What is Digitalization ?

You can either read Gartner’s definition or spend 45 seconds reading this blog entry.

Look at the way accounting has been and continues to be transformed. Some of you might remember the idea of an accounting machine, a specialized device to speed up accounting, clunky but the best option during it’s time. Still people sitting there, sorting through stacks of papers and at the end of the day you still had to tally and aggregate the results.

As computing advanced, the PC coupled with specialized software made it to the desktop, typically coupled with a backend to store any of the bookings. You still had bookkeepers who would manually enter bookings, validate them and perform a slew of tasks (eg. selecting the right account to book a charge against). Yet the fundamental principle remains the same, dedicated team sifting through tons of line items to get it sorted out. It was quicker and depending on the backend at least you had a joint view on your financial state.

Mobile apps have brought a new quality to the game even to accounting. If you think of a simple task such as claiming expenses you can see that pretty clearly. In a digitalized enterprise employees no longer need to submit receipts physically to claim expenses. A quick scan (photo taken with an app on a smartphone) of the receipt, adding a few extra categories and the data directly gets passed back through to your book keeping backend.

Unlike the accounting machine and the desktop PC which made book keeping & accounting mainly faster, a mobile app which is directly connected to your company’s book keeping system has structurally changed the way you do things. No longer will you have an accountant look at droves of receipts but the employee directly enters the data with a photo and a few clicks on a touch screen (One would recommend a few checks & balances to ensure accuracy & honesty).

Taking it a step further, when an employee would try to submit a receipt, which is over some form of allowance, the app would directly point that fact out. So not only are you reducing part of the middle layer, you have also structurally changed the way you deal with expenses, by directly gathering the information at source, transforming it into a digital medium and having it added to the book keeping systems in almost real-time. Also instead of any back-and-forth you are giving the employee an immediate feedback in case a budget / policy directly at the time of it being claimed.

This is key for making an enterprise digital, it’s not just about speed and making things quicker, but also at structurally changing the way employees and customers interact with your firm. Typically the smaller (or more accurate the younger) a firm is the more likely it will be further ahead in the area of digitalization. But like most areas, it’s never too late to get going.