Since data varies from industry to industry, its impact on digitalization efforts differs widely — a utilization strategy that works in one may be ineffective in another. How does the variety and availability of information impact the digital transformation process in various fields?
The connection between data and digitalization
Data is the core transformative tool organizations rely on during digitalization. Without it, their decisions would be uncoordinated, their strategies would be redundant and their investments would be immaterial.
Digitalization extends far beyond transitioning from paper-based systems to computers. It is supposed to shape business strategies, drive innovation and uncover insights. Realistically, without data on customer behavior, returns or pain points, organizations can only guess where digital transformation will be most impactful.
With data, organizations can establish benchmarks to inform their digitalization strategies. Being able to identify baseline key performance indicators (KPIs) enables them to accurately track their progress and see how impactful digital transformation is.
Of course, data also helps organizations secure buy-in from the board and stakeholders. If they can show metrics and statistics to validate their claims and support their strategies, they have a higher likelihood of receiving funds and getting the green light.
The benefits of data-driven digitalization
Although data is foundational to digitalization, there are varying degrees to which companies can leverage it successfully. If they validate, clean, transform, and categorize the information they collect, they will likely see greater success during their digital transformation.
While most organizations are aware of the potential benefits of such a strategy, few implement it. According to one survey, respondents estimated 43% of their data goes unutilized. This kind of barrier can artificially lengthen and complicate digitalization efforts.
On the other hand, organizations can see substantial gains if they strategically utilize data since it can help them streamline operations and extract meaningful insights. For instance, four in 10 executives agree operational efficiency is among the top benefits of digitalization.
How data impacts digitalization in various industries
Every industry must leverage data differently during its digitalization process.
Manufacturing
In the manufacturing industry, digitalization is heavily influenced by equipment and operational data — the primary variety of information facilities collect. They use it to inform their investment decisions, often utilizing tools like robotic process automation or artificial intelligence.
Without data, manufacturers will not know what technologies to invest in during digitalization. According to one survey, 95% of them agree digital transformation is essential to their future success, highlighting the importance of strategic collection and utilization.
Retail
Businesses in the retail industry depend on customer data during digitalization. It impacts how they anticipate and respond to dynamic market conditions. Additionally, it influences how they interpret customer demand. During a digital transformation, they need a massive database of purchase histories, shopping trends and demographic details to inform their strategies.
Pharmaceutical
In the pharmaceutical industry, patient data impacts digitalization. When companies know how individuals schedule appointments, react to drugs, and make payments, they can accelerate their products’ time to market and automate digital tools like their coding and billing systems.
Consumer electronics
In the consumer electronics industry, data on market conditions and customer demand impacts digitalization efforts. For example, based on the data point that the technology sector is responsible for 2%-3% of global greenhouse gas emissions, they may consider shifting toward sustainable practices. These insights can drive innovation in an oversaturated field.
Finance
Economic and customer data influence digitalization in the finance industry. Financial institutions and services rely on it to optimize cost-reduction efforts, decide where to invest and streamline operational processes during their digital transformation.
In one case, a bank developed a database of tens of millions of households to digitalize loan pre-approval. Within two years of its launch, they shortened the approval process from 28 days to seven, resulting in a 35% increase in loan originations and a 20% origination cost reduction.
The transformative power of data
Data variety and availability have a tremendous impact on the digitalization strategies various industries leverage. Even though they share the same end goal — to digitize their manual systems and procedures — their courses of action must differ.
