Digitalization, Digital transformation, Automation, 5 key digital transformation goals, Improving process efficiency and effectiveness, Increasing agility, Encouraging collaboration, Increasing customer satisfaction, Cost reduction, Gaining a competitive advantage
Author: Attila Sólyom, Digital Transformation Director
Before we go into detail of analysing the importance of these digitalisation goals and the “whys” we should mention the often-quoted thought of Imre Madách – who was still working in the “analogue world”: “The work, the great work is now completed, Machine is running, the creator rests.”  Well, we can say with great certainty that if we embark on our digital transformation journey, we will not really have the opportunity to rest!
Why? Because digital transformation is not a “one-off development project” that, after realising its inevitability, is planned, organised, implemented and applied according to the (business) objective.
As we have already pointed out in the first introductory article of our blog series , digital transformation is a series of constantly re-launching, interconnected development projects, a “matrix” to exploit newer and newer technological opportunities by involving, exploring, transforming and integrating newer and newer areas of business operations.
In other words, the view of digitalisation as an IT development project is rather outdated. Decades of digital transformation have now become a strategic business mindset that touches every aspect of a company’s operations and drives decisions towards integrated business solutions, with continuous improvements in technology, human resources and processes.
Thus, companies that make digitalisation part of their organisation and culture may no longer think of transformation, but rather of digital operations . It is in the light of this thinking that we now consider the 5 key objectives of digital transformation – in business services.
Goal setting in general
It is not only activities that end over time that need to set targets, of course, but any process. The objectives that emerge in the context of digitalisation are rather directions, in line with the operational nature of development, which indicate the focal points and strategically important areas that are currently relevant to the company based on its current capabilities and environment. It is essential that individual actions, projects and even long-term programmes should always have ‘SMART’ objectives .
The acronym SMART defines 5 key expectations for good practice in goal setting. The designated goal should be:
- Specific, as in concrete, precise, well defined
- Relevant, as in important for the business
We will now continue to define and examine the goals of digital transformation from an operational perspective – that is, we will think more in terms of directions.
It is an interesting task in itself how to choose from the numerous – and even too general – directions to improve and optimise the company’s operations the basic focal points for the implementation of our business strategy. Unfortunately, a comprehensive overview of this topic is well beyond the scope of this article, so for now let’s look at the most important goals of digital transformation for us. In other words, the above “targeting principles” have been applied in the writing of this article: we have had to choose a focus point and there are some topics that we must now leave out.
It should already be noted that the 5 priority development objectives set out below are not independent of each other, and that their implementation often leads to overlapping operational results. Their separation is justified on the basis of the current business situation and the approach to the strategic development direction chosen.
Proposal for the 5 most important digital transformation goals
Improving process efficiency and effectiveness
The need for efficiency and effectiveness is an inevitable feature of both strategic business thinking and classic development projects, as well as digital transformation.
First, by increasing efficiency, we can provide the same output with less resources used; while by improving effectiveness, we strive for greater output with the same resources used. In Peter Drucker’s succinct description, “Efficiency is doing things right. Effectiveness is doing the right thing.” .
Typically, of course, we should strive for both, but at the same time, for example, efficiency provides more room for manoeuvre in a first line of defence in a shrinking market and/or increasing competition, while increasing effectiveness provides a reserve for quickly exploiting opportunities in an expanding market.
Our experience in the market is that, at least in the context of digitisation efforts, the effectiveness perspective is often overshadowed. Cost reduction, which is highlighted among the most important goals of digitisation, can even be seen as redundant, since by definition, efficiency gains lead to less resources required for the same output. But there is a bit more to it than that: reducing the resources devoted to a given process does not necessarily lead to overall cost savings. The time or energy saved can be used to produce other outputs (which is often less talked about). For example, by reducing repetitive human labour, we can provide colleagues with higher value-added work; or have them focus on areas that have received less attention so far. But it is also very simple to imagine that we can just serve more customers with the same staff, i.e. increase volume.
