Hu Yoshida

Digital Transformation Can Resolve the Productivity Paradox 

Blog Post created by Hu Yoshida on Jan 11, 2017

The Productivity Paradox

 

Over the last 10 years, the exponential growth and power of technology have brought some fascinating, if not

mind-bending, opportunities. Machines talk to one another with computer-connected humans on the other end

observing, analyzing, and acting on the explosion of Big Data generated. Doctors use algorithms that mine patient

history or genetic information to detect possible diagnoses and treatment. Cars are programmed with data-driven

precision to direct drivers to the best-possible route to their destination. And even digital libraries for 3D parts are

growing rapidly – possibly to the point where we can soon print whatever we need.

 

With all of this technology, it is common sense to believe that productivity would also rise over the same span of

time. However, according to a recent 2016 productivity report released by the Organisation for Economic Co-operation and Development (OECD), this is, sadly, not the case. In fact, most advanced and emerging countries are

experiencing declining growth that is cutting across nearly all sectors and affecting both large and small firms. But

more interesting is the agency’s observation that this trend does not exclude areas where digital innovation is

expected to improve information sharing, communication, and finance.

 

Although nearly 5 billion people on our planet have a computer in their pocket or their hands at any moment of the

day, our digital ways have not translated into productivity gains for the enterprise. The culprit? Businesses are not

changing their processes to allow that technology to reach its full potential.

 

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Technology alone does not bring real digital transformation

 

Every week, I hear how companies worldwide are so excited about their digital transformation initiatives. Some are

developing their own applications or executing a new digital commerce strategy. Others may decide to deploy a

new analytics tool. No matter the investment, there is always great hope for success. Yet, they often fall short

because the focus is typically on how technology will change the business – not how the enterprise will change to

fully embrace the digital innovation’s potential.

 

Take, for example, a bank’s decision to allow the loan process to be initiated through a mobile app or online store.

The bank may receive the information from the consumer faster than ever before, but no real benefit is achieved if

it still takes three weeks to approve or decline the loan request. Technology may be changing the customer

experience online, but back-office processes are unaffected. The same old ways of work are still happening, and

productivity is not improving. For a digital world where everything is supposed to be automatic and immediate, a

customer will inevitably turn to a competitor that will approve the loan faster.

 

True digital transformation requires more than technology. Companies must evolve their processes with a keen

focus on outcomes, not just infrastructure. All too often, they are focused on creating this sort of digital facade

where it appears to be a digital experience for the customer, but, in reality, the back-office still has not caught up

to support that level of digitization.

 

 

Deep digital transformation starts with process innovation

 

In the coming year, most companies will look to transition to real-time analytics that drives predictive decision making

and possibly draw from the Internet of Things. While this technology presents a clear opportunity for

greater insight, organizations are no better off unless they transform business processes to act quickly on them.

 

Traditional data processes require days to move data from one database to another, process it, and generate

reports in an easy-to-understand format. In-memory computing accelerates these processes from days and

weeks to hours and minutes – paving the way for transformative power by moving decision-making closer to data

generation. However, no matter how fast the analysis, no benefit is realized if downstream processes and

decisions do not capitalize on the resulting insight. Like the loan process I mentioned earlier, you need to make

sure that the back office and front office are aligned in order to produce improved business outcomes. Legacy

systems and databases may still hinder the ability to achieve faster results, unless they are aligned with inmemory

analytics.

 

 

Increase Productivity with Digital Transformation

 

The ability to modernize core systems with technologies like in-memory computing and innovative new

applications can prove to be highly transformational. The key is to integrate these new technologies into an overall

business architecture to support digital transformation and deliver real business improvements.

Are you ready to transform your business and increase productivity?

 

A previous version of this post appeared in SAP’s Digitalist Magazine website

Outcomes