From Computerization to Digitalization - The Road of Transformation for Enterprise

Wednesday, April 27, 2022 TimeTec 0 Comments

1.0 The purpose of Digitalization
Not only the Malaysian government but the world has been calling for Digitalization in the past two years. What is the difference between Digitalization and the phenomenon of calls for Computerization in the late 1980s and early 1990s?

In fact, Computerization is shifting of the manual work to be operated by a personal computer (PC). Then, we witnessed computers took over some jobs and deemed the jobs obsolete. For example, when a Chinese newspaper’s reporters started using computers to write their stories instead of using pen and paper, the newspaper office shut down its entire Typing Department. More manual tasks, particularly those involved calculation like accounting, improved efficiency and reduced staffing when shifted to computers. However, the Computerization of this period did not manage to break the walls between various professions. The data were still self-contained to individual system and departments, and departments were still doing things their way and communication was weak between departments.

The advent of Digitalization brings with it the primary purpose of breaking this wall. It releases data, allows them to flow freely from one department to another, even flow to multiple destinations, so the “suffocated” departments can inhale and consume fresh data, recharge their minds, be more inventive, and even trying to relate the separated to create more possibilities to revitalize the business.

2.0 Origins and Opportunities
Since Computerization is already a process of conversion from atoms to bits, a.k.a the origin of digital, why the opportunity of Digitalization only happening now? Not five or ten years earlier?

After the wave of Computerization, Malaysia was vastly introduced to Internet technology and the world in 1996. Since then, computers, from standalone systems, started to establish the connection between each other. The rise of web technology sparked the explosion of information, and the mushroomed websites and telecommunication technology connected the world. Even though personal computers were the medium to carry and transfer information, they have evolved into a smaller size, from desktops to laptops and the more portable notebooks; they are still separate entities from the human body. It was not until 2007 when Apple released its first generation of smartphones, computers and mobile phones act as a combined entity. Since it always tags along, the smartphone becomes our “new organ”, the human body’s extension, which brought another wave of upheaval.

To distinguish the major change of the development of information technology before 1996 and 1996-2020, we can conclude that the former was to serve enterprises or socalled B2B (Business to Business). From the IBM Mainframe in the 1950s to serve very large enterprises; Mini Computers in the 1960s and 1970s, serving medium-sized enterprises; and Personal Computers (PCs) in the 1980s serving small and medium-sized enterprises. Personal or individual never exist in the eyes of the computer world before that, even in the era of Personal Computers. Only after 1996, with the advent of the Internet, and then in the era of smartphones and 4G communications, INDIVIDUALs outgrew enterprises. During this period, information technology serves more individuals than enterprises, and it marked the arrival of the B2C (Business to Consumers) era, and enterprise-led technology was no longer a favourite child. We watched those enterprise-served tech giants like SAP, Oracle, IBM and even Microsoft at one time, shunned from the limelight, swapped by the rapidly emerging companies such as Facebook, Amazon, Uber, Netflix, Alibaba, etc., that mainly using their technologies serving individuals, but not by selling the technologies.

What about the development after 2020? My opinion is, with the introduction of 5G technology, the information technology will switch its attention back to enterprise or B2B rather than B2C. There is a popular saying that 4G changes life and 5G changes society, which implies the shifting of B2C to B2B.

Why is there such a saying? First, 3G to 4G, from image to audio and video and streaming services, have almost reached the ceiling of satisfying personal needs. Faster in speed and better VR bring not much excitement to individuals. But in reverse, the advent of 5G liberates enterprise technology that has been slow-paced for the past 25 years. Since the future lies ahead for B2B technology development, companies should not miss this golden opportunity to make a dent in the universe in the next two decades.
Digitization term is meant for enterprises; Cloud Computing too. Cloud Computing is as natural as breathing air for individuals because as long as it is a technology that serves individuals, cloud computing is the foundation. But for many enterprises, the concept of an on-premise server should be minimized or entirely removed, and data hosted on the cloud should be a new attempt.

I emphasize Cloud Computing here because, without Cloud Computing, there is no Digitalization. The arrival of 5G is also an era in which the Internet of Things (IoT) takes off. The Internet of Things (IoT) means that “things” are mainly sensors, which collect various data on the ground and connect to the Internet for further analysis, processing, and transformation into useful results or next actions in the cloud. Because we can now move 95% of the work to the cloud for processing, manufacturers can design the “things” with less computing power, reducing hardware cost. Then, why didn’t IoT take off in the B2C era? The answer is simple. With one smartphone in hand, personal consumption has fulfilled more than 90% of personal needs, which left wearable, as the remaining IoT devices for personal use. Unlike industrial or corporate usage, myriad in variety and constantly changing in demand, the advent of the Internet of Things and 5G will accelerate Industry 4.0.
3.0 Examples of Social Reorganization
We mention that the upcoming 5G would allow the B2B model to soar. It would also be the explosive period for the Internet of Everything, changing the business models of all walks of life, turning the previously separated things or companies into related, and giving birth to various new Ecosystems (B2C focuses on the establishment of the Platform, while B2B focuses on the establishment of the Ecosystem), and causing the social structure reorganization.

Let’s just take driverless driving as an example. When the era of driverless driving arrives, people neither need to learn how to drive nor need to own a car, which will cause a declining in car sales, and automakers have to reduce production, lose weight, and operate their online car-hailing services.

Since human negligence no longer causes car accidents, it will change the insurance industry because policyholders are no longer individual car owners, but the e-hailing companies or automakers are. Shopping malls, office buildings and residential areas can also free up more space when people do not need to own and park their cars on-premises. Overall, it changes the construction and real property industry and finally produces a new breed of cities. We can also expect the amendment of traffic rules, which will change the social structure.

