Enterprise digital transformation: the battle between informatization and digitalization!

Source: Talking about Data, Author: Shi Xiufeng

The full text has a total of 4826 words, and it is recommended to read for 10 minutes

Recently, my friend (pseudonym Lao Wang) who is doing digital consulting has encountered a headache: it is said that Lao Wang's team has recently received a big order-a digital transformation plan for a large-scale manufacturing industry. Lao Wang led the team to fight for several months, various business research, information technology research, interviews with senior leaders... Finally, the first draft of the plan came out. However, when the plan was reported, this version of the plan was rejected by the client's leaders. The client thought that the plan they planned was an "informatization solution" rather than a "digital solution".

Let me explain: Lao Wang has nearly 20 years of working experience in the field of enterprise informatization, and is very familiar with various knowledge and technologies such as informatization, automation, and digitalization. He once worked for a world-renowned consulting company and led many large-scale ERP for many companies. The planning and implementation of the system can be regarded as "veteran experts" who have experienced many battles in the field of informatization and digitalization. It stands to reason that with Lao Wang's ability and experience, it is not difficult to complete such a consulting project. Unexpectedly, it stumbled on the boundary of informatization and digitization.

The customer thinks that the solution given by Lao Wang is still the ERP set: business research-blueprint planning-process design-function design-data preparation, etc. What the customer wants to see is a global digital solution that uses data to drive business, and does not It's not about letting people adapt to the system.

Lao Wang was also very distressed. He complained to me: "The foundation of customer informatization is relatively weak. Although there are some informatization systems, they are basically point-shaped applications. There is no connection between systems, and there are a large number of breakpoints between business processes. There is a lack of end-to-end integration, the quality of basic data is uneven, the problem of information islands is serious, and a lot of data is still missing... In this situation, it is no problem to solve the problem of process breakpoints and information islands at the system level first! Now Some businesses don’t even have data accumulation, how to drive business? Do you think this is a joke (smile)”

I can fully understand customers' high expectations for "digitalization", and I can empathize with Lao Wang's feelings. Let me talk about my immature views, which may bring some inspiration to "clients" and "Lao Wang" who encounter similar problems.

01 "Customer" is right, informatization ≠ digitalization

1. Definition and essence of informatization

What I understand by "informatization" is "dataization of business". That is: the process of digitally recording the business activities and processes of the enterprise's production process, procurement process, sales process, customer service, transaction processing, and cash flow.

Simply put, informatization means that business is carried out in the physical world, and information systems provide support. For example, for a traditional taxi, the driver stops after the passenger beckons, and the taxi operates in the physical world, backed by an information system.

The core and essence of informatization is to use network, computer, database and other information technologies to realize enterprise business process management and business data recording. It focuses on business process optimization. Typical tools are information systems, such as: OA, ERP , CRM, SRM, PLM, etc.

2. Definition and essence of digitization

My understanding of "digitalization" is "data businessization". Namely: In the process of informatization, the long-term accumulated transaction data, e-commerce data, media data, industry data, user data, potential customer data, product data, after-sales data, etc., are continuously integrated into the management and business activities of the enterprise , use data to discover problems, discover laws, discover business opportunities, use data to optimize business portfolio, optimize business processes, optimize business models, and achieve continuous operation, continuous innovation, and sustainable development of enterprises.

Simply put, digitization is when business is carried out in the digital world and physical elements respond. For example, online car-hailing platforms such as Didi carry out taxi business in the digital space, and taxi drivers and passengers in the physical world respond.

The core and essence of digitization is to use big data, cloud computing, Internet of Things, blockchain, AI, 5G, VR/AR and other digital technologies to realize business and management innovation and enhance corporate competitiveness. It focuses on " For "data-driven" business , typical tools are data systems, such as: data warehouse, data lake, intelligent analysis platform, algorithm platform, data asset management platform, etc.

3. Digitization ≠ informatization

It is not difficult to see from the definitions of informatization and digitalization that digitalization and informatization are a question of who dominates the real physical world or the digital world. Of course, the use of informatization cannot solve the problem of digitalization. For example, the two taxi examples we mentioned above.

The traditional taxi business is dominated by the physical world . Taxi companies also have software systems that provide system functions such as vehicle management, driver management, operation management, maintenance management, and invoice management. However, these system functions play a role in the business. The supporting role, that is to say, without these system functions, the taxi business can still be carried out. In the physical world, business is run by people, not systems.

