Impact of Digitalization and Case Stories on Adaptation – Future of work

Introduction

Digital transformation is the latest installment in a long line of technological solutions aimed at improving business processes. Digitalization has influenced operational and strategic activities in almost every industry in the past decade. Not only that, but key industry analysts estimate an increase in IT spending as economies continue to suffer as a result of COVID-19.

According to research by Gartner Inc, companies are estimated to spend $4 trillion on information technology this year as COVID-19 continues to affect just about all major industries. For most organizations, getting on board with the digital shift is inevitable as they want to be able to use such technologies to generate new business.

On the one hand, digitalization has broken barriers previously experienced by different industries, creating new business opportunities. On the other hand, this trend has created disruptive market entrants. The following article dives deeper into the impact of digitalization while examining a few case studies.

Digitalization takes on a standardized approach across different markets and economies by using advanced information and communication technologies.

However, one standard recurring theme in digitalization involves replacing business processes to incorporate technologies that will improve business and generate revenue.

Trends Driving Up Digitalization

Digitalization and digital transformation are the new driving factors in today’s economy. They have a profound effect on business processes. The following are some of the factors, including trends that have influenced digitalization.

· Effects of Coronavirus

It is a well-known fact that COVID-19 left many people working from home as part of the social distancing measures to curb the spread of the disease. However, this also created challenges for many organizations.

As a result, many companies were forced to turn to digitalization to create new and sustainable office-related solutions. COVID-19 forced many companies to adapt quickly to keep their operations running.

· Rise of Online Shopping

The lockdown initiated in most countries led to a rise in e-commerce trade. According to UNCTAD, online retail trade rose 3% from 14% to 17% since the outbreak of COVID-19. African e-commerce platform popularly known as Jumia reported a 50% spike in transactions during the first six months of the coronavirus outbreak.

· Advancements in Technology and Data

Data is increasingly becoming important to companies. People are producing more and more data than has ever been produced in history. For instance, reports suggest that in 2018 alone, the world produced approximately 2.5 quintillion bytes of data every day. But such data can be a valuable tool in the right hands.

For instance, credible sources suggest that Netflix saves approximately $1 billion per year on customer retention by utilizing big data. For such reasons, more and more firms are investing in infrastructure that will allow them to use data more effectively and efficiently and drive digitalization up.

At the same time, poor data quality costs companies a lot in revenue. Poor decision-making and wrong business strategy are synonymous with poor database storage facilities and poor data analysis techniques. For instance, in the US alone, companies lose more than 9.7 million each year on poor data quality.

It is evident to see that advancements in data and technology also influence the choice of digitalization by most companies.

Impact of Digitalization and Case Stories

Digitalization is more than just an emerging trend. Its impact is seen in the figures depicting the evolution of the international flow of goods, services, finance, and data. Reports indicate that digitalization has increased the movement and growth of global data 45 times more since 2005.

In this regard, digitalization has had a hand in generating more economic value with regard to traded goods. However, at the same time, it has caused disruptions in certain industries, creating both winners and losers in the process.

Below are some of the impacts of digitalization in today’s marketplace.

Leads to Business Turnaround by Improving Products and Services.

Products and services are best improved when organizations and for-profit companies increase customer engagement. Most of the innovations in digitalization are designed to increase customer engagement to arrive at better products and services.

Take the case of Amazon, who became ‘COVID giants.’ By the end of July, the company announced that its net sales had risen by approximately 40%. This owes to the fact that they underwent some form of digitalization during this time, characterized by quick deliveries by both humans and robots, fast online responses, and increased customer engagement.

Amazon is not the only company known for profiting as a result of minor digitalization improvements. A few years back, Best Buy was thought to be in its last stages in its business life.

However, by changing its strategy from mail marketing to digital customer engagements, it was able to overturn its situation to a more favorable one. Its stocks, once trading at $23.70, skyrocketed to about $74 in just two years as a result of digitalization.

Digitalization Contributes Positively to Job Creation.

This sounds contradictory to what many people believe. Most working professionals are of the opinion that digitalization is set to replace human labor with efficient robots and artificial intelligence.

And while digitalization will indeed cause disruptions in the economy, research by PWC (PricewaterhouseCoopers) suggests that employment rates will reduce by 1% with a 10% increase in digitalization.

To validate findings from this research, we examined Upwork, a freelance platform that connects clients to freelancers. Freelancing is a notable example of digitalization in the workforce as professionals only need a device with internet connectivity to find work.

Since COVID-19, more and more professionals have turned to Upwork to find more employment opportunities. Even amidst a recession, freelancers in the US alone contributed $1.2 trillion to the economy, a 22% increase since COVID-19. So, in as much as the economy will be disrupted by digitalization, there will be more employment income-generating opportunities for many in the future.

More Business Processes are Getting Automated

One of the main goals of digitalization is to improve operational efficiency. Digitalization at the workplace can help in automating a host of functions to make business operations more efficient.

For instance, more companies are investing in chatbots to help employees respond to customer queries swiftly and effectively. Chatbots provide 24/7 customer support services. Research suggests that over 80% of all businesses are expected to integrate some form of chatbot reply system, and rightly so.

Chatbots are estimated to save businesses as much as 30% of costs directed towards addressing customers. But chatbots are not the only form of automation that came as a result of digitalization processes. Other examples of digitalization designed to automate business processes include automated hiring, employee analytics, meeting software, form autofill, facility management, and digital signatures.

Conclusion

Digitalization has certainly influenced improving the quality of life and the people’s ability to access public services. However, for most companies, this trend is useful in generating new business and revenue.

As the world is witnessing an accelerated pace in digitalization, the effects are more likely to be felt by society in both positive and negative capacities. Regardless, one thing’s for certain; change is inevitable.