Digitalization: the new leverage in business

By: Lucell Larawan

IF BUSINESSES capitalize on digitalization, the benefits are immense: improving productivity by optimizing processes and automating the system, increasing productivity by saving costs, speeding up production and reducing errors.

In the fourth industrial revolution (Industry 4.0), the digital transformation increases efficiency by 15 to 20 percent and is responsible for 20 percent of the revenues for the next five years, according to Vinit Parida, David Sjodin and Wiebke Reim (in “Reviewing Literature in Digitalization, Business Model Innovation and Sustainable Industry….” published in Sustainability Journal, January, 2019). This explains why small businesses now make it their leverage. It outperforms the rivals’ revenue growth and efficiency.

To clarify what I am discussing, let me use Gardner’s (2018) definition of digitalization. It is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”

I am emphasizing this leveraging idea because many people nowadays still remain non-competitive and less productive because they ignore or resist the new economy. Local government leaders must make a stand for constituents who do not make use of the resources in the digital age. It is time for us to fully embrace what really improves our standard of living. In so doing, small businesses can fully exploit a technology’s ability to create, deliver and capture value.

Creating value is what produces wealth. These days, the value of products and services is based more on creativity which takes advantage of technology, among others. While value creation in the past was the function of the economies of scale, it is now a function of the economies of creativity.

In creating value, understanding customer needs is of prime importance. In its absence, a business cannot be successful. So, evaluating market needs should be a continuing process. Through this, one can avoid offering services that are not requested by or does not create value for the target market. We should be informed that 80 percent of dotcom firms fail after they appear for a while.

Considering market needs, visionary and creative mindset brings radical innovation leading to new business models incorporating new functions where the digital component is the main value driver. This expands boundaries of organizations where new networks come into the picture and collaborative value creation takes place.

Value creation, using creativity, describes what products or services are offered by a firm where digitalization can help through new and more advanced services. Digitalization allows companies to configure advanced services based on digital platforms. It allows one to capitalize on different roles and partnerships in the ecosystem.

For instance, a retailer buys e-load through a digital platform that sells it through a “drop off” payment system or one wherein the retailer pays the e-load through Cebuana Lhullier and not directly to the owner of the platform, making the transaction more comfortable for the consumer. This platform does not just provide e-loads; it also offers a digital system to record financial transactions for micro lenders and borrowers.

Moreover, the platform gives its clients an e-wallet that can be used as a bank account but uses a partnership with financial institutions as part of the processing of withdrawals. I am talking about a mobile app that you can explore at its website ezcashph.com. Expect that this platform’s patronage will spread like wildfire among micro, small and medium enterprises.

For more information about this platform, contact landline (038) 427-1907 or mobile phone 0929-249-7628 (Smart).