Digital Index: A trending Global metric

Along with standard approach to resolve a problem, advance tools and concepts Lean six sigma has brought a new era of measuring every initiative on worldwide accepted metric aka. “Sigma level”. The idea quickly become very famous as it has empowered various industries to be part of single curve so that they can measure the performance more evidently. However, we all know for the fact that “Change is constant” and it is applicable everywhere, industries are slowly started moving towards a next big thing“Digitization”

e.g. banking industry affiliation towards digitization (source: http://www.financialexpress.com/)

 

 

Digitization also bring a same question resolved by Lean six sigma decades ago, how to measure and compare digitization not only across same industry but beyond? Apparently, doing math will be the easy part, but the first requirement it to list down the Xs, well, here are some components that should help deriving output we are looking for;

• (Do) - Digitization opportunities within organization
  • L4 level process steps for all in scope verticals (including HR, admin), existing process maps or processing mapping exercise can help getting this
  • Most of the mistakes happens while breaking down already automated steps which usually considered as single step or not fragmented adequately 
• Number of opportunities already digitized (Most critical part)
  • Tag Level 4 steps whether they are already digitized or not, follow the simple rule, if that specific step do not requires human intervention / input marked as already digitized
  • Consider all shape and form of Digitization into this category, eg. Automated excel macros, web automation, scripting, RPA, application integration, auto task / job runs etc.
  • Don’t forget to classify already digitized steps into following;
• (Db) Basic Digitization - Scripting solutions (affiliated with Excel / Access based automation, platform depended scripts such VBS, CMDs,
• (Di) Intermediately Digitization - UI based automations, Application integrations, cloud / DB integrations
• (Da) Advance Digitization - Cognitive solutions e.g. Amelia, IBM Watson
• (h) – Tag steps that can’t be automated (considering all market solutions)
  • Steps such as Field works, Art & designing, customer interactions (only of direct interactions is necessary)
  • Some companies can also keep few process steps asides which impact policy or people.

Once the data gathering exercise is complete, we can apply following formula to estimated existing organization level digitization score;

 

 

Let’s take an example to understand what’s happening here;

Digi ( i ) = Digital index % , it will the out of this formula

Db = Number of L4 steps already digitized with basic solution

Di = Number of L4 steps already digitized with Intermediately solutions

Da = Number of L4 steps already digitized with advance solutions

Do = Total opportunity (steps) of digitization

h = Steps that cannot be digitized

 

in hypothetical scenario, if total Do = 10000, Db = 4500, Di = 1000, Da = 200 and h = 350, the formula will give following results;

 

 

Digi (i) = 34%

 

Scores can be utilized to measure the baseline and also to compare with other industries (provided it is measured based on same formula), hope it will help understanding Digital index more intuitively.