When data is digitized, i.e. made available in digital format instead of analog format, it becomes possible to digitalize the processes using this data. A complete digitalization of all processes changes the way a company can operate, its business model is transformed, and this represents the digital transformation. On a company level this is a major exercise as it impacts many systems and processes. It is therefore often preferred to move ahead with digitalization initiatives as they may be implemented more selectively and faster.
A key reason for digital transformation is, that it allows you to tap into exponential growth. What does that mean in practice? Most companies are used to linear growth. They aim to make incremental improvements to their business by growing revenue and cutting costs with a certain percentage every year. Exponential growth means that the growth accelerates.
How may digitial transformation help you achieve this? Here are three powerful factors:
Exponential technology is technology, which learns and adapts with use and over time. For instance the technology may get faster or may be able to handle more complexity. Or both. Which means the technology in 1 year's time may be 10 times more performant.
As new technology is implemented it will add new capabilities and also change work processes. The requires new skills from the organization, but also enables the organization to focus more on value creation. This grows the organizational perfomance.
As more and more technology connects and exchanges data and intelligence, new business processes and business models become possible. This network effect of the technology will super boost the growth.
Point 3 is not possible until a certain level of technology has been achieved. This happens by repeating steps 1 and 2 many times across the value chain to expand the digital capabilities and the skillsets of the organization. It also means, that there is not one single AI solution. Many technologies will be applied and not all will be AI based, but together they will support the path to full digital transformation. For instance Robotic Process Automation will be the right solution for certain tasks, which in turn may feed into other AI-based technologies. It is not a matter of either this technology or the other, but rather of combining many different technologies and processes to achieve a new level of capabilities.
The diagram below gives a simplified overview of some of the most common categories of tools in trading and procurement. Others may apply and it is likely to find all technologies in different parts of the processes in the value chain.
Acumex' Trade Management System (TMS) supports the digital transformation by providing the required infrastructure for the AI technologies with minimal disruption to current operations. The TMS enables further transformation in processes up- and downstream of the trading processes and may therefore work together with other initiatives towards digitalization.
The Rational Assistant (RA) belongs in the top right corner in the diagram above, that is in the AI category. It operates according to its client's strategy and goals, while learning from the input it receives.