The online car-hailing business is dominated by the digital world , and cannot directly interact with it in the physical world. If you want to take a taxi to the airport, and an online car-hailing car just arrives, and you tell the driver that you are going to the airport, the driver will say no, because he has already been booked. Even if there is no one to make an appointment, he said no, if you want to call a car on the App, he can only respond to that App, and the App sends orders or grabs orders on it. In the digital world, all human behaviors can only respond to the instructions of the digital world.

Regarding the difference between informatization and digitalization, Mr. Chen Xuepin, the founding partner of Wisdom Cloud, summarized a picture from the aspects of time of occurrence, technical architecture, demand characteristics, core goals, delivery mode, etc. I think the summary is very good. Share with everyone:

Informatization Transformation vs Digital Transformation (Chen Xueping)

This picture simply and clearly introduces the difference between informatization transformation and digital transformation. Therefore, I can especially understand what Pharaoh's customer said at the beginning of the article, "What we want is a digital transformation solution, not an information transformation solution"!

02 Can enterprises go beyond informatization and directly enter digitalization

That being said again, can enterprises skip informationization and directly enter digitalization? In other words, the foundation of informatization is weak, can we directly engage in digitalization?

In fact, the author's point of view on this issue has always been clear. In my series of articles on digital transformation, I have mentioned it more than once: digital transformation is a systematic project, which requires both top-level strategic planning with a "big picture" and The promotion strategy of "small steps, quick breakthroughs" is needed. In the entire process of digital transformation, informatization is the foundation. Without informatization, data cannot be precipitated, and without accurate and complete data, digital transformation is "waste work".

Therefore, at this stage, except for Internet companies such as Alibaba, Tencent, Google, and Amazon, which have digital genes, other traditional companies, whether it is finance, manufacturing, energy, chemical industry, etc., are undergoing digital transformation. In fact, it is inseparable from the upgrade or transformation of informatization!

The digital transformation of many traditional enterprises is learning from companies such as Netflix and Huawei that have successfully achieved digital transformation.

Let me talk about Netflix first. This is a successful case of subversive digital transformation. Netflix has successfully transformed from a DVD disc rental company to the world's largest streaming media content provider. It is more talked about in the Netflix industry that Netflix has achieved great success in its business model through the combination of "subscription payment" and "intelligent recommendation algorithm". Behind its transformation, Netflix has collected a large amount of user data during its more than 10 years of online rental and mailing of DVDs, which makes it capable of fine-grained analysis of user preferences. Without these data, what is the use of a powerful algorithm!

Let's talk about Huawei. Huawei's case is also an object of study and reference for many enterprises' digital transformation. Recently, Huawei also wrote a book - "The Way of Huawei's Digital Transformation", which systematically explained how Huawei successfully achieved digital transformation. This book is mainly divided into four parts: cognition, method, practice, and platform. It explains Huawei's digital transformation "1 set of methods, 4 types of scenarios, and 3 major platforms", providing a basic reference for the digital transformation of enterprises frame. See also: Demystifying Huawei’s Digital Transformation Framework: 1 set of methods, 4 types of scenarios, and 3 platform capabilities

From the practice chapter, we see that the primary task of Huawei's digital transformation is the reconstruction of the business operation model. The business operation model has been reconstructed through "object digitization, process digitization, and rule digitization", starting with the process and ending with the process. Digitalization results are internalized into the management system. Secondly, it is digital operation, which optimizes the supply chain through digital technology, deterministic business automation, machine replacement of human, etc., reduces high energy consumption points of business, and realizes cost reduction and efficiency increase. The third is digital transactions, emphasizing the "customer-centric" construction of ROADS user experience (ROADS is the abbreviation of "real-time, on-demand, online, self-service, social"), so that ToB business has ToC customer experience. Fourth, it is digital operation, which changes the traditional operation mode, is driven by data, breaks down information islands and departmental walls, and realizes scientific decision-making based on data. Finally, it is digital office, which is mainly the process of improving work efficiency through digital office software.

The above five practices include both informatization transformation and digital transformation. Seeing this, if you think that you can succeed by copying the above five Huawei digital transformation practices, you are very wrong. In the author's opinion, the book "The Way of Huawei's Digital Transformation" does not fully explain the way of Huawei's digital transformation. The five practices are just the tip of the iceberg of Huawei's successful transformation and implementation. What this book does not cover include: management changes marked by integrated product development (IPD), integrated supply chain services (ISC) and global supply chain (GSC) as the symbol of supply chain field management reform, and integrated financial services (IFS) as the symbol of management reform, and if these three major reforms are divided according to informatization and digitalization, they should all belong to the category of informatization.

