Digital transformation: How has digitization affected business?

Digital transformation, business flexibility, cost reduction, business continuity, and improving the user experience are all matters that have become important to companies and governments day by day, as they greatly affect the profitability and continuity of these companies in the rapidly evolving global market. In light of the changes that have occurred in work environments, driven by the recent Corona pandemic, it has become necessary to digitize business, which has come to determine the fate of many businesses.

What is digital transformation?

When we say digitization or digital transformation, we mean two different meanings. Digitization is concerned with transforming traditional processes into digital using various technologies to support and improve business models and activities. As for digital transformation, it is more comprehensive, as it is concerned with integrating digital technology into all activities and businesses of companies and institutions. This transforms the entire way it operates from operating models, people, and technologies to procedures and more.

And digital transformation aims to replace long-term transactions with simple, high-efficiency processes, and it always begins with solving a problem or exploiting an opportunity, which may be improving customer experience, reducing costs or increasing profitability. For example, companies and governments are moving from paper handling to using business and data center management software, and instead of doing traditional CRM is replacing it with CRM software.

The history of digital transformation

Digital transformation is one of the most discussed and focused concepts these days, and that was the case in the 1990s when the Internet came into being. At the beginning of the twenty-first century it transformed traditional forms of documents and images into digital formats, and today digitization touches every part of our lives and affects how we work. It has changed the corporate working environment by introducing new business models.

This digital transformation depends on a set of technologies such as artificial intelligence (AI), cloud computing and the Internet of Things (IOT), in addition to data management and analysis software, which are essential to the digital transformation process and aim to accelerate digitization. Companies that do not attach importance to technology transformation or develop an effective digital strategy will end up being out of the market.

An example of the exit of some companies from the market is the “Kodak” company, which specializes in the manufacture of photographic cameras. It did not benefit from the technology and its products became technically obsolete after the company “Sony and Canon” began to switch to digital cameras. These two companies provided users with multiple advantages over traditional cameras, which put Kodak out of the competition.

Nowadays, digital technologies have transformed many industries, providing fundamental improvements in activities and the ways services and products are delivered. In the future, there will be many digital opportunities that we never imagined, and the Corona virus is not far from us. Online work and remote team management have flourished, and technologies such as augmented reality, virtual reality and cryptocurrency have flourished.

Aspects of digital transformation in the business world

Digital transformation has changed the business world and changed many old concepts and activities. For example, in the past, it relied on marketing on newspapers and television. Today, new, more efficient and less expensive marketing channels have appeared, represented in digital marketing. Here's what digital transformation has brought to the business world:

The emergence of digital jobs and companies

With digital transformation, new companies have emerged that rely on technology in all or part of their activities, in order to meet the services necessary for digital transformation. Now, software companies are the most dominant in the global market, as they design and implement technical projects and provide technical support services in terms of networks, cybersecurity, server maintenance, digital marketing and other necessary tools.

The concept of freelance work and freelancing sites such as My Independent and Fiverr has also appeared. In addition to companies in various sectors, in the field of transportation and transportation, we find the “Careem” company, and in the field of order delivery, the “Morsool” application, and for shopping, you find the “Amazon and Souq” website, and in e-commerce you find WooCommerce, for example.

Facilitating operations and obtaining products

In the past, companies used to take a lot of time and effort in managing their business, for example, the inventory management process was done through the use of paper documents and inventory recording and calculating according to complex accounting processes, but now inventory management systems (warehouse management system) are used.

This software works to show the real-time inventory size by item and type, showing the profits for the stock and recognizing the value of the stock in real time. Simply, it enables you to monitor all aspects of your inventory, from anywhere and at any time, all you need is an internet connection and a computer or phone. The same is true for consumers. With just a few clicks, you can get to know the product information from price, specifications, etc., and then order it to reach you at your home without the trouble of going to the store.

The emergence of digital marketing techniques

Who among us would have expected to manage customer relationships through Facebook, or to build a business that was originally approved on a website. But now it has become a reality, as new technologies have emerged from search engine marketing, email marketing, marketing through social media platforms, and others.

Which worked to change the nature of the activities of companies. Now, there is no marketing plan without digital marketing, which reduces the cost, and allows access to the right customer at the right time.

e-government

Digital transformation has always been called for by governments to implement it, so you find them the first to start with that, as it allows them to create a transparent relationship whose operations are characterized by speed and accuracy, and aims to improve the quality of services provided to the public and private companies. And all this is done through improving the infrastructure of governments and automating the work of ministries and agencies.

