DX conversion is a term that refers to a state in which a company has achieved DX (digital transformation) or has strengthened its competitiveness as a result of promoting DX. This time, we will explain what DX is in the first place, how it differs from IT, the benefits that can be gained from DX, and examples of success in promoting DX.
What is DX conversion? Definition of DX and background of its attention
DX transformation is a term that refers to a state where DX (digital transformation) has been realized and the competitiveness of each company has been strengthened. So, let’s take a closer look at what DX is and why DX and DX conversion are attracting attention right now.
DX stands for digital transformation.
DX (digital transformation) refers to the transformation of people’s lives for the better through the penetration of digital technology. According to the Ministry of Economy, Trade and Industry’s definition, it means using data and digital technology to analyze market needs and transform products, business models, etc.
Reference:
Ministry of Economy, Trade and Industry “Digital Governance Code 2.0”
By realizing DX, the business itself and processes often change. However, a characteristic of DX is that any change will increase a company’s competitiveness.
Background to why DX is attracting attention
According to a report released by the Ministry of Economy, Trade and Industry in 2018, if the situation in which DX cannot be achieved continues, economic losses of up to 12 trillion yen a year may occur from 2025 onwards. The Ministry of Economy, Trade and Industry called this potential economic loss the “2025 cliff” and appealed to companies the importance of digital transformation. As this report was featured in various media, DX conversion started to attract attention.
On the other hand, factors that hinder DX conversion include the structure of existing systems. Traditional systems are often built for each department, making it impossible to utilize data across the entire company, and are often complicated by unique customization. These may be factors that hinder the introduction of the systems necessary for DX conversion.
Additionally, implementing a new system may not only change the content of your work, but also the scope of your work. For example, in the past, marketing and sales operations were clearly separated. However, if MA (marketing automation) tools are introduced to automate marketing through DX, the scope of work between the two departments will become unclear, and the areas in which they will cooperate will increase. Some employees may find it difficult to accept changes in the content or scope of their work, or may feel uncomfortable if they find it difficult to respond.
Despite these problems, it is important to move forward with DX. This is because DX enables companies to increase their competitiveness, build efficient business processes, and provide new value to the market. In order to survive in the coming era, efforts toward DX conversion are essential.
What is the difference between DX conversion and IT conversion?
A word similar to DX transformation is
IT
transformation. Digital and IT are sometimes used interchangeably and can be confusing, so it is important to distinguish between them.
IT refers to the use of IT technology to digitize analog work such as manual work to improve operational efficiency and reduce costs. On the other hand, DX transformation means using digital technology to transform services, business models, and the business itself. In other words, IT can be said to be one of the means of DX transformation.
Digital technology related to DX conversion
Utilizing digital technology is essential to promoting DX.
However, it is not a good idea to blindly introduce digital technology. In order to successfully implement DX, it is important to know the differences between digital technologies and incorporate them in a way that suits your company.
Next, we will introduce the main digital technologies used for DX conversion.
AI, machine learning
AI (Artificial Intelligence) refers to computers that have human-like thought processes, or computers that artificially reproduce human intelligence and perception. However, in modern times, the definition of AI is not clear due to the interplay of various values, and it is being discussed in diverse fields such as computer chemistry, psychology, and philosophy.
Furthermore, there is still no AGI (Artificial General Intelligence) that can address all problems. AI that can handle multiple fields and AI that has abilities that exceed humans in specific areas such as calculations and algorithmic trading have been born, but in reality, all of them have limited abilities and are far from being omnipotent. By the way.
Machine learning, on the other hand, is a method of inputting large amounts of data into a computer and discovering patterns and rules from that data. Equipped with machine learning capabilities, computers will be able to not only analyze existing data, but also predict events that may occur in the future and make appropriate decisions when certain events occur.
Both AI and machine learning are essential elements for DX transformation. By collecting large amounts of data and analyzing it using AI and machine learning, you can optimize your business, reduce costs, and improve operational efficiency.
cloud
Cloud
is a system that allows data and services to be provided and used online using the Internet. Introducing a cloud system makes it possible to store large amounts of data and share it within a group.
Collecting large amounts of data is essential to accurately analyze market needs. In order to safely store and operate data, it can be said that the introduction of the cloud is necessary.
