What is the key element of business digitization? In the business world, many are beleaguered by the idea of guessing future technology trends and predicting what will be the next big innovation that will revolutionize the market. Today, for example, the focus is on artificial intelligence, while yesterday there was talk of the metaverse, blockchain or other emerging technologies.
This frantic rush to adopt the latest innovation can often lead to unsustainable investments and a loss of strategic focus. And this is because of a very simple fact: Despite everything, the future remains unpredictable.
What is the key element of business digitization? For us, it remains the importance of digital strategy upstream of any initiative, also to avoid wrong investments in the technological future.
What is meant by digitization of enterprises?
It is a real process of integrating digital technologies in all areas of a company, not only in technological systems and infrastructure, but also in business processes, organizational culture and staff skills, changing the way the company operates and delivers value to its customers. So what is part of enterprise digitization? Several components may be involved:
- Process automation
- Digitization of data
- Use of cloud platforms
- Big Data analytics
- E-commerce and Digital Marketing
- Collaboration and Digital Communication
- Cybersecurity
- Innovation and digital product development
The allure of new technologies
Every year companies invest billions of dollars in emerging technologies. According to a Gartner report, global IT spending has reached $4.5 trillion in 2023, a 5.5 percent increase from the previous year. Of this figure, a significant portion is earmarked for technologies such as artificial intelligence and blockchain. However, not all of these investments in enterprise digitization translate into success.
Artificial intelligence: the final frontier
Artificial intelligence (AI) is the latest technological frontier that promises to transform the business world. IDC forecasts indicate that global spending on AI will reach $110 billion by 2024. However, a McKinsey analysis reveals that only 22 percent of companies that have invested in AI have achieved a significant return on their investment. This suggests that despite the potential, adopting AI solutions as part of enterprise digitization without a clear strategy can lead to disappointing results.
Lessons from the past: The Metaverse and the Blockchain
The Metaverse and the Blockchain have both been hailed as revolutionary technologies. However, many companies that have invested heavily in these technologies have found that widespread adoption has been slower than expected. For example, despite high expectations, the value of blockchain-related cryptocurrencies has shown considerable volatility, with the cryptocurrency market losing more than $1 trillion in value by 2022.
Benefits and challenges of business digitization
Enterprise digitization represents a profound transformation that requires ongoing efforts and a well-planned strategy to overcome challenges and take full advantage of the benefits of digital technologies. Here we summarize 5 benefits and 5 challenges:
5 benefits of business digitization
- Improved efficiency: to reduce execution time and minimize errors
- Cost reduction: to reduce operational and infrastructure costs through more effective resource allocation
- Real-time data access: to access and analyze data in real time
- Increased flexibility and scalability: to adapt quickly to market changes
- Improved customer experience: to interact with customers in new ways, personalize offerings, and improve customer service
5 challenges of enterprise digitization
- Resistance to change
- Upfront implementation costs
- Data security
- Technological complexity
- Maintaining data quality
The need for a well-grounded digital strategy
All of the topics covered in this in-depth discussion emphasize the importance of always starting with a well-defined corporate digitization strategy when it comes to investing in new technologies. Companies must avoid the temptation to blindly follow the latest technology trends and instead focus on how these technologies can be integrated into their overall strategy.
According to a Boston Consulting Group report, companies that integrate new technologies into a sound business strategy are 30 percent more likely to see a positive return on technology investments than those that do not. This involves a careful assessment of business capabilities, market needs and potential opportunities.
Although new technologies offer incredible opportunities, it is essential that companies maintain a strategic perspective. Investing in corporate digitization without clear direction can lead to unnecessary expense and disappointment. As business consultants, our role is to guide companies through this changing landscape, ensuring that every technology decision is well thought out and aligned with overall strategic goals. Only in this way can we ensure that investments in digitization not only meet immediate needs, but also set the company up for sustainable long-term success.
At Roncucci&Partners we help companies develop themselves and their business, embrace change and evolve to thrive in a world that is increasingly complicated, insidious and requires great expertise. We do this by applying punctual methods and rigorous strategies, the result of many years of experience and the richness of the numerous success stories we have conducted all over the world. Passion and method are indeed our guides to enhance the present and build the future.
