Overview - Why “Digital Health” Can Determine Success or Failure of Businesses

Everyone talks about the effects of digitalisation on the economy. But how digitally fit is your own business?

“Most enterprises are far from transforming digitally despite acknowledging the effect it will have on revenue in 5-10 years” (Forbes 2017).

How much truth there is in this Forbes quote will only be known though from the sales figures of the next five to ten years. How crucial dealing with digitalisation is in the success or failure of a company has already been seen even in the recent past.

Examples of this are the two video hire businesses Netflix and Borders. In 1997, at a time when about 2% of US households owned a DVD player, Marc Randolph and Reed Hastings founded the online-video hire business Netflix. The two founders had the vision that DVDs were just the first step in the transformation of the video cassette and digital transfer via the internet would take over the market. Their biggest competitor at the time, Blockbuster, stuck with an established business model and only started late with a delayed attempt to set up its own shipping service.  A few years later, the growing popularity of digital downloads was already making itself felt in the mail-order business and whilst Netflix already had a core customer base of 7.5 million subscribers in 2007, Blockbuster slid into bankruptcy. In 2007, the company therefore changed to a customer focused business model based on online-streaming, and very successfully: in 2010, Netflix had a customer base of around 16 million subscribers. Netflix today has around 125 million subscribers.

It is however far from possible to derive a generally applicable schedule from this example, which shows impressively how important it is to respond quickly to changes in the market and always keep customer behaviour in the focus of your own activity. Digitalisation can take a nearly incalculable number or forms and affects sectors and business with varying intensities. Depending on the market, business model, organisational arrangements, already implemented technologies and processes and many other factors, it has the potential to unleash uncontrolled levels of influence on every individual stage of the output of goods and services. Greater open-mindedness and acceptance of demanders and clients toward new technologies and the pervasiveness of digital habits in or everyday lives add to this and lead to changed behaviour along the purchase process. Against this background, one cannot wait for the transformation processes of competition that have already been rung in or the creeping changes in power relationships, but one has to be proactive in identifying one’s own digital weaknesses, tackling them and thus achieving a sustainable position and agile orientation in the market.

Challenges and Growth Potential for Businesses

Whether it is a large company or a medium sized business: progressive digitalisation is changing the rules of the game in the market and bringing with it new challenges which make holding on to existing structures and processes impossible and force a re-think. For example, it might soon not be enough to use conventional e-platforms, if these are being partially enhanced, or, in some cases, even completely replaced by Voice Commerce Systems. The spectrum of services of AI applications will also increase significantly in future and AI pioneers will hold keep their competitors at bay in relation to customer access, supply chains, process configuration or improvement of advertising very soon indeed. Bricks-and-mortar old dogs are increasingly coming under pressure from competitors with significantly lower processing and costs and are having to find answers to their competitors’  fast expansion without the necessity of a physical presence. Although the importance of successful  digitalisation is known to many businesses, they do not feel well enough positioned in respect of digital transformation. Yet this is essential to being prepared for the progressive upheavals in their own sector and thereby being able to exploit digital growth potential.

Figure 1: Digital success promotes transparency about your own digital maturity

Digitalisation does not just represent an enormous challenge, it also offers infinite opportunity. Digital growth potential can be focused on two cornerstones:

  • Targeted growth potentials, which can be primarily generated from digital business models, like e-commerce.
  • Targeted increases in efficiency through digitalisation of processes, enabling efficient participation in the market.

Digitalised processes can have an effect on, for example, the collection, processing and exchange of information over the whole of the service delivery process and remove information asymmetries. The quality of the learning processes between business and client in respect of competitors can be raised and the build-up of knowledge increased exponentially. Direct customer interaction and feedback leads additionally to shorter lead times, lower marketing costs and a benefit-based price structure. Existing transaction processes can also be speeded up and decreasing trends of costs applied effectively. Target-specific digitalisation also has an immediate effect on the services offered that both become cheaper with equal, or even higher quality and can be offered in a more customer-focused or in a more differentiated .

