Defining Digitalization

By Jeff Palm, CIO, Allianz Life Insurance Company of North America

Jeff Palm, CIO, Allianz Life Insurance Company of North America

One of the key challenges facing CIO’s today is the notion of Digitalization. It dominates the headlines, and is becoming increasingly important in all aspects of an organization, from the boardroom on down. As basic as it sounds, one of the fundamental challenges I face at times, is that it’s difficult to really define what Digitalization is. Perhaps more accurately, it’s difficult to define what Digitalization ISN’T.

"The continued trend toward consumerization of technology means that customers and users have an increasingly higher expectation of a more digital experience"

Think for a moment about your list of corporate priorities, look at your list of initiatives for the calendar year, and consider your planned spending. In some way, shape, or form, everything that faces us is somehow about Digitalization. So, the questions become: How do you think about Digitalization, and get an organization to share in, and mobilize around a common view of this idea?

I suggest that organizations can, and should, think about Digitalization using two distinct lenses – each requiring a different mindset.

First – Digital Improvement of the Existing Landscape

Much of the environment we now work in originally spawned from a primarily “non-digital” beginning. Digitalization in this environment takes many forms, usually targeting gains in efficiency, and creating step-wise, incremental change. We all have countless projects in these spaces, and there is often substantial benefit associated with investing here. Hallmarks of these initiatives generally include:

• Implementation of automation
• Digitalization of data
• Elimination of paper
• Reduction of manual processes and human touchpoints

These efforts generally constitute a large portion of the corporate agenda. They display solid benefits, a good CBA, and promise gains associated with simplification or streamlining of existing business processes. They are usually centered on the introduction of one or more new technology capabilities. Most organizations could stay quite busy tackling just these challenges and the need to keep developing core competencies in these areas is unlikely to decrease any time soon.

However, improving the existing landscape is only part of the equation. There is a second opportunity that exists – one that requires more in terms of strategy, thought leadership, and willingness to question (or even disregard) the status quo.

Second – Re-imagining the Business from a Fully Digital Perspective

Comparatively speaking, this type of effort is much more difficult than the first, and requires a different mindset. As opposed to “editing” an existing process or capability to generate incremental improvements, here the challenge is to start with a white sheet of paper and “create” a new, re-imagined view of a business model. The continued trend toward consumerization of technology means that customers and users have an increasingly higher expectation of a more digital experience. So, in order to successfully adapt, organizations must do a few things differently, while keeping Digitalization top of mind.

To begin with, an organization must ask itself the most fundamental of questions – especially those types of questions where the answers were previously thought of as “givens.” Every aspect of the business model must also be examined, end to end, including most notably, the customer experience. In addition, digital solution and design must be the default as opposed to the add-on, targeted at point-in- time improvements.

Consider an example from the banking industry. Historically, checks always had to be deposited at a branch office or an ATM in some physical manner – it was a “given” that this model would never change, right? Wrong. Mobile check deposit with digital images has now laid that assumption to rest, and foot traffic into bank branches continues to decrease.

Consider financial services. The relationship between the client and the financial advisor is irreplaceable, and clients will not want to lose that human interaction - it’s another “given,” right? Wrong again. In some channels at least, the notion of a Robo-Advisor is gaining increased traction, again challenging an existing assumption, and possibly altering a fundamental premise of the industry.

For an organization to successfully deliver against a fully digital agenda, it must embrace a few key notions:

• Maintain a good, current, working knowledge of innovative technologies across a wide array of technical disciplines. Whether the change be step change, or something more dramatic, understanding the leading edge technologies necessary for enablement will always be critical.

• Challenge to start with nothing more than a single data point - a definition (completely unencumbered by fact, if necessary) of what you want the ultimate customer experience to be this allows teams to examine and re-invent from all angles.

• Adapt a “lean” or “agile” approach – re-imagining a fully digital business model is almost certainly not something that can be conceived of, designed, or implemented in one fell swoop. More likely, in the context of an end-to-end solution, business processes must instead be decomposed to workable pieces, then conceived and implemented in rapid waves. A willingness to adapt an agile-like methodology, from both a business and a technology perspective, is a key to enabling this.

• Communicate specifics about objectives in terms of business goals related specifically toward Digitalization. Using common language will help an organization begin to establish a common digital mindshare.
Digitalization is likely to be a central topic for organizations for years to come. Organizations that target a combination of incremental improvements in the digital space, and take advantage of opportunities to re-invent key portions of their business, will be best positioned to succeed.

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