The digitization of the global economy is happening and is growing fast. Even regions normally associated with less development are seeing a rapid take-up of technology. For example, Kenya is at the forefront of mobile payment systems, with one service being used by two in five Kenyans. The advance of the digital economy will continue into the next decade and beyond. However, the digitization of companies is more mixed. While 92% of enterprises within the EU have invested in IT security, only one in five has made sales online. With more awareness of the value of data and technology than ever before, it’s clear there’s plenty more room for further digitization around the world.
Defining the Digital Economy
The digital economy is based on data and virtual connections - whether it’s the internet, cloud technology, or other networks. This includes the automation of processes, connected devices, and the use of algorithms to assist decision-making.
The Covid-19 pandemic has been hugely disruptive to traditional businesses and services, forcing many to pivot to digital. A good example can be seen in Australia, where welfare services applications surged as the economic impact began to be felt. Government departments and other bodies embraced technological solutions and moved in-person appointments online, witnessing a 600% increase in the use of digital assistants to speed up responses.
This is just one aspect of the digital economy. Several features can come to define the nature of digitization:
It is a word we have heard many times over the last decade, but it does not reduce its impact. One of the core purposes of embracing digital is automating processes, which can significantly improve both accuracy and speed. By utilizing data and the associated digital technology, companies can increase productivity, which in turn leads to greater profits.
Through integrating multiple systems and software, businesses can manage data from one centralized platform. By funneling the data and using API to filter the relevant information, companies will be able to manage data more efficiently. Another critical aspect of integration is the potential to improve the functions of the business. Instead of using one software for one process, it can be utilized and repurposed for multiple processes.
The flexibility stems from the latest networks such as cloud technology and 5G, the basis of the internet of things. This flexibility can be seen in terms of accessibility, with workers being able to securely access systems remotely and information updated in real-time. One of the cornerstones of the digital economy is the speed at which information can be processed, which positively impacts the rate of tasks being completed and productivity.
Each of the three previous features is due to the digital economy’s connectivity and network. Each year, more and more platforms and devices are becoming connected to the wider network, exchanging data, and information in nanoseconds. Networks can extend beyond the business, connecting with external stakeholders such as suppliers or customers, thereby smoothing the process further still.
Networks are the beating heart of the digital economy, while data is its lifeblood. The role of data processing points, like APIs, is to ensure the data is clean, free of duplicates and errors that could clog the system.
Achieving Digital Maturity
In the digital economy, it pays to invest in technology and data management. Gartner, a world-leading research consultancy, predicts that 90% of corporate strategies will mention information as a critical enterprise asset by 2022. This is not surprising given the role information and data play in the digital era. However, achieving digital maturity is more than simply mastering data management.
Taking a Systematic Approach
According to a survey conducted by Deloitte, more than 70% of digitally maturing companies were placing cross-functionality at their organizations’ core. The integrated nature of these businesses can be seen in the teams, relationships with their customers and suppliers, and technology.
The theme is that in order to embrace the digital economy, companies need to adopt a holistic approach. The transformation is not just limited to processes, software, and other processes, but it needs to be applied to company culture. By integrating the different systems within the organization, businesses will have the flexibility required to utilize digitalization fully.
The two terms, modularity and integration, may seem contradictory, but it works in perfect sync. In this circumstance, adopting a modular - or composable - approach to the company structure involves breaking the business into “interchangeable building blocks.” As Gartner explains, composability is not an entirely new concept, and it can be seen in the technology we use today, such as APIs and supply chain management software.
However, much like taking the systematic approach, the idea for businesses to become modular in themselves requires a new way of thinking. Gartner outlines three key building blocks that drive this approach:
The idea behind “composable thinking” is that anything is composable. For instance, allowing specialist teams to develop concepts and creative ideas to improve processes and technology. The use of digital assistants to speed up responses to welfare queries in Australia is an excellent example of composable thinking.
By following a composable business structure, where the company is organized in such a way that it appears to be a collection of small businesses rather than one singular body. This allows the company to be more responsive to evolving technology and trends, becoming flexible and resilient in the process.
In the digital age, there are a plethora of options for technological tools and solutions. The job of specialist teams is to find the right solutions and utilize them fully. Using tools like API integration platforms, logistics software, and cloud-based technology, companies can embrace the composable approach and achieve digital maturity.
The composable approach’s benefits have been seen repeatedly around the world during the pandemic, as manufacturers utilized their processes to switch from vacuum cleaners, automotive, and plastic products to produce vital medical equipment at breakneck speed.
From a business perspective, this adaptability can also prove invaluable. A digitally mature company will be ready to adopt the latest technology and solutions as they become available, providing an opportunity to increase productivity, grow profits, and get ahead of competitors.
Harness the Data
Once the approach, structures, and tools are in place, digitally mature companies can harness data’s full potential. By using real-time analytics and data management, teams will have the ability to measure performance and streamline processes on a continual basis. After a period of potentially disruptive transformation, as the business achieves digital maturity, the idea is that it becomes an evolutionary process.
By this, we mean that instead of having to overhaul systems to keep up with the pace of change - whether it’s technological or trend - digitally mature, composable businesses can respond in real-time due to their flexibility. In essence, achieving the goal of digital maturity means getting ahead of the curve, not just now but also well into the future.