Question Answered: The digital conundrum

Published: Mar 2020
Person using digital software with digital backgrounds

This issue’s question

“Does the move to digitalisation create more problems than solutions?”

Portrait of Saurabh Chakravarty, Jt President, Finance, UltraTech Cement Ltd

Saurabh Chakravarty

Jt President, Finance
UltraTech Cement Ltd

Before we analyse the question we need to first understand the difference between digitalisation and digitisation, since the two are often confused. Digitisation in its simplest form is converting information from a physical format into a digital one. For example, scanning a medical prescription and saving it as a PDF would be digitisation.

Digitalisation is slightly more complex. This means harnessing the digitised information to improve processes. In the example of my digitising the prescription, only when I store the prescription in a platform (say, the cloud) – which can be accessed at any point of time – will it be digitalisation. This saves me from carrying the prescription with me when I next visit my doctor.

Once we understand the underlying principles of digitisation and digitalisation, we can examine if it is worth engaging ourselves in this enhanced effort. I argue in favour of digitalisation on the following grounds:

  • Your customer is your focus – you can be closer to the customer through digitalisation. It is the easiest and cheapest method for any business to reach the customer. Social networks, opinion polls and websites all help the business to understand the customer’s needs.
  • The decision turnaround – while digitisation goes hand-in-hand with data management, digitalisation leads to harnessing information – the faster the information is processed, the better the decision-making is.
  • Productivity matters – this is probably the most critical. Digitalisation leads to more knowledge and when such knowledge is used intelligently, it can lead to a significant increase in productivity.
  • Employee friendly – options such as flexible working hours and working from home need the support of digitalisation. This benefits not only the employees but the employer too.
  • Brand recall – the extent to which customers are able to recall or recognise a brand. This increases the public awareness of the organisation.

So how do we prevent digitalisation from creating more problems? One possible approach could be through the clear understanding of the threats and opportunities that the digital world presents to the business. This can be addressed through an assessment of the challenges posed alongside the possible digitalisation endeavours to resolve them. With this basic understanding it should be possible to create a plan that will ensure success in the digitalisation endeavour.

The idea that digitisation and digitalisation are transforming the business and operating models has already been time-tested and the new business models will continue to stand the test of time in the current digital era. It will become imperative for businesses to develop digital strategies and comprehensive digital operating models.

Digitalisation today is no longer a choice but a necessity. Technology is changing the world and the progress is not linear. In the future, the digital strategy will become the business as usual strategy. This is the time to get a head start.

Portrait of Steve Lemon, Co-founder and Vice President, Currencycloud

Steve Lemon

Co-founder and Vice President

The fintech industry has boomed in the last decade precisely because people recognise that fintechs are providing simple solutions to really complex problems. International payments is a perfect example of how a process, which has traditionally been unnecessarily convoluted, is now being simplified for millions of businesses across the world. For the first time, payments systems can be harnessed to help businesses grow, rather than act as a burden or inhibitor.

The SWIFT global payments initiative (gpi) is likely to really kick off in 2020 and the coming years. The new system for global payments will increase speed, from days to minutes, if not seconds. Transparency will also drastically improve, meaning you are able to see where your payment is at any moment, and the cost of international transfers will also come down.

Yet, there is still more work to be done. Reconciliation is still probably the greatest challenge facing treasury departments today when it comes to payments. With traditional methods, a typical payment will pass through numerous intermediaries, which adds to the cost and shrouds the process in mystery, making a payment extremely difficult to track.

This means that when treasury departments receive a payment they often struggle to match it against the original invoice because what arrives in an account doesn’t match what’s been invoiced, or in many cases, what has been sent, even though all parties have acted in good faith. Global accounts that hold multiple currencies and allow businesses to invoice in local currencies can make the process a lot smoother for all parties.

Portrait of Param Thind, Head of Asia Pacific Digital Channels, Global Transaction Services, Bank of America

Param Thind

Head of Asia Pacific Digital Channels, Global Transaction Services
Bank of America

Digitisation vs digitalisation

First of all, it is important to make the distinction between “digitisation” and “digitalisation”. A number of people use these two terms interchangeably but they are in fact quite distinct. “Digitisation” means the conversion of data from analogue or physical form to a digital form (bits and bytes) that can be read and understood by computers. “Digitalisation” on the other hand is the actual process of moving from manual or paper-based processes to an electronic or digital mode, to improve efficiency and enhance the customer experience. And further along the digital spectrum is the process of “digital transformation”, which looks at the company’s strategy on using digital technology to completely change the value proposition for the customer and generate additional revenue streams.

Here is a simple example from everyday life to illustrate the difference between each of these terms. Scanning a newspaper to make a digital version of the same paper is digitisation. Sending an electronic copy of that newspaper or making it available online to the readers is the digitalisation of that process. Creating an entirely new online website or app to change the way readers access and read their news is true digital transformation.

Today’s digital world

Today, we live in a digital society and the vast majority of our social and business interactions are digital in nature. Ranging from social media and news to education and ecommerce, every aspect of our lives is touched and shaped by digital technology. Technology is no longer just an enabler but is in fact the very driver of everyday experiences at the social and the business level.

No business today can afford to do without a vision and strategy for digital transformation. And the undisputable fact is that digital transformation is simply not possible without digitisation. The actual process of digitisation can be challenging and does not come without its problems, especially if done in an ad hoc manner without a proper digital strategy in place.

Digitisation needs to be managed within the wider framework of digital transformation with clear articulation of how the digital experience is going to improve the overall employee and customer experience. Just digitising the information, without changing the underlying process and delivery of the information will not yield the desired results and will more often than not derail the entire digitisation process. For digital transformation (and digitisation) to be successful, there needs to be broad cultural change across the organisation and acceptance of the way business needs to be conducted in the digital world. Adaptation of business processes to emerging technologies like AI, APIs and mobile are key to longer-term success of any digital transformation programmes.


The process of digitisation is a means to the end, without which digital transformation and continued growth and very existence of the organisation is not possible. The potential for increased customer satisfaction and corresponding growth in revenues by harnessing the power of digital transformation far surpasses any challenges in the actual process of digitisation.

Next question:

“How can treasurers protect against payments fraud?”

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