DEVELOPING DIGITIZATION SCENARIOS
The options for digital enterprise development are called digitization scenarios. In this article, you will learn how to develop these digitization scenarios . However, the prerequisites for digital enterprise development must first be fulfilled before it can be started.
ANALYSIS OF EXISTING PROCESSES
A business process that is important for value creation is selected in consultation with management (usually a process in sales, which contributes significantly to revenue) in order to obtain a manageable scope.
The analysis of the selected process takes place according to the method of process cost accounting, which is known from the field of business management, but in slightly modified form, because it is not used here for the purpose of cost distribution, but with the goal of creating ideas for the development of the digitization scenarios accelerating business development.
In this process cost analysis, all activities in the process are scrutinized in detail and measured. Cost, resource requirements, processing time and number of operations are among the results of the investigation. Since every single activity in the business process has the potential to serve as a provider of an innovative idea, the question of the possibilities for digitization must also be answered accordingly for all activities.
The more detailed the processes with the activities taking place within them are analyzed, the more innovative ideas and possibilities for improvement become visible. The DI architect develops concrete scenarios for digitization from the collection of these ideas.
DEVELOPMENT OF THE DIGITIZATION SCENARIOS
DI architects develop various scenarios of digitization on the broad basis of ideas from the “analysis of existing processes” and the knowledge of digital intelligence.
The finally prepared digitization scenarios consist essentially of answering these questions:
- What is being digitized (what activity)?
- Is the focus more on the increase in sales or more on operational efficiency (EBIT)?
- Where and by whom will the it be done in the future?
- How high is the cost and risk of the action?
- What are the advantages (sales, costs, agility, other competitive advantages)provided by the scenario?
Frequently, the cost advantages of the scenarios are so significant that the measures are worthwhile. At least equally important are the opportunities for competitive advantage.
The digitization scenarios are divided into the following categories, which are described in more detail below:
- Internal shift
- Vertical integration
In practice, the categories are often combined.
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Through networking, most activities can be processed in other places at any time. This can be used to eliminate capacity bottlenecks and to achieve economy of scale. In addition, internal shifts in practice often also result in a shortening of the reporting paths so that the error rates can be reduced. A rather typical example is posting to the ledgers in the very moment of customer acceptance to reduce time to cash.
In vertical integration, the customers are networked with the supplying company. The concept leads to a simplification of the ordering process for the customer (often fully automatic), resulting in a higher customer loyalty, solvency, margin and yield. This concept isn’t new, but new technologies enable expanding the idea into new orders of magnitude.
In crowdsourcing, the knowledge, creativity or performance of whole groups of participants is connected. The crowdsourcing platform Qmarkets for instance provides support for a huge range of tasks ranging from the development of marketing concepts to the design of process optimization. Today, more than 2 million committed people around the world are ready to take on the task.
Automation is by no means a new concept. Even so, today and certainly also in future, very attractive potentials can be opened up. With today’s technology, extremely complex processes can be automated at attractive conditions.
The digitization scenarios form the decision-making information base for management and other boards and should be presented in a correspondingly clear form. The well-informed decision is based in particular on two pillars:
- Profitability of the measure (EBIT potential)
- Strategy Conformity (Competitive Advantages)
Profitability and risks
Since the method of process costing is already used in the analysis, the current costs are relatively precisely known and measurable. The costs after the introduction of the measure can also be approximated with simulation calculations. Economic decision-making is therefore at a rarely comfortable level.
The assessment of risks is somewhat more difficult. Although the technical risks can be described relatively well by the experienced DI architect, management should still be much aware of the cultural influence and the associated risks and should use a lot of tact and finesse.