The European Union has focused its efforts on a vision for Europe's digital transformation by 2030, building a secure and sustainable digital infrastructure, enabling businesses to better access data and use AI-based solutions.
At the same time, the programme's investments will provide people with the knowledge and skills they need to participate actively in the labour market. Digital transformation aims to have 75% of EU businesses using cloud computing, AI technologies and big data by 2030. And more than 90% of small and medium-sized enterprises are expected to reach at least a basic level of digital intensity.
The challenges of digital transformation
Digitalisation is one of the competitive challenges for Slovenia as well, as highlighted in the IMD Global Competitiveness Ranking and the OECD Economic Survey for Slovenia 2022. We asked Sinecon, a company that helps companies digitise and digitally transform their business with proven technology solutions and partners, what are the biggest challenges for companies in Slovenia in the area of digital transformation. As there are big differences between companies, from their size to the stages of their business lifecycle, the challenge is different for each one, explains Dr Dejan Leskovšek, Project Manager at Sinecon.
Jakob Kotnik, the company's CEO, adds that not every change is a digital transformation, which is why when upgrading or introducing new business solutions, instead of talking about digital transformation, we sometimes prefer to talk about modernisation of solutions, which is just one of the steps of the so-called digital transformation.
Why companies fail to add value
"Everyone has their own interpretation of what digital transformation is. In the most advanced companies, it is the introduction of artificial intelligence, advanced planning, the industry of things and so on. Unfortunately, the share of these companies in Slovenia is still in the minority, and this is one of the most important reasons why our companies do not achieve the added value that they do in more developed countries," Leskovšek emphasises. He adds that it is important to ask what is the purpose of a company's digital transformation in the first place. In the broadest sense, the purpose should be to increase the productivity of the company or its employees. "On the one hand, this means increasing revenues, in principle by increasing sales, and on the other hand, reducing costs."
And he illustrates that if we want to increase sales, we as a company need to be present everywhere and from anywhere (the easiest way to do this is through cloud solutions), and that means online, on social networks, via mobile apps, and no longer just in physical stores. However, Leskovšek points out, even this is no longer enough, because the customer wants the best possible shopping experience, and it is difficult to ensure this entirely on our own. The entire supply chain must therefore be involved in the digital transformation of the company: suppliers, transport and warehousing logistics, manufacturers, distributors, stores. "To do this, we need to understand the customer, their habits and adapt the buying journey accordingly, with the help of a website or shop, a portal, a mobile app, a call centre, after-sales support, anytime, anywhere delivery and so on."
Similarly, on the cost-cutting side, there is also cost reduction in supplier relations, explains Dejan Leskovšek, project manager at Sinecon, adding that another aspect of cost reduction is aimed at internal efficiency. On the one hand, this is about optimising processes and procedures, automating what can be done and what takes up the most of employees' time, and on the other hand, it is also about organisational changes, change management, training and increasing employees' competences, and it may also involve changes in the reward system.
Digitalisation is the modernisation of business processes
According to the interviewee, the result will only be noticeable if the management has the right analytical tools at its disposal, but without the right interpretation of the data, the right decisions will not be made. "A key challenge from practice - digital transformation is a core strategic project for management, which all too often still sees it as an IT project that will be taken care of by IT, perhaps providing a management representative for a project oversight board that meets every few months. Management cannot delegate this project to someone else because it is not an IT project, it is a business transformation. Only C-level executives can decide how your business will change," Leskovšek warns.
Digital transformation is a combination of IT solutions, business process re-engineering, marketing and sales strategy and change management, which also means people management and sometimes business models.
The main problems, as explained by Dejan Leskovšek, project manager at Sinecon, are unclear objectives of the business and digital strategy, lack of involvement of the business management, too low project budget, availability of (internal) resources, their lack of competences and responsibilities for making operational decisions, and lack of communication between the management and the project team on the one hand, and the (future) users on the other. Last but not least, the problem is also the preservation of old practices and habits that should be mapped by the new systems, the unwillingness to adapt processes to solutions and best practices where this makes sense, the interviewee adds.
Jakob Kotnik, the company's CEO, adds that in practice, we find that companies very often lack the knowledge and awareness of how digitalisation and technology can help companies do business better and remain competitive in the market in general, let alone know which solutions are key to implementing their strategy.
Marjana Kristan Fazarinc, Delo. 1.9.2022, availible via:
Digitalizacija ni projekt IT-oddelka, ampak vodstva - Delo