In addition, by managing data on the cloud instead of storing it on a specific computer, companies and departments can not only centrally manage data, but also prevent malicious access from outside.
5G
5G (fifth generation mobile communication system) is a communication standard used for communications such as mobile phones. Compared to conventional communication standards such as 4G and 3G, it has the ability to communicate large amounts of data at high speed.
If you prepare a 5G communication environment, it will be possible to quickly handle large amounts of data during DX, and you will be able to realize more speedy business.
IoT
IoT (Internet of Things) refers to home appliances and tools that are connected to the Internet. Things that were not originally connected to the Internet are now able to connect and share information via the Internet. By introducing IoT, you will be able to quickly understand equipment malfunctions and add new functions.
Collecting data with IoT is also useful for companies that manufacture and provide IoT products. User usage data can also be used to schedule repairs, discover new needs, and discover product improvements.
Four benefits of DX conversion
By implementing DX, you can obtain the following benefits.
1. Improved work productivity
2. Can improve corporate competitiveness
3. Be prepared for risks such as disasters and system failures
4. Leads to promotion of work style reform
All of these benefits are essential for the development of a company. Let’s take a closer look.
1. Business productivity improves
One of the means of converting to DX is IT. By implementing IT, routine tasks can be automated and business productivity can be improved. For example, if inspection work can be automated, the speed of inspection can be improved and the time from production to shipment can be shortened. In addition, since inspection can be performed with higher accuracy than human visual inspection, product return rates are reduced and productivity is improved.
In addition, productivity can be improved by implementing DX in various daily tasks. The accuracy of work will also increase, and the company’s social credibility can also be expected to improve.
2. Can improve corporate competitiveness
Advances in technologies such as AI and 5G are expected to significantly change user needs and consumer behavior. If you promote DX and strive to understand market needs through data analysis, you will be able to create new business models that respond to market changes and improve your corporate competitiveness.
Improving business productivity can also increase a company’s competitiveness. If production costs are reduced by automating routine tasks and saving labor in production, it will be possible to set the prices of products and services at highly competitive prices.
Furthermore, the money saved due to lower production costs can be used for advertising expenses, etc., so you can expand your business more efficiently.
3. Be prepared for risks such as disasters and system failures
In Japan, where there are many natural disasters, BCP measures are becoming increasingly important. BCP is a plan to minimize business interruption and ensure business continuity even in the event of a disaster or large-scale system failure.
If DX advances business automation, labor savings, and cloud management of information, the risk of business interruption due to disasters can be minimized. Furthermore, by building a business structure that is less likely to be disrupted by disasters or large-scale system failures, productivity declines can be avoided. Therefore, early recovery from the disaster will be possible.
4. Leads to promotion of work style reform
If it becomes possible to shorten work hours by promoting DX, overtime hours will also be reduced, and work style reform will be promoted. Making it easier for employees to take leave according to their circumstances is another way of working style reform.
Additionally, if you can build a system for online communication both inside and outside the company, telework will become possible. If telework becomes more widespread, people who live far from the office or those who find it difficult to leave their homes due to housework or nursing care will be able to work, which will lead to the promotion of work style reform.
What are the challenges when promoting DX?
Promoting DX conversion will bring benefits such as improving the productivity and competitiveness of corporate activities. However, in order to obtain the benefits, it is necessary to clear the following challenges.
Let’s take a look at the main challenges in promoting DX and the initiatives that will lead to solving them.
Securing human resources and funds to promote DX
By promoting DX, if productivity can be improved and labor savings can be achieved, costs can also be reduced.
However, in order to promote DX conversion, the initial cost of introducing systems etc. is required, so the cost reduction effect will not be realized until a considerable amount of time has passed after DX conversion. . If you decide to develop a system tailored to your company’s situation and needs, rather than implementing an existing system, you will need not only funds but also a large amount of time.
In addition, to promote DX, we need human resources who are familiar with the latest digital technology and IT knowledge. Many companies are promoting DX, so the need for DX human resources who are familiar with digital technology and IT is extremely high, and it may be difficult to secure the necessary number of people.
There are ways to train internal human resources to be suitable for DX, but training not only costs money but also takes time, and there is a risk that rapid DX implementation will not be possible.
