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Business digitization, the road to efficiency



The fourth industrial revolution is here to stay and, inevitably, it involves business digitization. Companies of all sizes and sectors are faced with a transformation which, on one hand, enables them to meet their customers’ new needs and, on the other, enhances their efficiency to keep up their competitive edge in a global market.

United States, Japan and South Korea are the world leader in digitization, but Europe is also gradually making headway This is confirmed in the Digital Economy and Society Index (DESI) report for 2016, in which all countries, except Sweden, improved their ratings compared to the previous year.

Nevertheless, there are great differences between regions and sectors. For example, in the European Union, out of the hall 28, only 1 of every 5 companies is highly computerized. Meanwhile, for Denmark the figure rises to 1 in 2 and for Greece or Bulgaria it stays at just 1 in 9.

What is digitization?

Digitization is the process of transforming businesses into electronic, automated and more efficient systems, designed to lower economic costs and enhance productivity. The aim is to integrate the technology into the business ecosystem. In other words, beyond the uptake of digital solutions, it involves a change in mentality and corporate culture.

When assessing the degree of transformation of businesses, the European DESI report weighs up two different factors:

  • Business digitization. This includes the penetration of trends such as electronic data interchange (EDI), RFID tagging, e-invoicing, social media or cloud computing.
  • E-commerce. Based on online sales, the benefits obtained and the internationalization of e-commerce companies.

Efficient digitization models

Digitization transcends the private sector. Governments around the world are currently working on the rollout of paperless initiatives that drive or even require the technological leap in the field B2G. However, these projects also end up encouraging a transformation for the B2B and B2C segment.

Here are some of the fastest growing digitization models in businesses and public administrations:

  • e-Invoicing . This system, which lets companies issue digital invoices with the same legal validity as traditional bills on paper, adds security to the process, cuts storage costs and simplifies shipping and tax compliance. In many Latin American countries, such as Mexico, Brazil or Chile, the use of e-invoicing is now widespread among taxpayers. However, Europe, North America and Asia are also beginning to demand its use. The requirement, as noted above, begins in the public sector and mandatory use then spreads into the B2B field.
  • e-Procurement. e-Procurement is the next step in e-invoicing models. This trend involves digital management of all processing documents linked with the business relation. e-Procurement, often encouraged from the public sector, facilitates e-commerce across borders and among businesses
  • Electronic Data Interchange (EDI). This channel is mainly used in the B2B segment, although it is also required in certain digital procedures with public agencies, such as e-invoicing. Specialized EDI software enables businesses to exchange standardized documents automatically in real time and with maximum security guarantees. It is an increasingly necessary tool to set up a smooth communication flow between trading partners, ensure traceability and correctly manage the supply chain. The benefits range from cost savings to faster turnaround times or optimized logistics.
  • Cloud computing. Cloud storage is no more than a direct result of electronic management. Cloud computing is crucial for savings on storage and the information stored can be accessed from anywhere through a simple Internet connection. However, the challenge is how to preserve the information through time with security assurances and legal validity. To this end, the European Union has approved the eIDAS regulation, which governs trust services.

These are four of the most widely implemented digitization trends in businesses around the world. Even so, the transformation goes even further and also includes other breakthroughs such as Big Data, electronic data catalogues, omnichannel retailing or the Internet of things.

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