Digitalization and Industry 4.0

Operations strategy,
industry 4.0 and digitisation

Table of Contents
INTRODCUTION...........................................................................................................................1
Rationale......................................................................................................................................1
Scope............................................................................................................................................1
Literature review..............................................................................................................................1
Conclusion.....................................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODCUTION
In digitalization business world it is very important to manage and maintain operational
efficiency. This is because there have been many changes that are occurring that is impacting on
industry. Also, there are several forces such as technological advancement, economic instability,
etc. that has led to change in operational strategy of business (Tupa Simota and Steiner, 2017).
Digitalization has highly impacted on manufacturing and production industries. Due to this,
operations are affected to a great extent. It has forced them to use advance technological tools
and equipment’s to reduce their cost. Moreover, in service sector many changes have occurred in
recent times. It has enabled in providing high quality services in instant time. there are many
things that is taken into consideration by organization before developing operational strategy.
They have started taking digital initiative in order to improve their efficiency. Hence, they are
able to attain goals and objectives in specified time period. For present assignment organization
selected is AMP limited. It belongs to financial service sector.
Rationale
This report will throw light on what challenges are being faced by company engaged in
service sector. also, what are the implication of new digital technology. Furthermore, it will
describe strengths and limitation of operational strategies and what resources will be required in
implementation of digital technology (Bortolini and et.al., 2017). Along with this, it will assist in
finding out impact and benefits of taking those initiatives.
Scope
The scope of report is it will provide a brief overview of how improving operations with
helps of digital technology can be beneficial for service industry. Moreover, it will give an
insight to other companies engaged in service sector to improve their operational efficiency by
making changes in process or methods. In addition report will show them how to reduce impact
by taking effective measures.
Literature review
The integration of technology and internet has revolutionized today’s business world. It
has provided a platform to enhance their productivity and expand in different markets. Also, it
has created vast number of opportunities to operate globally. Moreover, digitalization has
brought change in business operations. this has made it easy in doing complex task with high
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efficiency. Other than this, constant technological advancement has led to certain forces which is
highly impacting on production and service sector (Ennis and et.al., 2018). it has been identified
that it is very difficult for companies to implement operational strategies. this is because it
impacts on their performance and growth. Likewise, small and medium business has to depend
on technology in order to meet strategic requirements. Through this, they can modify or redesign
their operational process to develop products and services. Also, high quality services can be
delivered and customer satisfaction can be gained. In a study conducted by Weber and et.al.,
2017, industry 4.0 has resulted in invention of cloud computing. It has allowed business to shift
their IT operations. they are highly using those services to expand operation in wide area.
Moreover, data analytics is a concept in which large data sets are stored. Then, information is
analyzed to get precise data about what changes has occurred in market trends or people needs.
Data analytics is another way through which small business are highly impacted. Due to this,
they are not able to operate in large area.
Key forces of change impacting the industry
As said by Fremont and et.al., 2018 there has been frequent changes in business world. It
is because of emerging trends that has created a great impact on their growth and development.
Also, the way of operating business is completely changed. There are certain forces that is
forcing service sector to bring innovation. The forces are described below :-
Digital revolution- this is the common force that is impacting service sector. digitalization has
provided a platform for people and business to communicate and connect with each other. This
process has accelerated trend towards using advance tools to grow in different markets. In
similar way, it has forced service industry to provide instant service by connecting people at one
platform (Devold, Graven and Halvorsrød, 2017). Moreover, now people prefer to avail those
services that are easily available at low cost.
Change in trends- in recent time emerging trends in business economy is a driving force that is
impacting on service industry. This can be interpreted by finding out the way of delivering
services and taking customer feedback. now, many businesses are developing their own
application through which services are provided. This has brought flexibility and ease in access
of services by people. It has resulted in change in market trends and their needs.
Globalization – Although it is an old concept but it is considered as a force that has impacted on
world economy. it has allowed companies to enter in new market and offer their goods and
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services to people. Due to this their growth and development has raised rapidly. Furthermore,
integration of technology with business has created a platform to develop variety of products and
services.
