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  • Writer's pictureTimothy Laku

Three real pains that Going Digital is addressing for the enterprise

On XFM this week, we delved into the why of Going Digital. Everyone is Going Digital but just what does that mean? To understand Going Digital, we have to understand the why. What is the problem that Going Digital is solving for the enterprise?

DJ Cisse, Maritza, and Timothy at the XFM studios in a conversation on addressing enterprise pains.

What is the problem that Going Digital is solving for the enterprise?

Everyone is Going Digital but just what does that mean? Why should my business or organisation go digital? Why should I care? What is the business case for going digital? To understand Going Digital, we have to understand the WHY!

First things first; what is Going Digital?

Digital, when used as an adjective, describes the dominant use of the latest digital technologies to improve organizational processes, improve interactions between people, organizations, or make new business models possible.

Going Digital for the business means to transform the customer's experience in the context of the digital era that we live in today. Digital tools allow the business to talk to the right customer, at the right time.

The customer today demands convenience, at speed, across different channels. The customer is ultra mobile, so businesses today have to get closer to this customer. The customer is having conversations on social media - what this means is that the business has to engage with the customer where they are. Changes in customer preferences and tastes is driving Going Digital for businesses.

Digital technology has been a driving force along three interrelated business dimensions: scale, scope and speed. Rapid progress along and across each of these dimensions has in turn propelled digital innovation in business.

The pain of scale

Mary has a shop on the main street that sells clothes. She wants to expand to other towns in the country. The traditional way she would do this is open up a shop in those towns. This means investing resources in new inventory and building capacity. To Mary, this is going to be a big pain.

Scale without mass, combined with the global distribution, enabled by the Internet, will allow Mary's business to scale quickly, internationally, sometimes with very few employees or tangible assets.

Unlike physical products, which tend to have high fixed costs and substantial marginal costs that decline with scale, digital products tend to have mainly fixed costs and low marginal costs.

The pain of scope

What happens when Mary now wants to add other product lines to her shop? Say she wants to start selling electronics and food. She would have to look for a bigger space to accommodate the additional products. This would certainly mean moving to a new shop. If she has to do this with all her other branches, the logistics and operational challenges of adding new products to her catalog is going to be a pain.

Mary's business, after going digital, is able to add a buffet of new products and services on to their platform, with ease and sometimes at no additional cost.

Economies of scope is reflected in the capacity of digital technology to amass vast functionality in small useful packages through efficient combination, integration, miniaturization, and visualization. Scope is best seen in the smartphone that typically combines telephony, navigation, photography, music, and enables customers to add a host of other applications in one device.

The ability to categorize, code, and store digital information in standardized form reduces a broad range of transaction costs, providing the basis for more efficient interaction.

The pain of speed

There will come a time when Mary wants to know if the new baby toy that she is planning to sell will do well in her stores. She will traditionally have to make a prototype design, pay for the prototype to be manufactured and shipped to her shop - a process that would take months. Then she would have to embark on engaging her customers who walk into her store for feedback. This traditional process is slow and expensive. This is a real pain.

By leveraging digital tools, like 3D printing, Mary is able to launch an idea before it is perfected with the assumption that iterative learning will come from its use in the market. These characteristics motivate firms to learn quickly and maximize limited resources.

In conclusion, Going Digital accelerates economic and social activity: markets clear faster, ideas spread more quickly, the time buffer associated with distance shrinks, as does the time it takes to identify, engage and develop a community.

Tune in to Digital Thursday on XFM 94.8 from 9 am to 10 am

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