Furthermore, the outflow of DX human resources is also raised as an issue. There is a possibility that the human resources that you have secured or the excellent human resources that you have developed within your company will leave your company for some reason and will no longer be able to be used as a force for DX transformation. Therefore, while working on securing and training human resources, it will also be necessary to take measures to prevent outflow.
Aging and bloating of existing systems
Many companies have already introduced systems for purposes such as customer management and business automation.
However, the operations performed by the system are often limited, and it is generally not possible to use it widely across internal operations. Introducing a new system requires a fundamental change in business content and procedures, and the presence of existing systems that are outdated or bloated can become a hindrance to promoting DX.
In addition, repeated in-house customization of existing systems can result in complex functions, which can prevent the introduction of new systems. Before implementing DX, it is necessary to identify the existing system structure and corresponding operations.
Even after introducing a new system that enables DX, issues remain. It is important to prepare all employees for new tasks using new systems.
Not only does it take time to get used to the job, but it is also expected that you will make more mistakes. In the worst case scenario, if a major mistake occurs, you may lose the trust of your business partners, and confusion within the company may lead to a significant drop in productivity and economic loss. Therefore, before introducing a new system, it is necessary to list all possible problems and come up with countermeasures.
Reference:
Ministry of Economy, Trade and Industry “DX Report – Overcoming the IT system “2025 cliff” and full-scale development of DX”
Ensuring information security
Ensuring information security is a major issue when promoting IT in business operations. For example, going paperless and sharing and managing documents in the cloud increases convenience for employees, but also opens up malicious access from outsiders. In order to strengthen security, efforts such as thorough security education for employees and the introduction of new technologies and tools related to security measures are required.
The cost of security measures also needs to be considered. In order to prepare for various possible risks, you must build a security system tailored to your company’s situation. You will also need to pay for consulting with experts to build your own system, system maintenance costs, and support services when problems occur.
To avoid compromising information security due to budget shortages, be sure to include security system construction and maintenance costs in your DX budget.
3 steps to advance DX conversion
DX conversion will proceed in the following steps.
1. Clarify the purpose of DX conversion and share it within the company
2. Build a system to promote DX
3. Analyze and utilize data obtained from DX conversion
We will explain each step in turn.
1. Clarify the purpose of DX conversion and share it throughout the company
It is necessary to avoid a situation where you blindly tackle DX conversion and end up incurring costs but not seeing any tangible results. Instead of thinking, “We should convert to DX to keep up with the times,” let’s proceed with DX to achieve a clear purpose. For example, clearly determine the purpose of DX conversion, such as to create new business or improve operational efficiency.
It is important that the purpose of DX conversion is shared not only by the personnel and departments involved in the business, but also by the entire company, including management. In particular, management is required to have a thorough understanding of objectives. If management understands the purpose and understands the need for DX, the next step, securing the budget, will go smoothly, making it easier to realize swift and effective DX.
2. Build a system to promote DX
After sharing the purpose of DX, the next step is to build a system to promote DX. We will create a system to realize DX, such as securing DX human resources and budget, and creating plans. It is also necessary to identify potential problems and prepare countermeasures in advance.
After building the system, it is time to realize DX. We will introduce a system and each employee will put into practice work styles that suit the new system.
3.Analyze and utilize data obtained from DX conversion
The data obtained through DX conversion will be analyzed and used to understand market needs and customer reactions. This may lead to new business opportunities. The important thing is to not miss opportunities, to react sensitively, and to respond quickly.
Among the DX transformations, the DX transformation of web marketing is important. Utilizing the web system, we discover, acquire, and develop potential customers, leading to smooth sales.
The following material is an easy-to-understand guide on web marketing for BtoB companies. Web marketing is an essential method for increasing a company’s competitiveness. Please take advantage of it.
From small to medium-sized businesses to large corporations! 5 successful examples of promoting DX
By promoting DX, many companies are able to accurately grasp market needs, increase their competitiveness, and achieve growth. Therefore, we will introduce successful cases of DX promotion. Please use this as a reference for the direction and how to proceed with DX promotion.
1. NISSYO Co., Ltd.: A pioneer in promoting DX in small and medium-sized enterprises
NISSYO Co., Ltd., which manufactures transformers, felt a sense of crisis in securing human resources. Since the number of employees is around 150, even the loss of even a few employees will result in a major loss of strength for the company as a whole. It was thought that if the working population decreased in the future, it would become even more difficult to secure human resources.