To sum up, for traditional enterprises, informatization and digitalization are not contradictory. The realization of the goal of digital transformation is inseparable from the upgrading and improvement of informatization. The connectivity, synergy, and insight of digital technology need to be established on the basis of a certain degree of informatization maturity. Therefore, I can especially understand Lao Wang. The digital transformation plan of traditional enterprises at this stage must also be inseparable from the shadow of information transformation!

Quoting my previous article: Digitization is an inevitable result of the development of information technology to an advanced stage, and the focus of this so-called "advanced stage" is not whether some inherent qualities of IT technologies are more advanced, but more about how enterprises use them technology. In my opinion, being able to use "IT" and data "strategicly" is "digitalization".

03 How to carry out the digital transformation of traditional enterprises?

Digital transformation is a systematic project that involves the transformation of an enterprise's business model, organizational mechanism, talent structure, technical tools, corporate culture, etc. It is impossible to achieve transformation through the implementation of a single project. Please refer to my previous article " Points, Lines, Surfaces, and Body of Enterprise Digital Transformation "

For the digital transformation of traditional enterprises, the most important thing is the construction of digital capability elements. In the white paper "Digital Transformation Roadmap for Manufacturing Industry (2021)" released by China Electronics Standardization Institute, it is proposed that the general capability of manufacturing digital transformation " "Starfish" quadrant, I think it is very worth learning.

As a matter of urgency, enterprises need to accurately locate the development status of their own digital transformation capabilities, and clarify the specific development direction and advanced path for transformation and improvement. At the same time, in practice, we continue to improve transformation awareness, clarify transformation goals, enhance the confidence of enterprises in promoting digital strategies, and customize "exclusive" transformation roads suitable for their own development.

In this white paper, a reference method is also proposed for the digital transformation of the manufacturing industry. I think it is also worth learning. Quoted here for your reference:

1. Single-point application - "How can digital investment quickly bring me benefits?"

The goal of single-point applications is to realize the digital expression of key business links of enterprises. The focus is to realize data aggregation, interconnection, and interoperability in a certain link through the investment of digital tools and equipment, and solve actual single-point problems based on data. The key point is to abstract high-frequency repetitive, low-cost, high-yield and relatively independent business scenarios, grasp the core driving factor of data, integrate the value of data into key enterprise activities, and realize point-like transformation from process-driven to data-driven.

2. Partial optimization - "Which aspects of my business still need digital transformation?"

The goal of local optimization is to use digital means to systematically integrate the data that was limited to a certain equipment, system or business link in the past, break the island of information, and realize the integration optimization across departments, systems and business links, so as to achieve The purpose of cost reduction and efficiency increase. The key point is to focus on the key business of the enterprise, and realize the integration of related multi-business links and process systems. Based on the data integration and sharing of key equipment and business systems, carry out business process optimization design and organizational structure adjustment, and form a data-driven system construction, integration, operation and maintenance and continuous improvement mechanism.

3. System integration - "All businesses are worth upgrading with digital means!"

The goal of system integration is to gather various elements and resources through the industrial Internet platform to form support capabilities. The focus is on platform construction to realize the optimization, coordination and sharing of the entire business chain of the enterprise. System integration The collaborative optimization of multiple links of the system, the application of digital technology in-depth integration of the entire process of enterprise production and operation, the emergence of an industry-level industrial Internet platform at this stage, the full interconnection of people, machines, and things, efficient allocation of resources, and internal and external collaborative optimization.

4. Ecological reconstruction - "What kind of company will I be in the future?"

The goal of ecological reconstruction is to open up the information chain, innovation chain, and value chain within the enterprise, the supply chain, and the upstream and downstream of the industrial chain by relying on various innovative carriers such as the industrial Internet platform, so as to realize the ubiquitous interconnection and deep interconnection between enterprises. Collaboration, flexible supply, efficient allocation, open up a variety of new cooperation paths and business models, and establish an ecological group of enterprises with consistent values.

As in the last tweet " Successful digital transformation, all these 5 points are done right! In ", New Business Association-General Manager Wei Qiang left a message: "The future is the era of platforms, where connection, collaboration, empowerment, and integration are the main trends. This is the logic of the underlying transformation!"

references:

"The Way of Huawei's Digital Transformation", Machinery Industry Press

"Digital Transformation of Automobile Enterprises: Cognition and Realization", Machinery Industry Press

"Manufacturing Digital Transformation Roadmap (2021)", China Electronics Standardization Institute

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