If we take an example of e-government, we find that the government of Saudi Arabia has come a long way. Now, citizens can do all transactions through dedicated applications and software, which leads to raising the level of quality and efficiency of services, reducing costs for citizens and the government, and achieving citizens' satisfaction with these services.

E-Learning

By shifting from traditional teaching methods to educational systems, students will have the opportunity to be a vital component of the educational process, by activating participation programs and proposals. Students will also have the opportunity to learn at their own pace so that they are not constrained by life-consuming long academic years.

E-learning also helps to learn and acquire many skills in various fields. One of the bright Arab examples is Hassoub Academy, which offers a range of training courses and lessons in various educational fields, especially programming, that anyone can benefit from at any time and anywhere in the world.

Obstacles to digital transformation

Digital transformation cannot be achieved without concerted efforts, and a good knowledge and skill infrastructure, in addition to the infrastructure of communications, internet, electricity, etc. It also includes institutions and companies and their view of change, and there are many challenges facing this transformation, most notably:

Transformation itself is a hindrance

When we say digital transformation, we do not mean that an activity or group of activities of the company or government changes, but rather means the automation of all tasks and business, meaning that there must be a specific digital strategy, and it is implemented in a consistent manner, and this implementation needs time and cognitive and material capabilities with strengthening Internal and external cooperation and partnership.

technology illiteracy

Imagine with me that all business systems have been digitized, but citizens or employees cannot exploit and benefit from them because of what is called “digital illiteracy.” There is no benefit from all this technology if it does not take its share of practice and application. Technology illiteracy is the biggest challenge facing the digitization process in developing countries. This makes it imperative to start building a knowledge environment that encourages individuals to learn and acquire new skills to eliminate this illiteracy and create a digital society.

digital infrastructure

There is no digital transformation without an infrastructure that meets the needs of the digital environment, as it is one of the obstacles facing the digitization process, which is represented in the Internet connection, the stability of the electrical supply, the availability of skills and expertise, cybersecurity, and other manifestations. The good news is, the Arab countries have made progress in infrastructure, and we find four of them in the global speedtest index of internet speed around the world for this month, and they have improved their experiences and cognitive skills.

Not accepting the idea of ​​digital transformation

Not all companies, governments, workers or citizens want digital transformation. Large organizations do not accept change easily, and will only achieve it if they feel that they may face real risks. In addition, the factor of fear of failure appears, as digital transformation means new ways of working, and methods that differ from what they were before, which causes dread of failure to undertake this change.

In a related context, the majority of workers do not have the will and eager willingness to learn new ways of working, and this will naturally lead to what is called “resistance to change” and companies must deal with this resistance wisely and intelligently.

Why has digital transformation become an imperative?

Simplify business management

By using digital data and moving away from files and documents that fill cupboards, the management process will be easier and more accurate, as there will be aggregate information on which to base decisions. Digital transformation through data management systems collects, analyzes and archives it for future reference.

For example, when governments have collected data for all citizens in the country, this makes it easier for them to start any service program, as they can know the number of citizens, the percentage of men, women, youth, their average age, etc., which makes accurate decisions based on Correct data updated.

Improving CRM

Digital services permeate all of the company's activities until it deals with customers. Companies should use customer relationship management systems, which help them identify potential and existing customers, automate marketing tasks, learn consumer behavior, and provide real-time reports.

A strong example of digital transformation and taking advantage of customer relationship management systems is the “Netflix” video broadcasting company, which started as a start-up for renting CDs, and then expanded its business by introducing Internet broadcasting. Through digitization, it has the ability to learn about customer preferences and then display these preferences for each customer individually. Which made it now one of the largest companies to broadcast movies and videos on the Internet.

Gaining a competitive advantage

With digital transformation, companies are able to gain a competitive advantage either by reducing costs or by obtaining high quality products. By adopting artificial intelligence (AI) in factories, defective products can be identified in the production line and then withdrawn to be processed again. Also, companies must transform digitally because competitors will do so, and if they continue their intransigence, they will exit the market like the “Kodak” company we mentioned earlier.

Better supply chain management

By using artificial intelligence in inventory forecasting, warehouse robots and blockchain technologies to trace raw materials to final products, in addition to online stores and automated inventory, supply chain and supplier management will certainly be improved while ensuring customer satisfaction.

In conclusion, we say: Digital transformation is a challenge facing companies and governments and an opportunity that must be exploited, represented by the use of applications and websites, e-payment, supply chain, and business intelligence through the use of big data and e-learning. The challenge is in the case of fear of change and the opportunity to gain a competitive advantage, as digitization has become a necessity for every company and organization to face the challenges of today and excel in the future.