Digitalization, and Digital Transformation For Businesses in Malaysia

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The days where businesses invest in web and mobile apps to look professional and more trustable are over. Now, web and mobile apps are all about creating a great digital buying experience for customers.

It is first important to understand clearly the differences between digitization, digitalization, and digital transformation.

Digitization is the process of changing from analog to digital form. Below are some real-world examples of how a business can digitize. These terms are always are often indistinguishably used, broadly defined, and inconsistently applied. Many business owners, marketing leaders wrongly believe that digitization will result in digitalization or digital transformation.

30% of businesses will accelerate initiatives to reinvent their business models in 2021, in order to “future proof their businesses.

IDC

Real World Examples of digitization:

Accounting Software

If you’ve integrated accounting software in your finance department, instead of recording finance using paper and pen, the information will be digitally logged.

POS

When you implemented a POS system in your store, all purchases are recorded digitally in the POS.

HR Management Software

Your HR manager now can easily add new employee records, key in attendance, and calculate payable salaries faster and more accurately using the software instead of using paper and pen.

What is digitalization?

According to Gartner’s Glossary, the definition of digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities.

So far the best explanation for digitalization is as below:

The use of digital technologies and digitized data to impact how work gets done, transform how customers and companies engage and interact, and create new (digital) revenue streams.

At the fundamental level, digitalization cannot occur without digitization. To refer back to our example of converting paper documents to digital files by implementing accounting software for your finance department, a digitalization initiative here could include uploading these files to the cloud to transform collaboration and reporting processes and using analytical tools to generate insights and actionable knowledge to make business decisions.

Digitization is the process of moving existing data and processing digital. digitalization makes use of the ability of digital technology to capture and assess data to enable new business models and assisting in making better business decisions.

Why should businesses digitalize?

There are 3 big points every businesses have to do in order to be successful or to stay successful.

1. Keep making your customers happy
2. Stay Relevant
3. Stay Competitive

There are many companies who were once giants now are no longer in business, from a macro point of view, they failed because they lacked in either one of these 3 points or all of it.

Stay relevant and competitive to make your customers happy & keep making your customers happy by staying relevant and competitive.

One new change that businesses have to realize in the competition world nowadays is that the horizon of competition has broadened beyond your industry. Instant delivery is a mode of delivery that became very handy for consumers during the pandemic. Food delivery and grocery delivery services are being offered to consumers with instant delivery. Therefore, this trend is also going into e-commerce. E-commerce businesses have started to offer 3 hours delivery.

Too often corporate executives are too shortsighted to understand how technology that is disrupting a different industry might be adapted to do the same to their own. This simply means businesses in other industries are also your competition. They are setting bars for customers’ expectations. They play a role in how your customers expect from you. If you see a business in a totally different industry doing things differently to make their customers happy, you should immediately look into that as well.

For example, Procter & Gamble was responsible for pioneering the concept of giving away free samples to encourage trial use. Now, lots of companies from different industries are doing this.

Uber might be disrupting taxi services today, for example, but as they move into the delivery business, will Uber disrupt FedEx or UPS tomorrow?

The greatest challenge for successful companies is focusing on customers’ current preferences while preparing for their future preferences.

Harvard Professor, Clay Christensen in his book The Innovator’s Dilemma

Let’s see how a sports retail business can digitalize to perform all the 3 big points mentioned above.

Keep making customers happy

Digitalization allows businesses to explore new business models. For example, a sports retail business selling sports equipment now allows customers to bid for limited edition badminton rackets via their e-commerce store. This has pushed the profit margin for those items. This not only adds value to the business but also allows customers to bid and buy the limited edition stuff that they want. This has made the sports retail business form a sports enthusiasts community which has allowed the business to have strong sales.

Stay Competitive

Over time, the sports retail business has developed their own POS system and a mobile app for their customers to make purchases at their shops. Now, customers can earn loyalty points every time they made a purchase which they can then redeem to get discounts or free items. Customers also can also place orders on the app and make payments and then go to any of their shops to pick up the items. This digital experience has given great customer satisfaction.

Stay Relevant

By having a custom POS and a mobile app, every single purchase made is tagged with a user account which allows the business to collect data on purchases. This allows the business to present the data with their management and make data-driven decisions. With the data, they were able to understand their customers deeply and able to serve better while also increasing sales.

Summary

Above is a brief method on how a business can make their customers happy, stay competitive and stay relevant through digitalization. These 3 big points can be done better and more efficiently with tech.

