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Author's profile photo Valeria Vinclair

Digitization in the third sector : 3 challenges and how companies solve them

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While the debates around Industry 4.0, the smart factory and digital supply chains have only really taken off in recent years, the service sector is one of the business sectors that has been experimenting with the possibilities of the digital world from an early stage. We explain what the 3 biggest digitalization challenges are for service providers and how companies can solve them.

Challenge #1: Global competition

Digitalization has globalized the markets. This is especially true for the service sector. It does not produce goods that have to be shipped, so the location of the company is less important than in a production. At the same time, digital transformation is improving the position of customers. Modern customers tend to have complete information about their market today. The Internet makes it relatively easy to obtain, compare and analyze different offers. 

Building strong brands and digital business models

Service providers are often in a difficult situation. If they compete with companies from emerging markets, internal processes can be no matter how efficient: The low wage level in competing countries will always lead to a lower price. 

Instead, service providers need to focus on their own strengths and communicate them proactively to the outside world. Digitalization in particular offers a range of opportunities: 

  • Develop and test digital business models
  • Improve customer experience through automation and  
  • Establish and operate digital marketing and sales channels

The prerequisites for these measures are an agile organizational structure that promotes innovation and an appropriate digital infrastructure. 

Challenge #2: Create a consistent multichannel experience

Customers are increasingly demanding a consistent experience with all departments of a company. According to a study by Salesforce, the vast majority of customers expect representatives from all departments to have the same information available at all times. The user experience is also fraying due to the increased use of different channels. The company’s own website, digital platforms and traditional offline channels. Above a certain size, it becomes increasingly difficult to create a consistent experience for customers. 

This is a problem of internal communication: An overarching strategy and technological infrastructure should at least prevent contradictions in messaging on different channels. However, such errors often happen in collaboration with external partners. The integration of external stakeholders into the own ERP system is still deficient in many places. 

Digitally dovetail marketing, sales and customer service

Inconsistent customer experiences are usually reflected in an internal structure that is not sufficiently dovetailed. Each department uses its own tools and processes for its activities. The generated output is therefore not predictable from the outset, but must first be brought into a common form. 

A common unified business solution provides a framework for all business processes and massively simplifies the exchange of data between departments. It ensures that every employee always has the same up-to-date information at their disposal. This then also reflects on the customer experience. 

Challenge #3: Employee satisfaction

The modern knowledge worker spends the majority of his working time on unproductive activities. Searching for data, filing and archiving documents, and making inquiries of colleagues. This puts pressure on employee satisfaction. In areas such as customer service and sales, there is a shortage of skilled workers. 

In the future, the administrative workload of each employee will increase against the background of the spatial dissolution of the working world. The short official channels of communication are becoming increasingly obsolete. 

Automation of standard tasks

Automation measures often have a bad reputation among employees. They fear that they will be used primarily to save manpower and subsequently reduce the size of the workforce. However, robots will never be able to replace people. Rather, process automation provides the workforce with a virtual assistant who takes over unpleasant repetitive tasks and creates space for more interesting and important activities. 

Such processes exist in every department: 

  • Customers repeatedly ask the same questions, which can be answered simply and immediately
  • Invoices must be digitized, verified and entered into the system
  • Manual master data maintenance in sales and distribution

The prerequisite for automating such processes is a functioning ERP system. Only standardized processes can be automated with RPA. Processes can only be standardized if they follow a predefined structure. This structure is provided by an ERP system such as SAP Business ByDesign. Without an ERP system, gaps between different departments are necessary. 

Conclusion: Digitisation in the service sector

The major challenges facing service providers have their roots in the digital revolution and the accompanying changes in the global economy. But at the same time, the digital transformation also holds the means to overcome the challenges and to position themselves sustainably for the future on the market. 

For this, companies need the courage to innovate and the know-how to successfully implement concrete projects. 

Nevertheless, many decision-makers are reluctant to tackle tomorrow’s challenges today. But they are not alone. In the SAP community, you’ll find hundreds of active entrepreneurs from around the world sharing experiences and passing on knowledge. Learn from other SMEs and become a trailblazer in the digital world yourself: https://answers.sap.com/tags/2521823005136277121291.

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