Large potentials through digitalisation result for business, for example in supply chain management and in management of the product life cycle. A greater part of goods receipt and goods outwards can be automated by independent identification of products. Every product movement is recorded in real time and enables solutions in which the delivery control is automated by products equipped with RFID transponders or theft prevention labels are replaced. Clear recognition combined with a clear record of every product on the internet can significantly increase the security against fraud. It is therefore little wonder that there are many  proponents of RFID in the pharmaceutical industry in particular. But the advantages to businesses of digital communication are also obvious. Just as how the environment of the customer has transformed in all other areas, digitalisation sets new standards in relation to the service quality of the advice: customers today increasingly require competent advice via various channels and optimised channel integration therefore represents an important factor for successful sales.

Digitalisation thus does more than improve customer or client experiences. Grasping the opportunities it offers leads to implementation of business aims and strategies.

Figure 2:  Unlock process efficiency and ensure realisation of new sales

Against this background it is becoming clear how important it is to identify and improve existing weaknesses carefully, ensure and extend strengths sustainably, head off risks early and effectively use the opportunities of digitalisation which are without doubt there and within reach. But the use of growth opportunities requires more than the consideration of digital influencing factors, it also needs a detailed consideration of one’s own value creation chains. Comprehensive transparency about the status quo of one’s own degree of maturity in digitalisation and a comparison with competitors are the basis of a systematic increase in efficiency and improved use of growth opportunities.

Our Solution– Your Added Value

The decision to bring your own digital strategy into focus and extend it necessarily leads to making the first step of checking and analysing your own development status. What is already in place, in what areas has the implementation been successful and in which do strategies and processes need to be adjusted, fundamentally changed or even newly established? FOSTEC & Company offers you a solution in a Digital Health Check for mastering your current challenges by building on the results of your Health Check and introducing a sustainable digital transformation. The Digital Health Check is a systematic procedure building on internal and external analyses that determines your current digital degree of maturity. The holistic methodology also allows the identification of digital gaps and potentials along the whole value creation chain, the derivation and prioritisation of fields of activity and the creation of a concrete implementation plan.

Figure 3: Systematic identification of digital gaps, growth potential and areas of action.

The foundation of the Digital Health Check, through which the digital degree of maturity of your business can be determined saving time and resources, consists of a tool-based questionnaire. Through inter- and intra-divisional questionnaires, the entire business is considered holistically and comparisons between departments and functions can be drawn quickly and simply. If necessary, findings can be further evidenced with extended observations of the status quo. Insightful expert analyses and valuable competition comparisons form the basis here for deeper analysis.

The Digital Health Check investigates sector-specifically all stages of the service provision process in the six core areas of Strategy, Culture, Know-How, Processes and Organisation, Technology and Tools and Customers and Channels.

  1. Strategy: Investigation of the dedicated approach to a focused digitalisation strategy. This defines the current level of digitalisation with which business aims are supported and competitive benefits are driven forwards.
  2. Culture: Analysis of the extent to which an interest in digital technologies has been awakened in employees. This includes a determination of the current level of anchoring of digitalisation in the company culture.
  3. Know-How: Investigation of the current knowledge of employees about digitalisation. In this, the current perceived degree of digitalisation in the business is also determined.
  4. Processes and Organisation: Analysis of the current preparedness of the business to support digital processes. The current degree of adjustment of the organisation to digitalisation is also identified.
  5. Technology and Tools: Investigation of the extent to which already emerging technologies and tools are being used in the business. Current degrees of use are also determined.
  6. Customers and Channels: Determination of the current degree of use of digital technologies for determination of external data. In this, your application in Business Intelligence, Customer Interactions and in Marketing and Sales is investigated.

Figure 4: Overview of the six core categories of digital maturity

Systematic and comprehensive investigation helps businesses to get an accurate picture of their current digitalisation. The Digital Health Check proves itself as a robust and effective tool, that can help many companies to a target specific and sustainable digital transformation. In this, FOSTEC & Company also supports you in the definition of target-specific growth and efficiency programmes, with the development of digital business models and with the holistic implementation of digitalisation.

