Three ways to invest in digital and when to use them
Negative reputation and client attrition. These are some of the dominant reasons why managers in Czech companies are starting to consider investing in digitalisation in order to provide better services to their customers. What does a digital business strategy consist of and how to know which part of it to pursue?
The digital business strategy consists of three basic parts -technology enablement, digital optimisation and digital transformation. Theydiffer in their level of ambition and the technological maturity of theorganisation. While the technology area presents companies with some newopportunities - for example, to sell a product online as well as in a physicallocation - transformation, on the other hand, involves creating new revenuemodels or dramatically changing existing ones.
At this stage, the adoption of a technology allows companies to expandtheir offer or sales. Czech banks, for example, can offer simpler, faster andmore secure logins to client areas, e-shops or applications, or electronicsigning of documents, thanks to BankID, a digital identity verification method.At this stage, companies are building a technology portfolio and tools thatallow them to use digital channels in new ways.
The moment a firm has the technological background to developinnovation, it can start to focus on improvement. The goal of optimization isto get above the competition, operate more efficiently, and find thedifferentiation that makes customers come to the company. In particular, thismeans working on productivity and customer experience, which companies try toimprove using digital tools according to business KPIs. This strategy worksbest in a stable and ideally growing market.
At this stage, it is essential to have the technology"enablement" already mastered, especially when the market isexpecting the arrival of a new breakthrough that may force the company to lookfor a new business model.
The need to transform (not only) the digital business usually comeswhen the existing model is already exhausted and a new business model is on thehorizon. By the time the market is exhausted, companies should already betransforming and investing in alternatives that will allow them to respond tothe market disruption in time to use it to their advantage. However, this isstill a managed management discipline and the horizon of change and planningwithin the organisation must always be considered. The vehicle for disruptioncan be not only guerrillas who come out of nowhere, but also establishedcompanies that invest in new ideas and optimizations.
An example is Amazon, a company that built its business on e-commerceand whose representatives realised that they had a robust IT that was not fullyutilised. So they started offering their cloud platform - at a time when theterm cloud didn't exist - to others as a service.
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