Many of you may be wondering what
DX
is, why you should engage in DX, and what the obstacles are.
Therefore, in this article, for those who have the above questions, we will introduce the definition of DX, the reasons why it should be undertaken, examples, and possible barriers to tackling it. We also cover UX and CX, which may be mixed together, so please refer to this article.
What is DX?
DX is an abbreviation for Digital Transformation, and refers to the concept of enriching people’s lives by penetrating society with IT technology. The origin of the word DX was coined in 2004 by Professor Eric Stoltermann of Umeå University in Sweden, who proposed it in a paper. Recently, the word DX has become commonplace in Japan, and many companies are working on human resource development to promote DX.
In Japan, DX is being actively introduced, and the Ministry of Economy, Trade and Industry created DX recommended guidelines in 2018. The contents are as follows.
“In response to rapid changes in the business environment, companies are leveraging data and digital technology to transform their products, services, and business models based on the needs of customers and society. To transform our culture and climate and establish competitive advantage.”
Simply put, it means using data and digital technology to transform business. In Japan, the word DX is often used in business situations, so it is becoming established as a business term. From now on, especially those who want to work in IT or
marketing
, be sure not to misunderstand the meaning of the word.
Difference with UX
The difference between DX and UX is simple: UX is only a tool to promote DX technology. UX is an abbreviation for User Experience, which refers to the experiential value attached to a product or service for users. Simply put, it refers to the ease of use of a product or service.
In recent years, an increasing number of companies are using the Internet to sell products and services, so it is necessary to find users who precisely match their needs and provide them with the value they need. In doing so, it is necessary to consider what benefits can be gained from the ease of use of the product or service, and UX can be helpful.
The purpose of DX is to make people’s lives more enriching. In order to achieve that goal on a daily basis, it is important to consider UX and DX mutually.
Difference with CX
CX is an abbreviation for Customer Experience. Although it is similar to UX mentioned earlier, CX is broader and includes various support for products and services and convenience at the time of purchase. Therefore, improving CX is important for DX initiatives. It is important to understand that DX and CX work together as two wheels.
Why companies should engage in DX
So far, we have introduced the definition of DX and the differences between it and UX and CX. From here, we will introduce the following three points in detail as to why companies should engage in DX.
Let’s look at them in order.
Consumers now value experiences
The first reason to engage in DX is that “consumers have come to see value in experiences.” In recent years, people are shifting from consuming “things” to experiencing and sharing “things.” To explain in detail, users are focusing on the experience of the moment rather than purchasing and owning a product. This means that I have come to place more importance on things that can only be obtained from other people.
In other words, simply providing products and services is no longer sufficient to meet user needs. Here, DX initiatives are needed as a solution to meet
these needs
.
In order to provide products and services that provide attractive and new experiences, companies whose business performance is sluggish will need to actively incorporate DX.
Unable to launch new business with existing system
The second reason why you should engage in DX is that you cannot launch a new business with existing systems. It is said that it is difficult to launch a new business with the existing systems currently in place at companies. This is because existing systems are becoming increasingly difficult to meet user needs. Additionally, maintaining and developing the system requires a budget, which is not an easy task.
Here, DX initiatives can be cited as a solution. DX actively improves work efficiency and eliminates waste, making it possible to launch new businesses without relying on existing systems. Therefore, DX initiatives are essential for companies.
Business diversification
The third reason why you should engage in DX is that it is influenced by “business diversification.” In many businesses, new services and products are created one after another as new companies enter the business. As a result of this, even top companies that have led the industry up until now often lose market share to new companies that have adopted DX.
The introduction of DX is essential in order to respond to changes and trends without adhering to existing business models.
Why DX is attracting attention
The reasons why DX is attracting attention are as follows.
In the business world, many companies are paying attention to DX. However, there are many companies that are just paying attention but are unable to take action. The reason why they are unable to take action is because they cannot easily change their existing business model, and it is not easy to secure human resources who are familiar with DX. Therefore, the current situation is that there are only a few companies that are actually working on DX.
