According to the OECD (Organization for Economic Development Cooperation), in 2017, 76.9% of Portuguese households had access to the Internet, while in 2007 this number was only 39.6%. This growth regarding the use of the Internet is also felt in the evolution of companies, and digitization has repeatedly challenged the markets, both by the changes in the interaction with the customer and by the optimization of internal processes.
Digitization is a worldwide trend that has opened several business opportunities. A great example of the impact digitization has had in recent decades is the evolution of the music industry.
Analysis of the evolution of the music industry
Before iTunes, this industry was completely controlled by the studios. The only option to acquire a piece of music was to buy the album- containing several pieces that the consumer might not be interested in.
With the appearance of iTunes, consumers were able to buy individual songs for the first time. The studios did not expect such a significant change in their market, in particular, brought about by a company outside the industry.
Later, this industry underwent significant changes again: Spotify allowed consumers to access thousands of songs without having to buy them individually.
In a few decades, both business models and the main companies in the sector have changed irreversibly. This is the perfect example to show us that we have to be attentive to the evolution of industries, and we must be ready to change our business model, at any time, so to stay competitive and profitable.
The digital transformation
Digital transformation involves much more than digitizing your business. While digitizing only involves integrating digital technologies into your company's routines, digital transformation involves rethinking your company's internal processes and business model.
There are three essential elements to any digital transformation:
1. The committed leadership
Digital transformations are usually motivated by people in the highest and most strategic positions of the company. However, the change occurs mostly at the operational level.
Often, shortly after, those who motivated the transformation focus on more urgent matters, leaving the digital transformation into second place. This leads employees to consider the changes to be unimportant or even optional. Therefore, it is necessary that the management stay focused on the goal, so that the company continues to evolve.
2. Employees with digital skills.
Sometimes the biggest impediment to change is the lack of digital skills of employees, or their inertia in using them. Here, a good tactic is to minimize the impact of this transformation by adapting the software to the skills of the employees.
On the other hand, it is important that a strong commitment is made in training, so that employees expand their digital knowledge, acquire a new vision of the business and find answers to any questions.
3. Digital Agenda:
A digital agenda consists of planning and implementing a set of activities aimed at changing the organizational culture. Although this step is sometimes ignored, creating a digital agenda is crucial, because digital transformation does not take place without the employee’s involvement.
In addition to the involvement of employees in change, creating a digital agenda allows the organizational culture to keep itself competitive, since it generates the ability to question permanently the business model and evaluate the opportunities that can be created with the emergence of new technologies.
Digitization and the Growth of E-commerce
E-commerce is a sector that has grown at a fast pace. According to data from theE-Commerce Foundation, 2 out of 3 Portuguese people shop online, which represents a growth of 12.5% in 2017, compared to the previous year. This growth is due to several factors, including the digitization process that companies are suffering.
When we talk about e-commerce, there is a particularly interesting advantage: the possibility of reaching consumers who escape the pattern of consumption. They may be consumers with unusual preferences and needs, geographically dispersed or unable to be met by the supply of local trade. So, often, these consumers turn to online shops to get the products and services they need.
E-commerce for small companies
Alongside the digitization of all their processes, small companies should start with a standard e-commerce service, as this is the one with the lowest initial investment cost. As they increase the number of customers and earn a return of their investment, they may consider improving their online presence through a new store, developed especially for their business and focusing on their customers.
E-commerce for large companies
The biggest challenge for physical chain stores that want to establish a digital presence is communication and synchronization between the various channels. A consumer can buy a product online and go to the physical store to exchange or return it, because for him there's no tangible difference between channels, since the brand is the same. For this reason, establishing an omnichannel environment is crucial for companies with physical and online sales.
Regardless of the digital solution you are considering, remember that part of the success of this solution lies in who will implement it. Make sure that both your employees and your partners have the necessary skills and are aligned with your goals. This will be a key factor in the success of your project!
By Cláudia Freitas.