is completely digital. All processes are completely data-driven. The company "calculates" a comprehensive plan from target values (parameters). In doing so, the software draws on patterns that it has learned over the years. Strategic targets are taken into account as well as economic conditions and current market trends. Via software, the company has access to all channels on the Internet and uses this database to derive trends.
Production is fully automated. Robots are even used for maintenance tasks. Communication with customers is fully automated via so-called chatbots. Advertisements are personalized and automatically fed into the social media channels and placed as ads in ad campaigns.
Decisions are made completely automatically based on learned patterns and predefined rules. The computer can incorporate hundreds of parameters into the decision. Even a person's much-vaunted gut feeling cannot keep up with this. The decisions are automatically and completely logged for tracking.
Procurement is fully automated by requesting the required goods and services on special bidding platforms and then the software evaluates and decides on the various offers. At the same time, machine breakdowns are forecast in production and the spare parts requirements are determined.
Software processes as well as machines are permanently and automatically monitored. All relevant parameters are recorded. New ones are added through continuous learning. In the event of deviations, processes are set in motion that automatically eliminate the causes (so-called self-healing), for example by restarting a system.
Once level five has been reached for a company, then the efficiency and productivity of the company is determined almost exclusively by optimizing the software. Since hardware or machines can be procured identically for all companies, it does not represent a distinguishing feature in competition. The programming of the machines provides the necessary lead.
The decisive competitive factor, however, will be the creativity with which a company creates new innovations and can thus stand out from the competition.

 

This article was originally published by www.cio.de

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