Figure 5: Digital Health Check as a first step toward a sustainable digital transformation

A Customised Health Check Through Three Variants: Quick Check, Extended Check or Comprehensive Check

The Digital Health Check can be adjusted according to your needs. The right solution for your business depends on the level of detail of the determination of the degree of maturity desired. Three different packages are available to do this: Quick Check, the Extended Check and the Comprehensive Check.

Figure 6: Overview of Digital Health Check Service Package

Quick Check: Initial Overview

The Quick Check offers a quick initial overview of your personal degree of digital maturity.

Service content: The Quick Check encompasses the tool-based questionnaire, in which you answer selected questions on the previously identified determinants.

Output: Based on your answers, an overview of the status quo of the digital degree of maturity of your business and its capacity to align itself to the digital world is created. The investigation results are analysed, prepared visually for you and interpreted. A workshop helps you to get detailed insights into how well equipped you are for digitalisation.

Project duration: approx. 2 – 3 weeks

Figure 7: Overview of questions, answers and evaluation system in the Quick Check

Extended Check: Identification of Initial Areas of Action Through a Vertical and Horizontal Analysis of your Business

With the Extended Check you look more closely through the lens at your business and gain a profound picture of the status quo of your digital degree of maturity.

Service content: After an initial workshop, in which we define your individual aims and needs, an extended tool-based questionnaire that is perfectly tailored to the requirements of your company is carried out. The results generated from the questionnaire and the workshop are then validated and extended in the context of a cross-divisional and cross-functional survey of employees, followed by a vertical and horizontal consideration and analysis. This allows gaps to be identified holistically and specifically. Whilst the vertical consideration establishes Top-Down/Bottom-Up causes, and therefore a hierarchy-related readiness, the horizontal analysis is dedicated to the sector-specific service delivery process.

Figure 8: Overview of questions, answers and evaluation system in the Extended Check

In the horizontal consideration, there is a deeper analysis of the digital degree of maturity of individual value creation stages in the six core areas. For each function, both digital barriers and skills are identified thereby creating transparency about digitalisation in your own business.

Output: Der Extended Check offers you greater transparency of the degree of digital maturity of your business. The results are presented visually to you and you receive a visualised representation along the value creation chain, in which each individual stage in the service delivery process is represented by heatmaps. Initial areas of action are derived for you which are explained in a workshop presentation. The Extended Check gives you extended transparency about your business, how you can take a first step towards increased efficiency, sales and market share.

Project duration: approx. 4 – 6 weeks

Comprehensive Check: Completely Unlock Digital Potential with 360° Transparency and Comparison with Other Businesses

Do you want to know exactly what is going and are you asking yourself where you are in competition with other businesses? Or do you want an extended picture of the digital degree of maturity of your businesses from a deeper analysis? Then the Comprehensive Check provides you with the most precise and detailed picture.

Figure 9: Overview of questions, answers and evaluation system in the Comprehensive Check

Service content: along with the questionnaires and analyses contained in the Comprehensive Check, there is a comprehensive comparison of the investigation results with the data from other businesses. The comprehensive comparisons illuminate your position in the competition in regard to digital degree of maturity along with your strategies in comparison with other companies. In addition, supplementary interviews are carried out with selected experts and those with . This allows both additional insights to be recorded and the validation of findings already identified and creates the conditions for identifying indicative potentials.

Output:

The results of the Comprehensive Check allow detailed 360° transparency of digitalisation on your own company. In this, the status quo of digital competence (core areas) in the company is compared with the pressure for change and the implementation costs (operative implementation). In a workshop, you are shown indicative potentials and realistic Quick Wins and you receive specific and clear actions. The Comprehensive Check is the right step to setting up a sustainable growth and efficiency programme and implementing a package of targeted actions systematically, thus ensuring a sustainable digital transformation of your business. Five successive steps provide clear actions along the value creation chain:

Duration: approx. 8 – 10 weeks

Figure 10: Overview of methodology and output in the Comprehensive Check

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