What’s the difference between digitalization and automation? Can we handle digital transformation as an IT project?
Rafael Valeev, General Director of Ak Bars Digital Technologies LLC: Our group of companies started digital transformation in 2016. According to the adopted project strategy, the first milestone was to establish a high-tech retail bank by 2021. At the same time, which is 5 years ago now, Ak Bars Digital Technologies LLC was established.
In 2016 the whole market was buzzing with excitement about digitalization. Back then many experts thought that the whole banking sector would go online and the standard banking outlets would be closed for good. Many banking professionals were afraid that the banking niche would be taken over by large digital companies like Facebook, Google or Yandex and digital transformation in this context was seen as a chance to stay in business. At the same time, digital transformation was treated like any other ordinary project that has the beginning and the end, which can be measured in terms of its efficiency including financial results.
In 2018 we finished phase one. There were first results and there was also disillusionment and disappointment. It became clear at that point that digital transformation is an ongoing process rather than a project. Consequently, the share of IT expenses both capital and operating ones was steadily growing. But the efficiency and profitability of digital transformation was not immediately obvious. We didn’t manage to strike a chord with heads of several divisions right away. Fast application development processes were often hindered by absence of the hardware infrastructure necessary to run the required applications and services and the hardware procurement procedures were very tedious and long to accomplish. This fact made us think about creating a private cloud. However as time went by, it became clear for everyone that if we wanted at least to keep the achieved level, we’d have to go on running and investing. But if you want to be ahead of your rivals, the level of investment should be even higher along with recruitment of new personnel and retraining of the existing staff. In the course of time the market players realized that digitalization and digital transformation is not a process with deadlines and budget but a new concept of doing business.
Vladimir Chanyshev, Channel Director at Terrasoft: Today, we don’t use one system for tackling one task or even a group of tasks. This approach is now in the past. A business owner expects even monopolies to reduce costs and increase profitability. Any lost rouble (dollar or euro) is the rouble unearned. Today companies are trying to make substantial changes to offers they make to their customers. Such changes often require companies to review their operations and business processes to reduce time to market for new products. As a vendor we often receive such requests from our customers. And we also have to change our products to meet market needs.
We also faced another problem. The process is often stalled at lower levels due to lack of understanding among managers and other staff. It can be difficult for them to switch from the previous project-based approach to a new routine. But the more entry-level employees and other staff understand digitalization and its purpose, the more successful is the digital transformation of the company. People understand why it is necessary and stop resisting changes. They often start coming up with new ideas and contributing their own user experience to improve new processes and products. In our company we are committed to cultivate such ideas. For example, our solutions based on low-code concept allow users to reconfigure their workstations to address their issues in a more efficient way. We also decided to make certification free of charge and made product tutorials and other learning content related to our products publicly available. As a result, the quality of implemented projects improved dramatically.
Vladimir Marinovich, Angel Investor, Managing Partner of Girlyanda LLC, Shareholder of GetTaxi: Today everyone understands that digital transformation is a must. But it hasn’t always been this way. In the noughties and 2010s it was very hard to negotiate with owners of taxi companies. Today, seven ridesharing companies control 85% of the Russian taxi market. And where are those people now who laughed at me in 2011 saying they had 25 call center operators who were much cheaper as a business expense? Today, nobody wants to call the ever engaged line.
But now we face another challenge: How can we make it? I have been recently engaged in two interesting projects implemented one month apart. One project is implementation of a marketplace aggregator, a one-stop solution that makes it possible for consumer goods maker to enter all 12 marketplaces at once. In November 2020, we offered this digital service to 7 business owners in one of the Russian regions. But we got no reply from them. They were not ready to use digital tools in their business operations making excuses that digital tools didn’t work in their business environment but of course it was not the case.
Based on my observations, only 3% of businessmen are ready to embrace such tools. We can’t give out digital services to everyone and then wait for a miracle to happen. People start using them in earnest when profit margin is decreasing and they have to cut costs, reduce time to market for new products and expand their market presence. I can give an example of a lingerie manufacturer that successfully sells its products on social media and doesn’t have a single physical store.
People should be taught to use digital tools. Complicated things must be made simple and explained in plain language. For example, we have already posted around 50 videos explaining how to use digital services for business needs and the effect they have on your business. Indeed, it’s hard to hunt for mushrooms not venturing into the forest. It’s likewise impossible to count on business effect of using CRM system if you only run it once a week. So our priority is to raise digital awareness.
Vladislav Migachev, IT Advisor to Deputy General Director of TAIF JSC: What tools should we use? What tools should use those who beat the metal or manufacture any other products? What will help us cut our internal costs? What role will people play in the process when robots do all routine jobs? And what about those companies whose products are in demand today? For example, we don’t need to promote our products, they are sought after. We hold a monopoly in our market.
It is important to be absolutely clear on what digital transformation really is. It is not a migration from analogue to digital systems, it is implementation of digital tools to increase efficiency of manufacturing processes. This poses another question: Who will use them? It is also possible that people will be totally excluded from manufacturing processes. If so, what is the principal difference between digitalization and automation?
How will digitalization improve efficiency? Of course, there are solutions that make it possible to reduce emissions, improve safety and reduce headcount. But on the whole they enhance performance by only a few per cent.
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