Overview of Enterprise Digitalization Platforms in 2023 – Part 2
In the first part of our article series, we examined what effects are impacting the digitization of business processes. This post will look a little deeper into the fundamentals of improvement opportunities.
Possible goals of enterprise digitization solutions
There are many products on the market for digitising business processes, it is almost impossible to see the full range. To take a meaningful approach, it is necessary to generalize a little, observing the individual processes of a company’s operations and their impact from a higher level.
It is essential to remember what we want to achieve with digitization. The primary answer is to save resources. Let the machines do the work where possible, rather than burden human resources with repetitive, tedious tasks.
On the other hand, it is also worth looking at the return on investment in process improvement. From an investment point of view, the return on investment in digitization should be within 2-4 years. Calculating the payback of direct and indirect effects is not a straightforward exercise. There is no one-size-fits-all model, and each company will have to make individual decisions depending on where it sees a return on investment and where it does not.
Overview of digitized processes
Let’s look at the opportunities. The fundamental building blocks of a digitized business process are primarily the same, whatever the industry or business activity:
- Data quality and security.
- Streamlining processes and limiting exceptions.
- Significant reduction of human effort.
All of the above building blocks are useful and forward-looking, although we rarely see a textbook scenario in real life. Many of the processes to be included in digitization are already partly digitized, just not enough. Typically, data sets in Excel spreadsheets travel by email between process participants. The process is a given, the data is available, and the process runs according to agreements as a minimum, not counting exceptional cases and extraordinary decisions.
The picture is complicated because ERP and other specialized systems are usually involved in running the processes, mostly with manual data entry. This is where the digitized process has to stand its ground and add value. Sarcastically, it can be said that it is nice to win from here…
One of the hallmarks of successful enterprise-wide digitalization is that it is based on a comprehensive concept and does not look at solutions from the perspective of a partial problem. Let’s look at the three building blocks with a pragmatic approach.
An example of the potential of digitization
Every company needs to manage the data that describes its operations carefully. Let’s call it master data. There are many data sets, and as digitization expands, the number of these is growing, not shrinking. Let’s look at a short, simplified example.
Customers and suppliers are accurately recorded in the ERP system, and all relevant descriptive data is available. The company manages customer and supplier contracts within a controlled framework, but without the support of a digitization system.
What added value does digitization offer in this case?
Data quality and security:
The customer and supplier data in the ERP system will match the data in the contracts. Contract records will be digital, and agreements with customers and suppliers will be filterable, searchable, and accessible to overview. All arrangements for a given entity will be available in one place, in a digital format. The primary data of contracts will be available as digital information, dates, amounts, validity, clauses, and everything important. For constantly renewed contracts, with many additions over the years, this is a significant advantage, showing exactly how key data has changed over time on a form or in a report.
Simplify business processes and limit exceptions:
The digitization platform can manage business rulesets and support operations within the established framework, enforcing rules where appropriate. Consider the signing rights subject to limits or applying the four-eyes principle. A digital solution can manage template contracts, support real-time online collaboration and run workflow-based review and approval processes. It also preserves working copies and changes to key data over time. It provides visibility of the details of a commercial deal in a contracting process, along with their changes over time.
Significant reduction in human resources expenditure:
Consider the use of template contracts. Using legally and financially well-drafted template contracts, the business side only changes the commercial terms. The involvement of legal and finance departments with control functions can be reduced to the level of final review and approval, saving significant cross-process resource requirements. In the digital contract repository, current copies are accessible on a user-rights basis, without the need to search for or request them from the department responsible for their preservation.
Evaluating digitization as an investment
Of course, the calculation of the return on investment in the above example depends on many factors, such as the size of the organization, the number of contracts, the activity of the company and a few other factors. However, based on industry experience, the 2-4 years of payback mentioned above can be quantified concretely.
In addition to the quantified return on investment, digitization also provides another significant benefit: it reduces the risks an organization bears in a given process. First and foremost, it reduces the chances on the human side by spreading the workload and the responsibility for a given step proportionally among the participants in the process. To phrase it in a direct way removes bottlenecks in the process, so that the successful operation of the process will not depend on a single employee.
Organizations are constantly changing, it’s a natural process, digitization increases the operational reliability of processes, which is difficult to put into ROI figures, but from a management perspective, it is crucial.
In the third part of this article series, we will look at the technological side of digitization, with an overview of possible solutions and methods. Through industry experience, we will take a positive view of the success factors.
Do you have questions about digitalization in your company, optimizing existing solutions or introducing new systems?
Contact our enterprise digitalization experts now!
Overview of Enterprise Digitalization Platforms in 2023 – Part 2
Author: Zsombor Bereczki
Discover our other posts in this category!
Effective processes for handling potential quality problems in the SAP system.
We provide an overview of the most important localization tasks for the SAP ERP system in Hungary.
In this post, we look at the relevant trends for implementation regarding enterprise digitization platforms.