Business Trend: From E-Business to Services Digitization

What has been the long-term business trend of the past three decades? Transforming the world of business from an industrial economy, paper-dominant process model to a real-time, information-rich digital model.

Given this backdrop, take a moment and count all the critical processes - ordering, fulfillment, payment, billing, sales, marketing, and customer service - in your business. Now answer the following question: What percentage of your business processes is digitized? 10%, 20%, or 30%? We estimate that even the most advanced corporations (GE, Wal-Mart, or IBM) have digitized only 20%-30% of their business processes. The small and midsize business have done even less.

The Game Is Changing! Is Your Organization Paying Attention?

It does not take a genius to discern the pattern: Companies are steadily, systematically digitizing business processes. It took more than three decades of time-sharing, client-servers, and e-business to get to 25% digitization. We expect that it will take another 20 years to arrive at 40%-50% digitization.

Every business is an information business. Given the big picture of digitization, it is important to ask the question: What is beyond first generation e-business? Did the disappearance of so many dot-coms signal the end of e-business? No, the online channel is still alive and well and at the heart of the transformation of twenty-first business; however, it has evolved.

The state of the art in e-business no longer revolves solely around technology. Many components of e-business technology have become a relative commodity. A superior ability to acquire, interpret, and act on digitized information and provide distinctive services is the hallmark of outstanding companies.

Five trends have led to the push for well-designed services.

1. 1. Leverage and ROI - Budgets are down, and IT spending at many companies has peaked and is secularly declining. Rather than spend more, companies are looking to create new value by leveraging existing technology investments.
   
2. Retooling the processes - Companies are using technology to reconfigure operational processes and improve flexibility through either better business process management (BPM) or business process outsourcing (BPO).
   
3. Seamless multi-channel services - To satisfy customers on all fronts, companies are moving from uni-channel, single business unit solutions to cross-enterprise, multi-channel solutions.
   
4. Fragmentation to consolidation - Corporations are integrating and consolidating applications more quickly and cheaply than ever before in order to create a more transparent, real-time business environment.
   
5. "Can I help you" service thinking - Companies want to approach business issues both from the inside out (the traditional perspective) and from the outside in (the customer perspective).These trends imply that survival hinges on value capture and continuously streamlining operations, both of which are critical for managers forced to present a solid business case for all expenditures. Services digitization, or systematically creating new services by rewiring and integrating existing business processes, is how managers can accomplish these goals and stay in front of the competition.

Technology, as so many have painfully realized, only constitutes a small part of the overall solution. Implementing the latest technology applications and infrastructure without giving thought as to how they benefit customers, employees, or suppliers is of little use and results in poorly designed services.

The Bottom Line: A new genre of capabilities - Web Services, focal points, and service platforms - are aiding companies in their renewed quest to become more agile, integrated, and service-oriented. Services are the new currency of digital business. Digitizing services from end to end is the only way businesses can think on their feet and respond to customers with lightning speed.