The Digital Operating Model is one of seven tools designed to help customer service companies develop their business in the digital age. Adopting a “high-priority digital policy” makes digitalization issues part of the main business sectors and enables organizations to redefine their relationship with customers.
Customer-oriented organizations (companies) have a complex set of services that communicate with customers through different communication channels: call centers, sales and service centers, marketing processes, advertising campaigns, communication with customers, etc.
In many cases, multiple teams are responsible for digital operations in one or more business units. Challenges related to the coordination of digital operations often lead to inconsistent functions for organizations. These include inefficiencies in processes and infrastructure, security concerns, higher operating costs, and poor digital customer service.
As companies try to create a distinctive experience by increasing digital activities, the lack or lack of coordination in allocated resources or prioritization creates obstacles to the implementation of operations and innovation.
The ability to provide a good, high-performance digital experience for the customer enhances your business model and enables you to implement strategies.
Advantages of digital operating models
Organizations and companies with a digital operating model and strong execution capability can achieve the following:
Agility, speed, and innovation at scale
With a powerful operational model, digital strategies can be implemented quickly and at scale. With simple processes and a suitable governance model, it will be possible to reuse assets and expand innovation.
Before implementing a process or project in the whole organization, it is possible to implement activities and projects on a trial basis and in the form of a limited part of the organization.
Improve sales and customer relations
Coordination in an operating model enables companies to find a common view of customer interests, needs, and preferences regarding all product services. This issue can lead to improving customer interaction and increasing sales opportunities in various ways.
Reduction in costs
If the operating model is defined well, it will save money. By using a strong operational structure, companies can perform their activities with the optimal use of resources, which will only be possible with the maximum use of the organization’s digital talent.
A practical guide to the digital operating model
Determining the effective model for a business is always challenging, but it is important to think as much about the resources needed to implement strategies as it is about formulating strategies.
Before the company decides which model to choose, the following basic questions must be answered:
Is it reasonable to centralize activities, and should it be done to the extent of this centralization?
What should be the amount of organizational maturity in digital activities?
What role does the digital operating model play in the company’s future business plans?
The degree of focus that a company chooses for its digital operating model depends on the following factors:
- Its priorities
- Optimal control level
- Business model (global vs. regional)
- Cooperation from the customer’s point of view
Also, companies should consider how their approach can lead to the development of digital skills. New methods in customer management and advanced and cost-effective changes in technologies are among these approaches.
Companies can choose one of the four digital models (next figure) according to their needs
Each model has a dedicated digital license within (or across) business units to coordinate operations and implement strategies.
Choosing a digital model is not an unchangeable issue because, despite the growth and changes in organizations, it should always be possible to choose different and more appropriate models.
Decentralized model
If the organizations (companies) intend to develop and implement their digital strategies at the level of business units and concentrate individually, they will use this model.
Advantages:
- Digitalization strategies, resources, and assets are at the disposal of business units.
Disadvantages:
- Companies have little opportunity to reuse digital assets or their content
- It has a long development cycle and little flexibility.
IT costs will grow.
Shared Services
Digitization of activities has a low priority.
In this model, each business unit manages its digital activities and priorities. Stand-alone business units have their digital marketing services as well as separate digital technology investments, while shared services focus on operational IT infrastructure.
Advantages:
- The digital strategy is designed and developed close to the requirements of the business unit.
- It helps to gather a set of skills in one section. And leads to the speed and flexibility required in responding to problems related to digital technology in different business units.
- It reduces costs to some extent.
Disadvantages:
Each business unit is responsible for activities related to the digital field, and therefore success depends on effective cooperation between the two organizations.
Center of Excellence (COE)
Digitization is a high priority.
COE provides a central help desk to access digital skills and deliver them to different business sectors.
Different business departments set their digital strategy and manage their respective digital technologies.
While COE standardizes applications, processes, data, and business activities, it helps to further integrate the organization’s digital activities.
The COE provides a range of digital services (eg social media, data analytics) and marketing campaigns across the organization’s business units.
Advantages:
- Centralized access to digital skills and service delivery and help to improve IT and coordination in different business sectors
- Adapting to choosing the best practices among business units (matching yourself with the best work experiences)
Disadvantages:
- Providing double reports may cause concerns in doing business.
It requires a complex governance model.
Centralized model
Digitization is the core of the business.
The specifications of this model are as follows:
- Digital products and services are well integrated across channels
- In this model, information technology infrastructure and business services are concentrated.
- A dedicated team is responsible for formulating and implementing the digital strategy.
- The entire business of the organization has been moved to a standard digital infrastructure. which allows for fast and cost-effective implementation of new campaigns and digital tactics.
- Business services include a range of complex capabilities such as digital marketing outsourcing, loyalty management, and data analytics as a service.
- In the first step, marketing communications are designed for digital channel infrastructure and then made available to others.
Advantages:
- Business agility enables growth, cost reduction, and innovation.
- Intending to implement strategies in the organization, this model causes concentration by using resources and requirements.
Disadvantages:
- The priorities of a small business unit may be considered lower than the priorities of other large business units.
Creating capabilities related to an efficient operational model based on digital technologies
Choosing a digital operating model is not enough to create high performance, regardless of the chosen digital model, institutions, and companies need to develop a strong digital driver within their internal business units.
In the following, some capabilities of an efficient digital advertising model are mentioned:
Innovation, strategy, and governance
- Creating focus and leadership in formulating and implementing digital strategies
- Creating digital governance and understanding customer insights
- Digital innovation by collecting and sharing digital ideas that can originate anywhere.
Being executive and specialized
- Being responsive to technical issues and implementing projects in digital formats
- Responsibility for the deployment of each service as well as the results of providing services to customers
Digital Foundation
- Planning, building, and maintaining the necessary infrastructure for all data, content, and technologies in the company.
Digital management
- Management of processes, priorities, and methods of deployment of digital elements, maintenance of logistics aspects, coordination of projects, and management of customer experiences.
Change management
- Management of organizational changes and communication related to the organization and digital strategies
Digital knowledge management
- Organizing, archiving, and publishing documents related to customer management as well as standards and digital technical documents produced by specialized groups of the organization.
The digital implementation model that covers all the above areas is one of the most important driving engines for advancing the goals of any organization.
Professor Siavosh Kaviani was born in 1961 in Tehran. He had a professorship. He holds a Ph.D. in Software Engineering from the QL University of Software Development Methodology and an honorary Ph.D. from the University of Chelsea.
