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Put digital transformation and data together: What do you get?

Put digital transformation and data together: What do you get?

Put simply – how well you understand and make use of data when digitally transforming your business is the key issue

Ilan Oshri and Julia Kotlarsky, University of Auckland Business School

Digital transformation has become a buzzword. Just browse the internet for articles, events and marketing material and you will quickly realise that we are in the Wild Wild West.

Some pitch cloud computing as the digitalisation of the business while others offer automation as the road to the digital enterprise. Digital transformation has become the big umbrella under which business solutions that previously performed using analog means, now are executed using digital means.

There is nothing more to it than just the following simple definition: “novel use of digital technology to solve traditional problems”.

In theory, digitalisation should improve the firm’s and individual’s performance by redesigning manual processes and implementing them in inter-connected digital systems.

In reality, the replacement of an analog and a manual process with a digitalised one does not necessarily mean better results. The element that stands between the buzz word and the actual impact of digitalisation is data. Put simply – how well you understand and make use of data when digitally transforming your business is the key issue.

Take the paperless office as an example. The common perception of such digitalisation is that paper-based documents will be scanned and stored on a digital system. Most firms will view this effort as purely scanning and storing paper-based documents. Would this transform the way firms operate as a digital enterprise?

To some extent, predominantly because scanning and digitally storing documents will somehow improve document management efficiencies. However, scanning and storing documents will not achieve the full potential of business intelligence and efficiency expected from this digitalisation effort. We observed that the key challenge for firms when digitalising documents is to move away from considering the digitalisation as the key objective to an approach that adopts a mindset that considers the data as the key value in these documents.

The replacement of an analog and a manual process with a digitalised one does not necessarily mean better results

Ilan Oshri and Julia Kotlarsky, University of Auckland Business School

Like in any transformation, the advantage of transforming a business function comes from reconstructing processes, information and data to make new business sense. That is also the case for document management as a digitalisation process.

A document contains numerous data fields, some more important than others and some can become important at a later stage. How important data fields are is subject to understanding the operational and strategic relevance of the data and how these will be used to extract critical information about customers and markets.

What will make a difference in digitalising paper-based documents is a thorough analysis of (i) what data should be extracted from the documents (e.g., name, location, contact number, document ID, specific clauses), (ii) how these pieces of data interrelate (i.e., to be able to re-create links between specific fields in a digital process), and (iii) how this data should be used in the business context. Data in the digitalisation context is no longer a input/output feature of a system. Instead, it is a translation mechanism in which data is de-composed, restructured and re-composed to suit current business needs.

It is a linguistic exercise that gives rise to business meaning in which semantic and business objectives intertwine.

One company that adopted such an approach to the digitalisation of documents is ABBYY. Documents that are scanned are decomposed based on the data fields and their relevance for the business process, but then restructured and recomposed as a dataset for data analytics to derive meaning from the data.

Many firms fail to pursue this approach to document digitalisation and therefore their main achievement is in simply digitalising documents rather than understanding and using their data. To do this right, firms have to apply a completely different approach as to how the relationships between data and digitalisation should be understood. Put simply, firms have to start their document digitalisation journey with the end-game question: how our business model will relate to these data and how it can benefit from insights in this data?

Such an exercise forces decision-makers to think about the meaning of data captured through various documents and its relevance for the business. Only when realising the links between data in documents and the firm’s business model, a systematic approach to digitalising documents can be ensued with data analytics tools put in place that give rise to what data mean in the digitalisation era.  

About the authors: Dr Ilan Oshri is a professor at the University of Auckland Graduate School of Management and Dr Julia Kotlarsky is a professor of information systems at the University of Auckland Business School.

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Tags strategyCIO rolechange managementcareerCultureuniversity of aucklandDXethics of big dataCIO50leadershipUniversity of Auckland Business SchooldataJulia Kotlarskyanalytics Ilan Oshri

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