Other Examples:

How Data is helping Unilever to stay Relevant with new consumer habits

Unilever reported a sales spike in beverages that contain zinc and vitamin C, such as Lipton Immune Support tea. This is due to consumers becoming more health-oriented because of the Covid-19 and increases their intake of vitamins and minerals. The company is therefore rolling out such products globally. 

How McCormick Stay Relevant with the help of Data

Spice manufacturer McCormick’s sales in China have sustained double-digit increases compared with 2019 due to the introduction of packaged food products.

There are 2 parts of digitalization:

Automation

Automation refers to the internal optimization of processes in order to simplify processes, make better & faster decisions and save cost.

To paint a clear picture of how automation can add value to a business, below we explained a few ways on how SegWitz is helping our clients to automate.

Business Intelligence Analytics

A business that has a web application or a mobile app where the customer makes a purchase is the best source of customer data. By collecting data from relevant data points, we can develop in-depth analytics that visualizes customer persona with purchase data coupled with customer behavior.

Stock Management

Big businesses usually have multiple channels of selling their products such as in e-commerce sites, physical retail stores, distribution centers, agents, referrals and etc. Businesses that have this much of selling channel usually face the issue of upkeeping their stock with the demand and sometimes overstock more than required. This is because when data is not present, the decision might not be accurate enough.

By having a centralized stock management system that is connected to all selling channels, every time a sale is made, the quantity of the purchased item will be deducted from the stock where the stock management software can show the real-time stock quantity and will notify before the stock even runs out. This will be very useful for businesses with a huge number of outlets or various different selling channels.

Process Management

We have once stumbled upon a small company which hires 3 full-time employees just for quotation making purposes. This company has a complex method of pricing for its service. We developed a web-based software which eventually increases the time needed to generate a quotation by 4x times, reduced error to 0, and reduces the cost dramatically as the company now does not need to have the 3 full-time employees doing the work.

This has allowed them to even run a successful marketing campaign which allows their prospect to generate a quotation on their own and contact the company if they want to proceed. The company ends up doubling its revenue in 12 months upon launching this software.

Customers-Facing Tech

Customers-Facing Tech digitalization refers to creating a digital experience for customers to add value while acquiring the products or services which results in customer satisfaction.

digitalization is a strategy or process that goes beyond the implementation of technology to imply a deeper, core change to the entire business model and the evolution of work.

Digital Transformation

Digitization + Digitalization = Digital Transformation

Digital transformations have reshaped how companies approach customer service. The old model was to wait for customers to come to find you, whether in person or by calling an 800 number. But the rise of social media has changed service much like it’s changed advertising, marketing, and even sales and customer service. Progressive companies embrace social media as a chance to extend their service offerings by meeting customers on their platforms of choice. 

Digital transformation enables companies to reach their goals. It allow companies to rethink how to unlock new demand through innovation in business models and product development.

Companies need to decide whether to lead their own ecosystem or participate in an existing one, depending on which role could be fulfilled most effectively.

Companies need to be able to navigate new digital ecosystems and handle much larger amounts of data, and often the most effective way to do this is within partnerships.

Why Now?

It is time now for businesses to adopt a digital transformation strategy. On the 25^th of January 2020, the first case of COVID-19 was first detected in Malaysia. The COVID-19 crisis continues to upend Malaysians’ lives and livelihoods. The pandemic has disrupted nearly every routine in day-to-day life.

A number of new trends has emerged.

Increasing Purchasing Power of Malaysian Consumers

The Movement Control Order (MCO) was imposed on the 18th of March 2020 and you can see how the graph just shoots up right after that. Although a lot of people are financially tight right now, things are about to change, the average consumer is going to have a higher purchasing power in the coming few years than before.

People are open to trying new things

Early 2020, if you told your older parents that they will soon be buying things online, they would have laughed at your face. Now, not only are older people buying things online but older business owners started to leverage social media to promote their businesses to acquire customers.

A 50+ year old termite control business owner who has been relying on word of mouth to get customers suddenly realize the power of social media and quickly started to leverage that to get customers.

The number of older people who owns smartphone is now higher compared to early 2020.

Number of smartphone users in Malaysia from 2010 to 2020 and a forecast up to 2025

As the number of smartphone owners in Malaysia increases, so does opportunity !!!

An opportunity of reinforcing positive new beliefs as the consumer journey has changed. As the consumer journey has changed, so have the peak moments, and it’s crucial for companies to identify and optimize them. 

