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Digitalization: miracle or mirage?

Too often, digital transformation does little to change the status quo

Dr. Min Zhou is the CEO of Thingple, a digital transformation company dedicated to delivering digital solutions to modernize manufacturing operations through intelligent logistics and smart warehousing.

Digital transformation is all the rage. Using ICT (information and communications technology) to transform business processes is now a global phenomenon spanning industries and geographic regions.

Organizations have set up their own digitalization departments and created positions such as the Chief Digital Transformation Officer. For guidance, many rely on consulting firms, which happily charge high hourly rates to develop “strategic digitalization frameworks” that often look something like this:

Many companies start their digital transformation by buying software: Laboratory Information Management (LIMs) systems for R&D, for example, or manufacturing execution systems for factories, plus various types of customer service software.

But what does all this software do? Captures data from business practices, sure. Makes it all permanent, accessible, and sharable – yes.

But will it fundamentally change business practices? Will it, as the consultants like to say, add value to the end product or service?

Too often, digital transformation is an easy sell that does little (or nothing) to change the status quo.

What are we trying to transform?

Digital transformation is frequently confused with digitization, but they’re not the same thing.

Digitization is simply converting information into a digital format. This has value: it makes information easier to share, trace, and analyze.

But digitalization shouldn’t just be about going paperless. It’s a trajectory or path.

That path starts with getting different elements of the business interconnected, so data becomes easier to collect. It culminates in the organization’s acquiring better decision-making capabilities as a result of analyzing the data it has collected.

We believe that less than 5% of “digital solution companies” can deliver actual digital transformation. Most offer plain digitization.

So, what does the real thing look like?

The strategic use of real-time data and wireless connectivity is key to transforming the way a warehouse is run. For example,Thingple’s electronic warehouse management system, doesn’t just digitize warehouse stock data. It simplifies and replaces previous operational processes to track goods flowing into and out of a busy warehouse.

Instead of laboriously scanning barcodes for every item that enters or leaves, an RFID system wirelessly and automatically reads entire loads as they come and go.

Instead of physically searching for space in a large warehouse, operators need only view the 3D digital twin of a constantly-updated stockpile in the warehouse to find vacant slots.

With real-time data on hand, an AI system directs forklift operators to pick the right goods every time – and advises on timely movement of goods to avoid expiry.

Real digital transformation, in short, should lead to increased efficiency and productivity, fewer manpower requirements, less waste, and less human error.

Digitalization is about changing how business gets done

Ironically, digital transformation isn’t really about technology. Rather, according to the MIT Sloan Management Review, it’s about “how technology changes the conditions under which business is done, in ways that change the expectations of customers, partners, and employees.”

And here’s the cruel truth: most digitalization efforts fail – 84% of them, according to one estimate.

Weighed down by the need for copious data entry, and hobbled by a lack of interoperability across platforms, most digitalization projects don’t deliver the hoped-for transformative results.

For that reason, we need to look at digitization differently.

Start with a clean slate and ask what’s the best digital tool is for revolutionizing your business operations. Can you leverage advances in sensor technologies, computing, automation, or AI to improve your operations – in ways that change the expectations of your customers?

Since digital transformation’s purpose is to help improve businesses in meaningful ways, DX companies with deep industry insights/experience tend to offer better, more targeted solutions. Cloud infrastructure providers like Amazon Cloud or Huawei Cloud, for example, can partner with industry-specific solution providers to offer insightful value to industrial clients.

The question should not be, “How do I digitize my company’s operations?” but, “How can I improve operations through technology? How to use tech to enhance efficiency, output, and added value?”

So if you want to digitalize, start by figuring out how technology can help you do those things.

Avoid digitization – the mere conversion of paper into bits and bytes – and the adoption of digital technology for its own sake.

Contact us!