Digitalization in Russian: How ready are Russian companies to implement new technologies in business
02.07.2024 17:15
Today, the introduction of new technologies is becoming a necessity for the development and sustainability of business.
The growth rate of innovation is about 40% per year and will only increase in the near future.
Digitalization is the foundation for digital transformation, which can be a lifesaver for businesses in the face of technological revolution. This process requires planning and serious preparation, but the stronger the foundation is laid, the more efficient the company will be in the future.
Why the lack of digitalization threatens the existence of a business, how Russian companies perceive the introduction of technologies and what to do to ensure that this process goes smoothly and brings economic benefits - said the head of IT projects, director of digital transformation Yulia Bazhanova .
How Russian companies perceive the trend towards digitalization
We are now in the era of the fourth industrial revolution, which began in the world about five years ago.
Photo: Pixabay
Due to the difficult geopolitical situation, a large amount of software, equipment, components and chips have ceased to be supplied to Russia. Given the latest package of sanctions, even consulting assistance has become unavailable. All these factors are forcing the Russian market to adapt to new conditions.
Digitalization of business involves the implementation of advanced technologies such as blockchain, data analytics, the Internet of Things, automation and artificial intelligence to improve the efficiency of any activity.
Unfortunately, today more than 70% of companies start digitalization only in case of urgent need. This process is often perceived negatively, as it requires significant financial investments, which companies may not have. Faced with the need to find a budget, organizations are forced to optimize and cut other expenses.
The remaining 30% of companies are optimistic about digitalization. As a rule, these are startups that are performers and contractors for the implementation of technologies. They are flexible, with a small staff, which allows them to quickly adapt to everything new, unlike “slow” giants such as mining, oil and gas, etc.
However, now even such complex industries as fintech and medtech are moving towards digital transformation at a rapid pace: creating electronic Internet platforms, developing an online presence and improving customer service.
Companies that are optimistic about digitalization reap significant benefits. They see the potential for increased profits due to the desire to develop much more actively than with motivation from deficit. This seemingly coaching approach also works in relation to business automation.
There is a saying: "Eyes like Studebaker headlights." The Studebaker automobile was created by a company that once produced horse-drawn carriages and then made an innovative transition to creating cars with an internal combustion engine.
But despite this rise, Studebaker did not want to go further. While new technologies began to transform the world, the company decided to stay put, not adapting to the new trends of the digital breakthrough and, unfortunately, could not withstand the competition and closed.
Leading organizations see digitalization as an opportunity to increase budgets, improve margins, and outpace competitors who are slow and reluctant to adapt to new technologies. Companies that have successfully implemented automation are starting to take leading positions in the industry.
Difficulties of digitalization faced by Russian companies
Misunderstanding the essence of digitalization
Today, many agreements, contracts and collaborations are full of the terms “digitalization” and “digital transformation”, but even the heads of large businesses sometimes do not fully understand what this is. Often these concepts are considered the same, although in practice they are different processes.
Digitalization is only the first stage of transformation. Its beginning and foundation. Therefore, it is important to first study what these activities consist of, how they differ, and how they are carried out.
Lack of analytics in the industry
Digital transformation cannot be carried out in isolation from the economic indicators of a specific industry. The lack of analysis leads to the failure of strategic plans, which is confirmed by examples of companies that have lost multi-million dollar budgets due to the wrong approach to digitalization.
It is important to look at how ready a particular industry is for a particular change, as well as to adapt to the current market and changes in legislation.
Underdeveloped technological infrastructure
For successful digitalization, and subsequently digital transformation, a modern infrastructure is necessary.
Many are hampered by the lack of integrated systems. Employees use 30 applications for different tasks, which ultimately creates chaos, increases the risk of human errors and, as a result, the loss of clients. Instead, it is better to implement a single, secure and convenient software, where each specialist will solve their own problems.
Limited budget
Budget is one of the main obstacles to digitalization. The process of implementing new systems, changing business processes and training employees requires significant financial investments.
Companies must be prepared to include such expenses in their budget items on a permanent basis. This is a necessity dictated by the market conditions and the technological revolution. If you are not willing to change, there is a risk that the company will quickly become lost among competitors and eventually simply close down.
The costs of implementing new systems, changing business processes, training people, attracting qualified managers and executives are an investment in the future sustainable development of the company.
Bureaucratic red tape
Public procurement and project procedures often make it difficult to implement digitalization due to formalism and regulatory issues. Companies must take into account economic realities and new legal regulations in order to win large contracts.
Lack of corporate culture and communication
The culture of interaction between specialists and top managers is changing: they are starting to constantly use chats, and personal communication is gradually disappearing. People feel like they have completely switched to digital.
But despite the fact that the Internet has entered everyone's life, we must continue to hold corporate events, quizzes, cook dinner on Fridays, organize runs, swims, etc. And the company can provide the digitalization process with live meetings, which will help people feel like an important part of the team.
Companies that successfully overcome these challenges become more competitive, flexible and attractive to talented professionals. Their approach helps to gently change the business model, make more profit, provide their employees with attractive working conditions, which increases the status and reputation of the company.