Examples of corporate DX
So far, we have introduced the reasons why companies should engage in DX and why it is attracting attention. From here, we will introduce DX examples of the following companies.
Let’s take a look at each.
major financial institution
First, I will introduce an example from a major financial institution. At major financial institutions, employees read and processed the voices of each customer one by one until they started working on DX. At that time, there was an issue with the amount of time and budget required for data processing for individual work.
Therefore, major financial institutions have started DX initiatives to solve this issue. By introducing a system for data processing that had previously been done manually, data can now be summarized and categorized automatically, leading to improved operational efficiency and a reduction in the burden on employees.
Internet mail order
Next, we will introduce an example of online shopping. Internet shopping can be said to be a model for DX success. In the past, only products were sold on the Internet, but when online shopping started to become popular, purchasing products was not so commonplace, and the business models of each company were unclear.
However, as shop sites such as Yahoo! and Rakuten began working on DX and created easy-to-use sites, online shopping has become commonplace. In addition, the introduction of a system that can display “related products” and “recommended products” based on consumer data analysis has led to the success of the Internet mail order business.
Possible barriers to working on DX
So far, we have introduced examples of corporate DX. Finally, I will explain the following three points that are obstacles when working on DX.
If you are a company that is thinking about starting DX, or are already working on it but are stuck, please use this as a reference.
Securing human resources who can oversee marketing and IT
The first barrier that can be considered when working on DX is the difficulty in securing human resources who are familiar with both marketing and IT. In recent years, Japan’s declining birthrate and aging population have combined to reduce the workforce and increase demand for IT, resulting in a shortage of marketing and IT-related human resources.
The advantage of having people in your company who are knowledgeable about marketing and IT is that they can keep the system’s PDCA cycle running. In addition, by making full use of IT, we can build systems that are easy for users to use, which will also lead to the establishment of new business models.
There are various benefits to bringing in human resources who can oversee marketing and IT into your company, so be sure to secure them as soon as possible.
Building an IT system
The second possible barrier to working on DX is building an IT system. Companies that have not tackled DX are still using old IT systems, which are costly to operate and maintain. One of the causes of high operational and maintenance costs is the resignation of employees who were familiar with the system. They are unable to work on DX because they have left the company and are no longer able to repair the system in-house, so they have no choice but to outsource it.
The solution is to review the system or introduce a new system as soon as possible. When doing so, create a team that understands the system and keep in mind to build a consistent system. By doing so, it will be easier to operate and maintain it in-house, and you will be able to fully engage in DX without incurring costs.
Securing human resources who can formulate optimal objectives
The third possible barrier when working on DX is securing human resources who can formulate optimal objectives. As mentioned earlier, in Japan, the combination of a declining birthrate, an aging population, and the increasing importance of IT has made it increasingly difficult to secure human resources. As a result, it is becoming difficult to secure human resources who can formulate optimal objectives.
Additionally, as securing human resources takes time and cost, an increasing number of companies are abandoning the idea of recruiting DX-related human resources. At first glance, withdrawing from business may seem like a good decision, but if you want to make profits in business or the IT industry, DX initiatives are essential. This is because companies that are actually working on DX are profitable and successful. If you think you can’t handle it yourself, there is an option to outsource it, but running costs will continue to increase because the technology and know-how will not be accumulated by your own employees.
In order to reduce costs as much as possible, be proactive in securing human resources who can formulate optimal objectives.
Summary: Let’s move forward with DX conversion as soon as possible
In this article, we introduced the definition of DX, the reasons why it should be undertaken, examples, and possible barriers to tackling it. The important points of this article are as follows.
It takes a lot of time to actually work on DX. However, if you execute DX correctly, there is no doubt that it will lead to great profits for your company.
Please understand and put into practice the contents of this article in order to utilize DX and further improve your business performance.