This example illustrates only the automotive industry. By just removing drivers from cars, it could lead to a string of social changes. What about other industries?
4.0 The Future Development Model of Industry
From the Industrial Age to the Information Technology Age, and towards the future of 5G, Internet of Things, Big Data, Artificial Intelligence, and AIoT (Artificial Intelligence of Things), the major changes are quite obvious. Industrial Age has created an era of mass production, whereas the Information Technology Age has emphasized on personalization production. But in the era of Artificial Intelligence, it can quickly and effectively meet the mass personalization production needs.

This trend also indicates that it will continue to shorten the distance between factory and consumers to zero-distance to embrace each other. For a factory to shorten this distance, it does not only need to overhaul the production line (transition from automated production to intelligent production), but it also needs to overhaul Customer Relationship Management (CRM), Enterprise Resource Planning, Workforce Asset Management, and all other fields. The composition of AI in a factory should get higher with time, and also highly integrated. At the end of its development, it is foreseeable that by then, the factory will most likely no longer be a mere factory, but by all means an IT company. This is the ultimate goal of Industry 4.0.
5.0 Roadmap of Enterprise Digitalization
Several thought points:
1. The backend must be based on Cloud Computing to facilitate the establishment of various enterprise ecosystems;

2. When cloud is involved, make sure the cloud solutions and vendors comply to some international standards like cloud and data security certifications such as ISO27001;

3. Since 5G can change the social structure; companies will inevitably change their internal structure in response to social changes. Therefore, various professional systems or subsystems must be open and provide integrable Application Programming Interface (API);

4. Any adoption of a new system should not be just enough; it must be able to keep up with the pace of technology advancement;

5. Digitization planning must be foresighted, adhere to the possibility of future development, historical facts are just for reference;

6. Smart companies need to constantly move closer to AI.

6.0 Main Modules of Enterprise Digitization
According to the views of digital expert Anup Maheshwari in his book “Digital Transformation- Building Intelligent Enterprises”, the basic main modules of enterprise digitalization are shown in the figure:

Anup said in the very beginning, the cloud is the most basic platform to run successful digital transformation for enterprise, as the cloud provides a scalable, flexible, elastic, and easily accessible, and cost-efficient platform to run the business. Without the cloud layer, the enterprise would not achieve the required automation and orchestration for the next layer, known as the data layer, that comprises bid data and analytics.

The above modules of enterprise digitalization are planned and implemented according to the enterprise’s characteristics and requirements. For example, the blockchain may not be urgently needed for common enterprises and can be temporarily omitted until there are suitable applications being introduced and can be integrated into the enterprise’s operation.

For example, social media will never be an internal self-operated system for enterprise. Since it requires a massive traffic flow as a base to exert influence; enterprise just needs to adopt social media platforms like Facebook, Twitter, LinkedIn to establish communication with the outside world. Since it involves the company’s public relation policy, and if a company is a B2B enterprise or focuses on industrial products rather than consumer goods, the application of social media is less so important, or it only needs to make good use of some specific social media such as LinkedIn, as the search and supplement of its talent pool.

Of course, some of the modules in the Diagram are sequential. For example, the cloud is the starting point, and Big Data should precede Artificial Intelligence.

In the process of enterprise digitization, it does not necessarily need to start with a specific department. It can be the Production department, the HR department, the Warehouse or the Logistics. The system needs to more or less incorporate some technological modules mentioned above, for example, some mobile Apps, as real-time communication, approval process, notification and claim platform between departments, subordinates and superiors; and even extended to customers and suppliers.

Since there are so many possibilities and flexibility, how to proceed? I suggest that from now onwards, any new systems to be installed can use the above eight technological modules as a reference point but not necessary a system to contain all the above main modules. It is more important for the management to review any new systems to ensure that they meet the Six Thought Points mentioned in Clause 5.0 as the key guideline.

Sometimes it’s hard for business owners to keep up the pace with the rapid development of ICT. They realized the necessity to adopt technologies; but have difficulty to kick-start. In fact, for business owners, knowing technology in details is least important; what is more important is to grasp the concept and development context of information technology, and what changes it can bring to the company, and to compare the needs of the company to the right technologies.

For example, in the past, the Computer Department of an enterprise was the maintenance department of the system, responsible for ensuring the normal operation of computer software, hardware, databases, and networks; but in the new era, the major functionality of Computer Department is no longer handling the system maintenance. Today, Computer Department must be able to participate in company operations, such as how to digitally market company products, how to make the company’s products smarter, and spread the digitalization traits to everywhere in the company for better efficiency and productivity. One thing for sure, when the system moves to the cloud, the hardware, network, database, etc. no longer need to be maintained by internal computer technicians and free the department for operation participation, but with smarter people in order to prepare for the future of intelligent enterprise.

About Author:
Teh Hon Seng, Group CEO of TimeTec Group of Companies. Prior to forming TimeTec, Teh led PUC Founder (MSC) Bhd to be listed on MESDAQ (ACE) market of Bursa Malaysia in 2002. Teh initiated the R&D in fingerprint technology in 2000, which later developed into a renowned global brand for commercial fingerprint product known as FingerTec. In 2008, he foresaw the trend of cloud computing and mobile technology, and over the years, he had strategically diversified and transformed its biometric-focused products into a suite of cloud solutions that aimed at workforce management and security industries including smart communities and digital building system that centered around the cloud ecosystem. Teh has more than 20 patents to his name, and he is also a columnist in a local newspaper and a writer of several books.