It is also easy to see that there is an optimum point and a limit to both efficiency and effectiveness. These may change, for example with technological progress, but no output can be produced from a zero resource, nor can infinite output be produced from a finite resource. It is important to emphasise that it is not just, and not specifically, the technological limits to efficiency that we are currently looking at – it is the human side that we need to address. What exactly this means is worth a separate post in the future.
The ability to adapt quickly to change – efficiently and effectively – is not only an obvious competitive advantage in business, as it is also a fundamental principle of Darwinian evolutionary theory, which is almost 200 years old, that natural selection ensures that the preferred species survive the struggle for existence, i.e. the rise and fall of species can be marked by their ability to adapt to a changing environment.
In line with the example of the evolution of the living world, let’s take a quick and important detour from technology and focus on the people who operate digital solutions, i.e. human resources. It should be emphasised that modern technological opportunities are developing and appearing in our everyday tools with such intensity that this represents a significant challenge by itself, both for companies and for individual employees.
It requires firms to manage change effectively, including sophisticated internal communication, and to employ a workforce capable of running new processes, either by hiring new staff with the right skills and/or by providing high-quality internal training. Retaining skilled staff, increasing their engagement and ensuring their work/life balance is a major challenge for middle and senior management, especially since the 2 years of Covid pandemic brought on a significant change in labour market expectations.
Of course, employers also expect their employees to adapt to changes, to be motivated to take advantage of opportunities for development, and to exploit the full potential of modern solutions.
We will return to the human resource implications of the digital revolution in later posts, given their importance. Questions to be raised include how to ensure that our people are not only able to keep up with very rapid change, but are motivated to want to do so.
More generally, how well are people able to keep up with the scale and frequency of change in their environment that we have seen in recent years? And how can we, as an organisation, help them to do so, especially considering the aspects of hybrid working?
Why are these crucial questions? Because knowing the possibilities of digitalisation, and even embedding the willingness of colleagues to change into the company culture, gives us the chance to track external changes faster and more painlessly in our incredibly accelerated environment. A more agile response than our competitors will give us a short-term competitive advantage over those who fail to find answers appropriate to their industry, maturity and market situation, and fail to adapt as required, because today the ability to respond is a challenge in itself.
By collaboration we mean first and foremost the cooperation of people or teams – and by encouraging, we mean the positive effects of digitalisation on the timely and physical bounds of cooperation. Of course, we can also extend the understanding of collaboration to the technological aspects of ensuring that increasingly complex systems “work together”, and that digital transformation increasingly merges “human and machine roles”.
Telecommunications provided an answer to the timeliness of communications relatively early on, in the 1800s, but until wireless technologies became widespread, the devices used were bound by their location. Compared to mobile telecommunications, the internet has had the enormous advantage of being able to move large amounts of data very quickly, while also making it promptly available due to the high penetration of ‘internet-enabled mobile telephony’ – at least in the more fortunate, developed countries of the world. This acceleration of communication, or more precisely information sharing, has in fact put the spotlight back on the risks of human capability limitations in terms of how much information we can not only take in at once – or in rapid succession – but also process to the required level and, especially, use well. And, of course, there is no denying that when dealing with very diverse or very large amounts of data, the technical possibilities are finite and, above all, not necessarily economically feasible – automation has its limits.
In addition to achieving virtual geographic agnosticism, modern digital solutions not only enable collaboration, but actively facilitate and even encourage it. That is, in addition to the collaborative purpose of digitalisation, which can be understood as somewhat overlapping with efficiency (we can do tasks involving many people faster; we can do the same thing cheaper, e.g. in another region), or even with agility (we can react faster as an organisation to changes and challenges due to better communication). However, facilitating collaboration as a goal can also be seen as an objective in its own right – certainly in the sense that human interactions generate ideas, and building relationships, a sense of community and simply being more comfortable working with colleagues can lead to increased employee satisfaction and thus, lower workforce fluctuation.