Therefore, we created a system in which we distributed a tablet device to each person so that they could easily do paperwork and other tasks at hand. Furthermore, by introducing RPA (Robotic Process Automation), we have simplified and optimized back office operations.
In addition, NISSYO Co., Ltd. clearly states that by realizing DX, a portion of the expected profit increase will be returned to employees, which will also improve employee motivation. There are various factors that can be cited as the reason for the success of DX transformation, but one of the most important factors for success is that employees were thoroughly informed about the purpose and specific initiatives of DX transformation.
Reference:
NISSYO Co., Ltd. “Our DX initiatives”
2. SoftBank Corp.: DXing human resource allocation after recruitment
SoftBank Corp., which hires many people every year, decides where to be assigned based on each person’s experience and subjectivity. However, there were many cases where employees were unable to perform as expected, resulting in a drop in productivity or being transferred to another department within a short period of time.
Therefore, SoftBank Corp. introduced a “People Analytics System” to support decision-making regarding assignments, and implemented DX in human resource allocation. With the introduction of this system, it has become possible to decide where to assign personnel from a perspective that was previously unnoticed, enabling more objective and fair decision-making.
Reference:
Softbank News “DX wave is also spreading in human resource allocation.Supporting assignment decisions based on personality match rate between people and departments”
3. Honda Motor Co., Ltd.: Developed in-vehicle communication module
Honda Motor Co., Ltd. has developed a system that uses IoT modules installed in cars to grasp and collect vehicle information in real time. This system makes it possible to centrally manage vehicle conditions, fuel efficiency, and mileage, making maintenance and repairs more efficient.
There are many benefits to this system for vehicle owners as well. This is because it is possible to accurately grasp the condition of the vehicle at all times, allowing early maintenance and repairs, avoiding major repairs, and reducing vehicle maintenance costs.
Reference:
Honda official website “New generation connected technology “Honda CONNECT””
4. Asahi Kasei Co., Ltd.: Formulated “DX Vision 2030”
Asahi Kasei Corporation has formulated “DX Vision 2030” with the aim of “by 2030, using the power of digital to connect across boundaries and co-create a ‘healthy life’ and a ‘future for the earth full of smiles.’” .
Asahi Kasei has introduced various measures and systems to achieve this goal. One of these is the “Open Badge System”. By making skills visible, we encourage voluntary learning and help existing employees grow into human resources who have acquired DX techniques and knowledge.
Reference:
Asahi Kasei Co., Ltd. “Digital Transformation”
5. Otsuka Pharmaceutical Co., Ltd.: Developed medication support system
Otsuka Pharmaceutical Co., Ltd. has collaborated with NEC (NEC Corporation) to jointly develop a system to support medication management (Pletal Assist). This app is designed to prevent patients from forgetting to take their medication.When it is time to take their medication, a light on their smartphone will flash to notify the patient that they have forgotten to take their medication. If you operate the device after taking the medication, not only will your family be notified of the medication via the app, but medical personnel will also be able to check your medication history.
Depending on the disease, forgetting to take your medicine can make your symptoms worse or cause them to reoccur. DX can be said to be useful in protecting the health of patients and reducing the burden on medical professionals and their families.
Reference:
Otsuka Pharmaceutical Co., Ltd. “Domestic application for specialized containers compatible with the Pretal Assist System, which supports daily administration of drugs to prevent recurrence of cerebral infarction”
Aim to improve operational efficiency and corporate competitiveness with DX conversion
If operational efficiency and productivity improve through the realization of DX, the competitiveness of companies will also improve dramatically. Building new business models that reflect market needs through data analysis and other means will also lead to improved competitiveness.
There are challenges associated with DX conversion, such as funding and human resources, but overcoming these challenges one by one and working on DX conversion at an early stage is an essential element for a company to achieve sustainable success. is. Not only management but also employees are required to understand the importance of DX, clarify specific goals, and work together as a company to realize DX.
In addition, DX conversion can also be realized from familiar fields. For example, using web marketing to efficiently acquire leads will improve your company’s strength and increase future sales. Let’s introduce tools suitable for your company’s situation and move toward realizing efficient DX.
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