Industry 4.0 and digitalisation impacts on the industry
Industry 4.0 refers to fourth industrial generation and current trend of automating data
and information in manufacturing technologies (Stock and Seliger, 2016). It is a concept in
which new technologies are been used by business to integrate their data and information. This
has enabled in smooth flow of operations and taking effective decisions. In this there are
different types of technologies used and implemented by business such as cloud computing,
internet of things, etc. with help of these automation in process and methods is implemented.
Similarly, service sector is also impacted due to industry 4.0. it has forced them to use software
and applications to provide services to people. Moreover, the ease and access of services can be
done quickly. with help of internet real time services is provided. Aside from it, new entry of not
for profit organization in service sector has resulted in increase in competition. This has reduced
the profits of companies.
As said by Schumacher, Erol and Sihn, 2016 government has made some strict
regulations in financial service sector. it has enforced business to set standards accordingly and
deliver services to customers. thus, following of regulations has restricted business to modify
their operations. they have to develop a proper procedure of delivering services. It must be
ensured that a customer expectation are met and systematic process is followed. Another impact
is diversified market which has attracted service sector to follow regulations and standards as per
government norms. they have to follow certain standards through which service are delivered.
Organisational challenges
While making operational changes, there are some challenges that is faced by business. It
is because changing operations results in assigning new roles and responsibilities, determining
tasks, etc. also, it is necessary to follow regulations imposed by government in financial sector.
AMP limited is a company that operates in financial sector. it provides various types of banking
services to such as insurance, loans, financial advice, etc. its operation are expanded in Australis
and New Zealand. In recent times, company is facing many challenges related to operations. they
are not able to provide timely services, connect to customers, deliver reports online, etc.
moreover, AMP limited is facing issues related to solving customer problems (Özüdoğru and
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et.al., 2018). Also, due to lack of advance software and applications there has been delay in
providing services timely services. Besides this, it has been analyzed that there is no proper
centralized communication system which enables employees and management to coordinate.
Apart from this, data and information stored in database is not accessed in time due to which
customer issues are not solved. The staff is not able to coordinate with managers in proper way.
Due to this operational efficiency has declined. On the other hand, costs of delivering services
are rising due to rise in tax regulations by government. AMP limited is putting the burden of rise
in tax on customers. it has led to decrease in their satisfaction level.
Implication of new value propositions
As elucidated by Walther, 2018 there will be high implication on AMP limited due to
implementation of digitalization. This is because it will change in overall operational process.
With change in process or methods of operations, services will be delivered in effective way.
There will be proper communication between employees and customers. moreover, the problems
and issues will be solved within less time. thus, it will help in generating customer value.
The change in operations will make it easy to handle and manage it. besides this, process
can be automated through each or access of service can be done quickly.
Increase in operational efficiency will enable employees to follow a fast method of doing
task. Through this, targets will be attained in less time. also, services will be delivered in just one
click. Hence, it will benefit in gaining trust and satisfaction of customers. it will generate value
in industry by providing high quality services in such a low cost. The use of advance software
and application will reduce task complexity. By this coordination between employees and
manager will be done properly. It will generate a distinct image in mind of people about AMP
limited. Thus, it can be evaluated that it will impact on performance of employees and managers.
Current strengths and limitations in meeting strategic and operational strategies
In order to implement operational strategies, it is necessary to have adequate resources. It
helps in making changes in method of operations in step by step manner. Along with this, it is
essential that AMP limited should be able to attain goals and objective formed in operational
strategies. therefore, it can be said that implementing change management in operations depends
on strengths and weakness of business (Yüksel and Sener, 2017). They should analyze it
properly so that decision can be taken. As AMP limited belongs to service sector and operate in
two countries, hence they have to identify their current state.
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Strengths-
 AMP limited offers variety of financial services to people. They are having a skilled and
qualified workforce that enables them to perform operations in effective way. Moreover,
their operations are spread in wide area.