Increasing customer satisfaction
With digital tools and processes, it’s not difficult to find examples of how to deliver more, better – how to meet growing demands, how to respond to changing customer needs, legislation or other environmental changes, preferably at no extra cost. Here again, we can refer back to the previous objectives – the benefits of process efficiency gains are typically shared with customers. It is tempting but certainly not expedient – at least in our view – to keep all the benefits of digitalisation. This is not just a naïve, optimistic view – in the long run, those who succeed will be those who seek win-win situations, sharing their successes with colleagues and customers; the question is perhaps rather the proportion of this sharing that satisfies all stakeholders.
Coming back to customer satisfaction as one of the goals of digital transformation, there are excellent tools for gaining competitive advantage, increasing market share (unique product or service category; unique response time; convenience, etc.) and even building trust, among others.
Trust is perhaps worth a special mention – in the accounting and payroll business the trusty relationship with the client is mandatory; so much so that automated systems can sometimes be counterproductive because of the erosion of the human relationship, perceived or real. It is a delicate balance that needs to be managed with great care. Again, the ‘how’, is beyond the scope of this publication, but it is worth addressing this issue separately, as high-quality digital solutions can only ensure real business success through successful customer relationship management.
We cannot omit cost reduction as one of the objectives of digital transformation. Although again, we are talking about a seemingly redundant goal of increasing process efficiency, the approach here is not process-centric, but – hardly misleadingly – cost-driven. In other words, it does not start from evaluating a single process, but is rather aimed at reducing a cost driver or a specific cost element, and thus can affect a number of processes. The difference is subtle, but this definition is more accurate.
It is worth mentioning here that in our digital transformation, we do not limit our analysis to the potential uses of explicitly digital tools. We also take a process-analytical view of the problems or opportunities we encounter. Thus, in the case of support using digital tools, there are opportunities to
- complete elimination of processes,
- reorganisation of process execution (e.g. between different levels or units), or
The result is typically a reduction in costs – with the focus shifting to the use of the cost savings. Naturally, shareholder expectations dominate here, but it is not trivial that lower cost levels translate into extra profit, especially in growth or ‘over-demand’ businesses where the opportunity cost of simply increasing profits is typically higher, than the expected benefits from reinvestment.
Other directions, alternatives, considerations
Of course, there are many other business objectives or directions that can be identified to exploit the opportunities of digital transformation. In addition to the ones highlighted, some topics that deserve attention are:
Gaining a competitive advantage – In a rapidly changing business environment, new product and service needs are inevitable. We don’t have to go far from the subject of this article to see an example: by now, many companies offer tailor-made digital transformation consultancy. But an example could also be more competitive pricing, where a more efficient operation allows us to offer better service rates.
Increasing employee efficiency – This was partly discussed in our introductory blog article , which said that employees should do what they are really good at, and not what digital tools (machines) are more suited to do…
Improving governance and compliance processes – Here we can think of various tracking or workflow management systems, but also of the IT security issues required in all areas of corporate operations in case of high levels of digitalisation – IT security is almost certainly worth discussing in detail.
And what is surely essential for setting good goals…
Each market player – even within the same industry – must consider individually which objectives are likely to bring them success. To do this, it must consider the current opportunities in its business environment, its own capabilities, the resources available for development, and develop and adapt a strategy for moving forward.
In other words, digital transformation is not a magic weapon, but an opportunity. A way of thinking that is now essential to formulate goals that lead to long-term success.
We are still waiting for your feedback!
Contact us if you have any questions, suggestions or opinions that you would like to be supported by the Process Solutions digital development team. We look forward to hearing from you!
- What are the challenges you and your company face(s) when creating a digital strategy?
- What goals do you think are important to highlight alongside ours?
- How successful has your organisation been in setting and communicating these goals?
- What experiences have you gained during the implementation?
Your feedback is welcome here: email@example.com
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A cikk olvasható magyarul is a PS HU karrieroldalán >>
 Imre Madách: „Tragedy of the Man” (Scene 1), mek.oszk.hu (in English: here)
 Sanjib Sahoo: Why we need to think differently about digital transformation (Forbes Technology Council, 25 August 2022)
 Wikipedia: SMART criteria; en.wikipedia.com
 Peter F. Drucker: Managing for Business Effectiveness (May 1963); Harvard Business Review