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Let’s know the purpose of DX|Explanation from the difference with IT to the promotion steps

Isn’t there a lot of readers who think “I want to know the purpose of DX”?

If you understand the purpose of DX,

  • The direction of our DX promotion becomes clear
  • You can prevent the situation where the goal is not clear and the DX is stalled on the way

There are advantages such as

Therefore, this time, while explaining the purpose of DX and the reason why it is necessary to promote DX, we will explain the three promotion steps of DX and the difference from digitization .

Table of Contents

  • DX definition
  • Difference between DX and digitalization
  • Reason why a purpose is necessary to promote DX – DX is just a means –
  • Purpose of DX [By occupation]
    • Purpose of DX in HR/Accounting Department
    • Example of the purpose of DX in the sales and marketing department
    • Example of the purpose of DX in the development department
  • Two purposes for promoting DX by the Ministry of Economy, Trade and Industry
    • 1. Addressing the 2025 Cliff
    • 2. There is merit of new value creation
  • 3 steps to promote DX to avoid failure
    • Step 1: Clarify your vision
    • Step 2: Analyze the current situation and find your company’s strengths
    • Step 3: Develop a strategy to close the gap between what you want to be and where you are now
  • summary

DX definition

DX is “using technologies such as AI and IoT to transform business processes, products, services, businesses, and management . 

To put it another way, it is “to promote the transformation of products, services, and business models using digitization as a ‘means’ . ”

Difference between DX and digitalization

The difference between DX and digitization lies in whether digitization is viewed as a “ means ” or as a “ purpose ”.

  • DX: Transformation of products, services, and business models using digitization as a “means”
  • Digitization: Promoting digitization with the “purpose” of improving operational efficiency

In other words, digitization is one of the means to realize DX. In this way, DX and digitalization look the same at first glance, but they actually have completely different meanings.

Reason why a purpose is necessary to promote DX – DX is just a means –

It is often misunderstood, but DX itself is not the purpose, but “DX = means” .

Therefore, it is necessary to clarify the “purpose (goal)” of what kind of internal issues you want to solve with DX .

If you proceed with DX without clarifying the purpose, you may blindly introduce various digital tools, which may end up costing you money.

Again, DX is just a means necessary to achieve some kind of goal . In order to visualize the degree of achievement of DX promotion, it is recommended to set numerical targets after setting objectives.

Purpose of DX [By occupation]

From here, we will introduce the purpose of DX by occupation.

This time, we will introduce the following three.

  1. Purpose of DX in HR/Accounting Department
  2. Example of the purpose of DX in the sales and marketing department
  3. Example of the purpose of DX in the development department

I will explain each.

Purpose of DX in HR/Accounting Department

While the human resources and accounting departments handle extremely important data such as financial statements, employment contracts, and onboarding documents, the reality is that they often process that data on paper.

According to the ” Reimbursement and Payment of Expenses Survey ” conducted in March 2021 ,

  • 64% of workers answered that they were asked to submit paper receipts when reimbursing expenses
  • 24% of people who need to come to the office for procedures at the time of settlement

The result is out.

Issues that arise due to data processing on paper

  • Occurrence of input errors in important data due to manual input
  • Stamping paper documents hinders the realization of telework

and so on. Therefore, DX in the HR/Accounting department can be set to solve the above issues.

Specifically, DX will digitize data and implement approvals on a system instead of paper, which will lead to the prevention of input errors and the realization of telework.

Example of the purpose of DX in the sales and marketing department

Sales and marketing departments can set the goal of DX to improve communication with customers.

For example, introducing chatbots to platforms such as websites and SNS can reduce the burden of conventional customer support.

In addition, the number of channels with customers (mediums and routes for attracting customers) will increase, increasing the possibility of acquiring new customers.

In addition, by introducing a customer management system such as Salesforce, it will be possible to easily view customer information at any time, so we can expect an increase in customer understanding.

Example of the purpose of DX in the development department

If you are in the product development department, you can set the purpose of DX to provide better services and products .