What to do to ensure the digitalization process goes smoothly and efficiently
Planning and strategy
Every successful business starts with a plan, and digitalization is no exception. Companies must develop a clear strategy that aligns with their business goals and identifies priority areas for technology implementation.
It is necessary to create a plan taking into account deadlines, workloads, metrics, systems, budgets and risks, and to conduct regular reviews.
Investments in technology
It is important to invest the budget in modern equipment, chips, servers, cloud solutions, in the development of digital platforms and artificial intelligence, as well as in research (R&D) and R&D. It is necessary to implement an analytics system, because working with AI requires high-quality data.
All this will allow you not only to follow trends and tendencies, but to create them and be the first on the market.
Qualified personnel
Despite the drive for automation, people remain the company's most important resource. It is important to maintain live communication, organize offline meetings and corporate events.
And here again investments are needed: in trainings, courses, in education and advanced training, as well as in the development of HR departments. Training of employees in new technologies and business processes should be systematic and transparent.
Cybersecurity
As the volume of digital data increases, so does the risk of cyber attacks. Over the past few years, it has become clear that a company can quickly lose data due to leaks and hacks. This has a significant impact on the reputation, monetization, and share price of the enterprise.
In order to fully ensure protection, components, chips, additional data centers and servers are required. The infrastructure must ensure uninterrupted storage of data, their subsequent recovery in the event of an attack.
Monitoring and analysis
Process monitoring of digitalization results allows you to make timely adjustments, find out what went wrong and the reasons for deviations from metrics. Data analytics helps to evaluate how the adaptation process, changes in corporate culture and employee training are going, as well as quickly respond to changes.
Government support
The introduction of benefits for the purchase of equipment, tax compensations, subsidies for startups and IT companies contributes to the development of the economy. The implementation of these measures will allow Russian companies to successfully implement the digitalization process and, at a minimum, increase their competitiveness.
Who determines the success of digital transformation in a company:
1. Top management. This is the CEO, commercial director, financial director, technology director, and digital transformation director.
The company's management defines the vision, strategy, goals and priorities for the digitalization of business processes. It is the top manager who forms the plan, allocates resources, makes important decisions and fully ensures the support of other participants in the process.
2. IT department, IT director, technical director (CTO). Digital transformation and digitalization are the sphere of the IT department, because it is the implementation of new technologies, infrastructure support and data protection.
The department is responsible for selecting the technology stack, configuring software, implementing security systems and new platforms, etc. In general, these specialists create the entire infrastructure that allows business processes to be transferred to digital.
3. Marketing department. It is very important for marketing to interact with the CTO, because improving customer interactions is the basis of digitalization, since it is from customers that the company makes a profit.
The interaction between the marketing and product management departments improves the effectiveness of marketing campaigns and increases sales volume.
4. Human Resources Director (HRD). The HR department is responsible for corporate culture, training, adaptation, conducting training for new employees and developing a new digital culture within the company as a whole.
5. Purchasing and legal departments . It is important to purchase hardware, chips, technological solutions and licenses. The purchasing department, together with lawyers, participates in negotiations with suppliers, conducts audits, and concludes contracts with reliable counterparties. They must find the best, safest, and most fail-safe solutions for the company, especially in the context of sanctions.
6. Employees. Personnel are the main force of any business. It is important to involve all employees in the digitalization process. Managers need to sell these changes, show why these innovations will help improve the life of each specialist in the company.
It is necessary to support innovative activity, exchange knowledge and experience, listen to feedback from employees, help them adapt, and take part in training events.
Prospects for digitalization in Russia in the near future
The pace of digitalization in our country is encouraging. In 2024, we witnessed a real boom in technology, which can be considered the result of the efforts and investments made.
The Russian government and business community have been actively encouraging the implementation of digitalization in recent years. Thus, in 2023, more than 146 billion rubles were allocated for the production of microelectronics, and in 2024, investments will already amount to 210 billion rubles.
The importance of digital technologies for the development of the economy, military sphere, construction, oil and gas sector, mining industry, retail and medicine is recognized at the state level.
Even in difficult economic conditions, many companies did not reduce costs for the implementation of innovative solutions. In 2023, more than 300 billion rubles were invested in this area.
The Digital Economy project is actively developing, which includes measures to develop automated infrastructure in the fields of education, healthcare and public administration, aimed at improving the quality of life of citizens.
Despite the crisis stage caused by sanctions and the departure of software, the country is finding new ways. Russian companies are developing their own software that meets new challenges and strategic goals. A survey by the HSE ISSEK showed that the rate of import substitution has increased by 36% of Russian enterprises.
Thus, the prospects for digitalization in Russia are encouraging. In the coming years, we can expect even more active implementation of digital technologies in all spheres of life, which will lead to new opportunities and improved quality of life for every citizen.
Earlier, the Federal Customs Service (FCS) of Russia stated that the Russian Federation had won trillions of rubles from sanctions.