 AMP limited is a medium size company and having offices in different cities. They
follow same process of delivering services to people. Furthermore, company is having a
large customer base through which profits are earned.
 Another strength is AMP limited is having high brand value and established a positive
image in mind of customers. so, any change in operational efficiency will not result in
loss of customer.
Limitations
 AMP limited profits are not much that enables them to go for operational change. This
limits them to develop strategy and implement it.
 Changing operations frequently will interrupt in performing operations. for this they have
to provide training to them and then explain overall new operational system. Thus, it will
incur a lot of time as well cost (Ang and et.al., 2017).
 In company most of the services provided are based on real time. thus, it will affect in
solving customer problems. They have to follow new process which might be not suitable
for customers.
 Many time AMP limited is involved in cases where customer expectations are not
fulfilled. Thus, it restricts business to opt for changing operations. it might lead to
decrease in customer base and creating negative image.
Resources and capabilities needed to support digital transformation
In order to implement digitalization, it is necessary to have essential technological tools
an equipment’s. without having proper tools, it is not possible to implement it. for this AMP
limited must conduct IT audit to determine what resources are required. By having appropriate
resources there are many other things that must be taken into consideration. Apart from this,
business should also have capability to support digital transformation (Pfohl, Yahsi and Kurnaz,
2017). The resources required are described below :-
IT infrastructure – this is basic requirement in digital transformation. It consists of overall IT
tools which must be installed in AMP limited. this contain both hardware and software. Business
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capability can be analyzed only when its IT infra is excellent. Developing strategy depends on
capability of business to go for it.
Hardware – it is the basic support that is required in digitization. It is structure on which entire
implementation is dependent. AMP limited requires a proper IT hardware infrastructure in which
all tools and equipment’s are there. It includes systems, devices, etc. if there is no proper
hardware then it is difficult for company to proceed further.
Software- it is the secondary resource which is required in it. After fulfilling hardware needs,
software and application must be determined. Without proper installation of software operations
can be performed. There are several types of software which is use by service sector. it depends
on companies and what type of digitization they are going to implement (Büyüközkan and
Göçer, 2018). It also depends on what hardware are being installed.
Finance – In order to implement digitalization, finance plays a vital role. AMP limited must
have funds in sufficient amount. The availability of capital enables company to go for it.
moreover, funds are required to evaluate and maintain digitalization for long term in effective
way. Also, it is needed to cope up with any technological advancement in future.
HR- human resource are essential thing needed to implement this. Business should have
experienced employees to operate on digital tools. AMP limited must hire skilled employees so
that overall IT operations can be managed. Also, having a skilled work force enables in
identifying how transformation can be executed. They show the way through which it is easy to
utilize tools and equipment’s.
Therefore, it can be stated that business must have capability as well as infrastructure so
that digital transformation can occur. They must identify how operational efficiency will be
increased.
Building and sustaining a continuous learning culture for operational improvement
Implementation of digital transformation is not enough, it is important that business
should sustain it for long time period. Moreover, this concept is only implemented for long term.
However, with advancement in technology it is required to update technology accordingly so that
business can cope up with that (Dalmarco and Barros, 2018). If they are not able to do this, then
it will be difficult to utilize in proper way. The major impact of digitalization is on organizational
culture. This is because they resist change. Therefore, building continuous learning culture helps
in ensuring operations are run in smooth way. For this effective training is provided to
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employees on how to utilize system and tools. In order to build such a sustainable environment,
AMP limited can take following measures. These are described below :-
Evaluation of system- in this evaluation of system can be done to measure how they are
working. It will help in finding out deficiencies and making improvements in it. also, by doing
this it can be found out what modification are required. Here, goals can be set and then IT audit
can be conducted in specific time period. It will be very useful for AMP limited to analyze
operational efficiency and improving it.
Measuring performance – This is also an important step taken to build continuous learning
culture. Here, AMP limited can measure performance of employees after digitalization and then
writing their strengths and weakness. It will benefit in finding in which area changes are required
and how it will be implemented (Srai and Lorentz, 2018). By doing this in particular
department, overall operational efficiency can be enhanced.