In order to provide better services, it is important to thoroughly analyze customer feedback and use it to improve services. However, if you analyze the customer’s voice only by human hands, omissions will inevitably occur.

Therefore, by using digital technology to perform advanced analysis that cannot be done by human hands, it is possible to visualize needs that were not visible before and improvement points of existing products in more detail .

Two purposes for promoting DX by the Ministry of Economy, Trade and Industry

The Ministry of Economy, Trade and Industry promotes DX for two purposes: ” to deal with the 2025 cliff ” and ” to have the merit of creating new value .” I will explain each.

1. Addressing the 2025 Cliff

The “DX Report” released by the Ministry of Economy, Trade and Industry on September 7, 2018 pointed out that many Japanese companies are facing the ” 2025 cliff “.

* “2025 Cliff”: A term that refers to a decline in the international competitiveness of Japanese companies and economic stagnation that can be expected if the existing systems, which have become complicated, outdated, and have become black boxes, continue to be used. This stagnation is expected to occur by 2025 due to the retirement of the IT personnel who launched the existing system and the termination of support for the system.

If DX is not promoted, it is predicted that there will be an economic loss of up to 12 trillion yen per year after 2025 .

On the other hand, it is also stated that if DX is promoted, real GDP can be expected to increase by more than 130 trillion yen in 2030.

2. There is merit of new value creation

The Ministry of Economy, Trade and Industry has announced the necessity of promoting DX, as DX will lead to an increase in the international competitiveness of Japanese companies .

Earlier, I mentioned that one of the “2025 cliff” problems is the decline in the international competitiveness of Japanese companies due to the continued use of complex existing systems.

By the way, companies that are said to have high international competitiveness have one thing in common: they actively use digital technologies such as AI and data to create new businesses (that is, DX). GAFA is the best example of this.

For example, Amazon predicts what to buy next by learning and analyzing the customer’s order history with AI, and incorporates a mechanism to move the product to a warehouse near the customer in advance so that it can be delivered smoothly to the customer. We are constantly striving to improve the superiority of our services by utilizing technology.

As a result, the market capitalization became the fourth largest in the world (as of October 2020), threatening the global retail industry.

In this way, if Japanese companies can promote DX and create new businesses, it will lead to increased international competitiveness and the resolution of the “2025 cliff problem .”

3 steps to promote DX to avoid failure

From here, we will introduce 3 steps to promote DX properly so as not to fail.

Here are the steps I will show you:

  1. Clarify your goals
  2. Analyzing the Current Situation and Finding Our Strengths
  3. Develop a strategy to fill the gap between the desired state and the current state

I will explain each.

Step 1: Clarify your vision

In step 1, clarify what your ideal company looks like.

This is because by clarifying the direction that the company should aim for and sharing it within the company, employees can aim in the same direction toward DX.

As a result, you can prevent the common failure of DX getting stuck in the middle.

Step 2: Analyze the current situation and find your company’s strengths

The important thing in step 2 is to analyze the current situation of your company and find your strengths.

This is because DX refers to establishing a competitive advantage through digital technology and data utilization. This is because it is important to extend our strengths with digital technology and data.

Specifically, analyze your company’s current situation in terms of items such as business model, products and services, operations, organization, processes, and corporate culture.

Step 3: Develop a strategy to close the gap between what you want to be and where you are now

The important thing in step 3 is to classify DX into digitization and digitalization.

  • Digitization: digitizing analog data
  • Digitalization: Using digital technology to bring about change

The axis of the DX strategy is to clarify the target and the current situation, and consider what kind of flow will be used to digitize analog data and what kind of technology will be combined with it .

summary

This time, I explained the purpose of DX, the promotion steps, and the difference from digitization.

One thing I would like to say here is that knowing the purpose of DX is just the first step in promoting DX .

As mentioned in the “DX promotion step” above, let’s promote DX by establishing a strategy to fill the gap between understanding the current situation of the company and the desired image.

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