This article was originally published on Supply Chain Digest.
So called “digitization” continues to be a hot topic, even if what it really means remains a little vague.
The consultants at The Hackett Group are the latest to take a stab demystifying that, with a recent report titled “Five Essential Digital Business Capabilities,” authored tby Hackett Consultants Laura Gibbons and Timothy Yoo.
Hackett has a large practice relative to procurement, and the report goes a bit back and forth between a more general business versus procurement-orientation.
Regardless, Hackett notes that in its most recent key issues study, “enterprise digital transformation” catapulted to the top priority for business execs for 2021, up five spots in the ranking from the previous year. More than one-half (53%) of companies report having a major digital transformation initiative on the enterprise agenda, and 65% of these companies have accelerated their digital programs in response to the 2020 crisis.
So what does Hackett view as the five essential digital business capabilities? They are summarized below.
1. Digital Engagement
Hackett notes that flood of technology innovations has transformed the way companies and business services functions engage with customers, suppliers, partners, and others, technologies that can optimize stakeholder experiences by digitizing and integrating interactions across channels and leveraging data.
It said opportunities for digital engagement encompass front office automation, customer self-service, ecommerce and social media platforms.
Hackett adds that digital engagement capabilities may include:
• Spend dashboards and real-time access to data
• Buying desks designed to engage and inform stakeholders
• Seamless multichannel engagement
• Built-in customer privacy and security
• Intelligent agent-assisted self-service
2. Digital Workforce and Organization:
Hackett says that technology has changed the nature of work by automating many routine tasks, digitizing workflows, connecting co-workers in virtual teams, and untethering and empowering knowledge workers with personal productivity tools.
It notes some current digital capabilities enable workers through remote access to applications and self-service provisioning; knowledge management tools; workforce collaboration platforms such as Microsoft Teams, Zoom and Slack: and other means of communication and engagement.
Hackett says procurement organizations should focus on developing digital capabilities that include:
• Seamless access to enterprise data
• Common, easy-to-use communication, collaboration and creativity tools
• Access to analytical tools
3. Digital Service Optimization
Hackett says that business process automation (BPA) has never fully lived up to its promise. Why? It cites the inherently dynamic nature of business processes and operating models, and the inability of business applications to adapt to changes at the speed at which business operates.
“Without a major overhaul of technology platforms and upgrade of IT capabilities, this agility gap will only widen,” Hackett adds.
It recommends that digital service capabilities center around the use of content and process digitization, business process management, automated workflows and approvals, robotic process and cognitive automation to maximize the efficiency and effectiveness of business services, and execution of underlying processes.
Hackett says that key areas of focus should be on developing capabilities for:
• Virtualization of procurement service delivery
• End-to-end process design and intelligent automation to eliminate manual dependencies and continuity risks
• Autonomous decision-making based on artificial intelligence (AI)
4. Digital Ecosystem
Hackett believes that traditional organization structures and value chains are evolving into networks of digitally connected resources, service providers, and consumers – digital ecosystems. It says that within a knowledge network, companies may, for example, crowdsource innovation, collaborate with strategic suppliers to innovate, or incorporate customer feedback into product development.
It adds that an ecosystem based on the Internet of Things may enable entirely new business models, products or service offerings.
Hackett suggests that priorities for enhancing procurement digital ecosystem capabilities may include:
• Automated supplier networks
• End-to-end life cycle management solutions supplemented by best-of-breed technologies with seamless connectivity
5. Analytics-driven Business Insight
Hackett posits that superior ability to mine data for business insight is an important – and for many industries, in fact the most critical – competitive differentiator. It notes that digitally native companies like Uber, Amazon, Facebook and Google optimize their service offerings almost in real time based on analytics-driven insight. Meanwhile, companies such as Caterpillar, GE and Bayer are redefining their business models, generating analytics-based revenue streams. Hackett says that consumer packaged goods giants like Unilever and Procter & Gamble compete based on the analytical capability of their marketing functions.
Key capabilities in this area will include:
• A single data repository with consistent definitions and governance
• Master data management
• Integrated business planning
• Real-time data access and visibility
• Prescriptive and predictive analytics for better decision-making
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