Companies in various industries are beginning to undergo digital transformation (DX). What is DX and what do companies need to promote it? Let’s think about it, including the issues that need to be solved for its realization.
DX is a transformation for companies to survive
Today, new business models that make full use of digital technology are emerging in all fields, and a phenomenon known as digital disruption that shakes existing industries is occurring one after another. DX is required by each company as the business environment changes dramatically.
According to the Ministry of Economy, Trade and Industry’s “Guidelines for Promoting Digital Transformation (DX),” DX is defined as “a company that responds to drastic changes in the business environment and utilizes data and digital technology to meet the needs of customers and society. In addition to transforming products, services, and business models based on this, we will also transform operations themselves, organizations, processes, and corporate culture/climate to establish a competitive advantage.”
To put it a little easier to understand, DX can be said to be a major transformation that utilizes digital technology for companies to maintain their competitiveness and survive in a society where the wave of digitalization is surging.
Our society will continue to become more and more digital. If a company wants to survive in a highly digitalized future market, it will realize DX, incorporate cutting-edge digital technology, and create new value such as products, services, and business models that meet the needs of the times. I need to keep going.
From IT to DX Digitalization flow
Many companies have been working on IT. Documents that used to be printed on paper and sent by mail can be sent as PDF files by e-mail, and contracts and drawings that were stored on paper can be converted into data and managed collectively within the company. Digitization has greatly changed business styles and made corporate operations more efficient.
It has been supported by core systems such as inventory management systems and accounting systems, as well as technologies (tools) such as PCs and email.
However, until now, IT has only partially digitized analog data. Thanks to recent advances in digital technology, it is now possible to highly digitize data into more business-friendly forms. DX is a transformation using cutting-edge digital technology.
Among the digital technologies that support DX, the central role is played by “artificial intelligence (AI)”, which reproduces some of the intellectual behavior that only humans could do with computers, and things such as cars and home appliances. The Internet of Things (IoT) creates new services by connecting to the Internet and collecting and analyzing information.
If DX is realized, the business will become even more efficient. It will enable the creation of new products, services, and business models, and is expected to increase competitiveness and productivity.
Things necessary for promoting DX
When a company works on DX, it is usually not possible to deal with it with the existing core system, so it is premised on drastically reviewing the system or building a new one. At the same time, it will be necessary to set up a specialized organization that specializes in promoting DX.
This is because, according to the 2019 report “Survey on the Functions and Roles of Human Resources Promoting Digital Transformation” published by the Information-technology Promotion Agency, an independent administrative agency, more companies have established specialized organizations than companies that did not. This is because it is known that companies that have done so have achieved a higher level of results in promoting DX.
In addition, the same survey also showed that the highest level of results was achieved in cases where the information system department was involved after establishing a DX promotion specialist organization. It seems that the key to success will be for the specialized organization and the information system department to work together on DX.
In addition, human resources with specialized skills and knowledge to promote DX are essential.
Specifically, there are “producers” who play the role of leaders in promotion, “business designers” who plan and draft new businesses, “architects” who design systems, and “data scientists” who handle and analyze large-scale data, and artificial intelligence. Jobs such as “AI engineer” who develops intelligence (AI), “UX designer” who designs easy-to-use systems for users, and “programmers” and “engineers” who are responsible for system construction, maintenance, and operation are required.
Issues in promoting DX
However, at present, although many companies understand the importance of DX, they face various challenges that hinder their promotion, making it difficult to promote transformation. Next, I will list the issues that Japanese companies tend to face in promoting DX.
In many companies, existing IT systems are outdated and unsuitable for new business strategies.
As a result of repeated expansion, there are many cases where the system has become complicated, and the contents have become a black box because the person in charge of the building has retired. In addition, there are cases in which data management and coordination across the enterprise are no longer possible due to the long-term use of different systems for each business division.
In either case, the existing system becomes a factor that hinders the promotion of DX.
For some companies, the lack of funds is a barrier to the promotion of DX. To promote DX, it is essential to renovate existing systems, but there are cases where the costs involved are too high to proceed with renewal, and there are also cases where maintenance costs for aging existing systems are a heavy burden.
According to the “DX Report-Overcoming the IT system ‘2025 cliff’ and full-scale deployment of DX-” released by the Ministry of Economy, Trade, and Industry in 2018, 80% of the IT-related budget of Japanese companies is to maintain the current business.・It is said that it is assigned to management. From this, we can read the reality that many companies are not spending enough money on IT strategies that create new value.
Shortage of human resources
A shortage of human resources is also a serious issue. As mentioned above, highly specialized human resources such as business designers who can plan services and businesses that meet customer needs and engineers who are familiar with the latest digital technology are indispensable for promoting DX. However, many companies have not been able to develop such human resources, and it is difficult to secure them from the outside.
Awareness within the company
In addition to physical issues such as existing systems, funds, and human resources, there are also many problems with the company culture and awareness, such as the lack of a sense of crisis about the future of digitalization and the strong resistance to organizational change within the company. It seems to be a bottleneck in the company of
To proceed with DX, it is necessary to confirm what kind of measures can be taken against the above problems and whether there is a prospect of solving them. It can be said that the shortcut to success is to formulate a strategy based on an accurate understanding of the reality of the company.
It is not possible to change the mindset within a company all at once in a short period, but the first step is for the management themselves to have a strong sense of crisis about the future and a firm will to proceed with reforms, even if they are difficult. On top of that, while sharing information and educating employees, it will be necessary to make steady efforts to reform the organization, such as reviewing conventional customs and business methods.