Businesses must have a way of reinforcing a new belief to focus on customers’ peak moments. Peak moments often include a first-time experience with a product or service, touchpoints at the end of a consumer journey such as the checkout process in a store, and other moments of intense consumer reaction.

The COVID-19 crisis has changed people’s routines at unprecedented speed and most of those changes will outlast the pandemic.

The below infographics will show you how consumer buying journey and consumer behaviour has changed over time due to digital transformation.

F&B is probably the industry that changed the most during the pandemic. Due to the inability of operating their Brick and Mortar store, selling channels were innovated to the max. Virtual kitchens which operate and sell food entire on delivery apps and websites has become a trend that a lot of F&B investing in it.

The focus point for every F&B is and should be the customer. Giving a great customer experience on every touchpoint the brand has with the customer is a key for F&B to grow.

Have you heard of stories where people got cheated off their money buying insurance policy from a crook agent ??

This was one of the reasons why people were avoiding taking up an insurance policy although they know how beneficial it can be. The lack of transparency and convenience was a barrier and the insurance companies knew this and bridged the gap with digital channels.

Booking is a hassle to some since it takes time for you to drive up to the place, wait in line and make the booking.

We worked with a startup in building an app for sports complex booking. Previously, people will have to call up or walk in to book a sports complex where the complex usually records their bookings either on paper or a spreadsheet. We built 2 apps with the startup, User Booking App and Sports Complex Booking Management app. Now, customers can make bookings for sports complexes from the comfort of their home on their smartphones while the complex operator can easily manage their bookings on their tablet.

This has given customers a great customer experience which encourage them to make more bookings.

As for the complex operator, they can now easily collect the data of their bookings, analyze to make business decision.

Along with this startup, together we are digitalizing sports complex operation throughout Malaysia.

Desired Output through Digital Transformation:

For Customers:

• Increases average purchase amount
• Improve customer loyalty
• Improve customer retention

For Business:

• Reduce costs
• Improve productivity
• Integrate supply-chain partners
• Differentiate offerings
• Improve agility
• Improve flexibility

For Management:

• Reduce complexity
• Solve issues before they even occur
• Increase transparency
• Control over assets

Data:

• Make better decisions
• Improve efficiencies
• Gain competitive advantage

Why digital transformation initiatives fail

Lack of leadership support—If the management level doesn’t define a clear goal and strategy you will simply fight a losing battle.

Sometimes waiting for all of the facts can be riskier than taking a leap of faith. Incumbents also fail because of the size of their organization themselves. Frequently large companies have a decision-making process where many people have the power to stop an idea, but very few have the authority to green-light one.

Over the last years, an increasing number of companies have installed the role of Chief Digital Officer (CDO). Their job is to generate new business opportunities, revenue streams, and customer services from the adoption of digital technologies across the organization.

Digital Transformation is an ongoing process. Digital transformation doesn’t stop after you’ve successfully implemented your plan. First, technology updates will occur frequently, and you need to be prepared to take advantage of new features and opportunities offered by those updates.

Consumer behavior is ever-changing due to the change in the market. Customer demands and needs keep changing due to this. A successful transformation is one that can support a fast-changing world while maintaining productivity. Your transformation must continue to evolve along with your organization.

Lack of proper mindset. Top management need to step up to support and enforce the journey.

Not having the right culture. Change management must be done right.

Not having the right people to guide through the process. Hiring the wrong person to spearhead the digital transformation journey is suicide.

No clear goals. Implementing technology for the sake of technology is a recipe for failure. Ask “why” are you doing this, start from the business goals.

Failure in understanding the required technology. Figure out what is really needed and take a more realistic approach in your transformation roadmap.

Success Formula for a Successful Digital Transformation

Visionary and Risk-Taking Leader + Committed Digitalization Partner + Great Company Culture = Successful Digital Transformation Journey

Key Take Away

Consumers expect better digital buying experiences from businesses.

Digital transformation isn’t about spending money on tech, it’s about spending money right.

The biggest misconception of driving successful digital transformation is that new technology alone is the answer to all problems.

Successful digital organizations put customer experience at the center of every process and operation in their digital transformation journey. 

Digital transformation begins and ends with the customer.

Companies may need to rethink how demand for their products and services is likely to evolve and to look carefully at which of the ten growth angles are relevant to their businesses.

Just like SegWitz, technology is an enabler. It’s your processes that drive outcomes if you do it the right way. 

Self-disrupt yourself before someone else does it to you. As Steve Jobs put it, “If you don’t cannibalize yourself, someone else will.”

Some Wisdom on Digital Transformation:

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