What is digitalization?

Date of recording: 23.09..2021.

In this podcast episode, we talked to Sándor Mester about the basics and key concepts of digitalization.

Participants

Sándor Mester - Moderator Mester Sándor
András Tresch - Quattrosoft managing director Tresch András

Note that the podcast is in Hungarian.

Summary

We've been in the market with Quattrosoft for 25 years, and during this time we've gained extensive experience in digitalizing corporate processes. In this podcast episode, we discussed the basic concepts of digitization and their true meaning with Sándor Mester.

How did our story begin?

Quattrosoft initially worked alongside a large company as an external partner, and around 2000 we began to focus on process management. At that time, Lotus Notes was the main process platform, with few alternatives available.

Our first significant process development project was the visa system, which we had to build twice - first before joining the EU, then when joining the Schengen area. This was one of the most complex workflow systems we've ever worked with, requiring numerous integrations. We encountered requirements that even IBM systems couldn't fulfill at the time, so we had to develop the integration ourselves.

Importance of a process-based approach

One of the most important, though seemingly boring to many, parts of development projects is defining processes. If this succeeds, the end result will be good too. The challenge lies in communicating with clients in a way both parties understand.

Business users are mostly economists, not IT specialists, so when we approached them with ER diagrams or objects, they often didn't understand what we were planning. That's why we create materials that users can understand: process diagrams and screen designs.

It often turns out that clients don't have well-defined processes, or existing ones don't consider digital possibilities. In such cases, we help reorganize processes, considering that a paper-based process differs from one with proper IT support.

We had a client who proudly told us that after digitalizing their processes, efficiency didn't increase - in fact, they had to hire two new people because they kept the old processes intact while implementing new digital steps alongside them. This is a typical example of not considering the new possibilities offered by the tool.

The role of the business analyst

Successful digitization projects require three roles: the user, the developer, and the business analyst. The business analyst translates business language into IT language. Without them, developers often misunderstand client expectations.

The business analyst is typically a client employee because it's important that business domain knowledge remains on the user side. If even the business analyst isn't with the company, it becomes difficult to take over the system at the end of the project, as there's no one to verify that the original requirements were met.

Managing resistance to change

A characteristic curve can be observed when implementing any new system: initial enthusiasm, followed by deep apathy, from which we slowly return to the original state. People fundamentally dislike change, and a new IT system inevitably brings change.

The situation is particularly difficult when process regulation changes along with the system. In these cases, adaptation may take up to a year.

The interests of different stakeholder groups - company executives, business leaders, and users - don't always align. Users often resist because systems make their work transparent. We had a client where it was discovered that members of a 5-10 person team completed only two tasks per day on average.

In the long run, however, users also perceive the benefits. For example, they don't need to spend an hour and a half daily searching for information because the system makes necessary data available in one place.

The current level of digitization in Hungary

We recently conducted a survey involving 20 large companies employing over 50,000 workers in total, representing more than 1% of Hungarian employees.

We found enormous differences in digitization levels. Some consider email communication as digitization, while others use integrated ERP systems. There's a very wide spectrum between these two extremes.

Clarifying key concepts

ECM (Enterprise Content Management)

This is an older term; today we refer to it more as a Digital Storage System (DMS). On one end of the scale are shared directories; on the other are document repositories with permissions and other functions accessible only through the system.

Two approaches exist for permission management:

  1. Flexible approach (typical for SMEs): everyone has access to everything unless specifically restricted
  2. Strict approach (large corporations): everyone can only see what's absolutely necessary

IT security considerations strengthen the second approach (zero trust principle), while efficiency considerations favor the first. This is a dynamic balance that must be found in every organization.

Workflow

Here too, the range is wide:

  • Paper-based workflow: walking folder systems
  • Email-based task assignment
  • Digital, visually designable workflows with conditions and events

Email communication poses numerous problems: information can be lost, tasks are difficult to track, and messages may not arrive. It happened that we sent a proposal, but the client didn't receive it, so we always verify by phone that important emails have arrived.

Filing

Filing originally meant recording incoming and outgoing letters in a register. The first electronic filing systems replicated this.

The modern approach is to digitize shipments in the mail room, so administrators work only with digital document images. Physical documents are placed in temporary, later permanent archives.

Digitization can occur at multiple levels:

  1. Scanning: reading a document into a PDF file
  2. OCR (optical character recognition): digitizing text
  3. Intelligent processing: identifying content elements, extracting metadata

For example, with an incoming contract, the system can recognize a barcode, verify the acceptance mark and signature, then automatically update the contract status.

Archives

Archives store physical documents. It's important to know where a specific document is located (building, room, rack, shelf, box, folder), otherwise it will be difficult to retrieve when needed.

Digital archives support archival processes and contain digital images or certified copies of documents. Today, more companies dare to discard papers after certified digital archiving, as courts accept these. Depending on the value threshold, companies decide which documents to destroy and which to preserve in paper form as well.

It's important to archive only what's absolutely necessary because storage is expensive. What can be discarded should be, considering the balance between storage and potential litigation costs.

Automation

This is our main specialty. The essence of automation is that the system executes certain process steps without human intervention.

A typical large company uses 3-4 different systems: a digital document storage system, workflow system, filing system, and physical document management system. These systems contain partly overlapping and partly unique data.

Automation is effective when all relevant data is visible simultaneously. We've developed a system - BürOffice - that combines these data, allowing us to see metadata for process, digital, and physical content. This enables efficient automation.

For example, automatic closing of a contract requires process data (which step it's at), content elements (marked acceptance X), and identifier (barcode). If these are in separate systems, automation becomes difficult.

Results of digitization

The greatest performance improvement we achieved was 2.5-fold - not for a few but for hundreds of users. When calculated for labor costs, this means monthly return on the entire investment.

Digitization means not only cost reduction but also value enhancement: faster, more accurate service, greater customer satisfaction, and a better workplace environment.

Summary

Digitization is a complex process requiring not only technological but also organizational and mindset changes. Besides rethinking processes and selecting appropriate technology, preparing people for change is critical.

With 25 years of experience, Quattrosoft helps clients in this transformation, focusing on a process-based approach. We believe that a good team, good clients, and good cooperation are the keys to long-term success.

Note that the podcast is in Hungarian.