Training programs – A continuous learning culture can be developed by providing effective
training programs. By conducting IT skills audit AMP limited can organize various training
programs. It will help employees to learn about different systems and how they can be used in
doing operations. in addition, employees will be able to work in creative way. Through this, their
skills and knowledge will be gained. They will be able to operate effectively on systems and it
results in improving operations.
Hence, by doing implementing above elements, continuous learning culture can be
developed. It will allow employees to increase their performance so that services can be
delivered in proper way. Also, through this it digitalization can be executed efficiently.
Benefits to be realised from adoption of digital initiatives
Implementation of digital transformation provides various benefits to business. It not only
helps in increasing operational efficiency by also in growth and development. Similarly, AMP
limited will be benefited by taking digital initiatives. By installing new system and application
the task can be conducted in easier way (Benefits of digital transformation. 2017). Moreover, the
quality of delivering services will be enhanced. There are several benefits that can be obtained
from this. They are as follows:-
Reduced cost- it is most common benefit of using technology. By using tools and applications
the cost of delivering services is reduced (Davis and et.al., 2017). It helps in providing services
quickly and doing task in more simple way. Besides this, it leads to rise in profit margin.
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Consolidated operations- it is another benefit in which operations are combined and
streamlined in proper way. With use of digital tools, it becomes easy to conduct activities one
after the another. Moreover, completion of one task leads to immediate start of another one.
Through this, AMP limited operations will be integrated resulting in attaining goals and
objectives in time.
Centralized communication- technology helps in building a centralized communication
network through which it becomes easy to share data and information. The coordination between
different department is done in effective way. This leads to completion of task and clear
exchange of information (Devold, Graven and Halvorsrød, 2017). It will be beneficial for AMP
limited to deliver services to customer in different locations.
New services- technological advancement also brings in new ideas of innovating services and
products. The enterprise is equipped with better software and applications that can be used in
developing services. With help of it, AMP limited can provide new services to people. They can
gain competitive advantage in industry. Also, more customers can be attracted and retained.
Quick solution of problems- digital initiative enabled company to solve customer problems
quickly. in similar way, AMP limited will be able to resolve queries and gain their trust.
Alongside this, several solutions can be obtained for specific problem. The employee will be able
to determine issues instantly. Thus, it will enable AMP limited to increase customer satisfaction
and create a loyal customer base.
Data analytics – by adopting digitalization, AMP limited will be able to analyze data and
information of customer quickly. this will enable them to store, manage, access, etc. data
instantly. By this need of customer can be identified and services can be provided accordingly. It
will be useful in generating more profits and streamlining of operations.
How new systems may impact or change service delivery choice
The installation of new systems in AMP limited will change the overall process of
delivering services (Schumacher, Erol and Sihn, 2016). it can create either positive or negative
impact on operational efficiency. Also, it will impact on customer choice of opting for services.
they might get new options to choose on how they prefer services to be delivered. By using new
system services will be delivered in new way. it will be quick and fast. This will create a positive
image in minds of customers. they can access it from anywhere, anytime.
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It can be evaluated that customer might prefer the old way in which they are accessing
services. it will create a negative impact. But many a times new systems increase speed of
delivering services. through this, large number of people can be contacted at one time. For
example – if customer want to claim insurance, then he or she can enter details by log in into
account. The new system will access details of customers and insurance policy. Then, an agent
can be contacted to take follow up and process of claim. This will make it easy to extract details
and start claim process as soon as possible. Hence, by it service delivery can be increased.
There are many other impacts that can bring changes in service delivery. It can be
analysed by redesigning the process with new systems, a new method can be established.
Key recommendation
There are certain recommendations that can be followed by AMP limited in process of
digitalization (Tupa, Simota and Steiner, 2017). This will be useful for company to implement
in proper way and take appropriate measures. They are as follows :-
 The company should develop effective strategies on how technological advancement will
be maintained and managed. This will help in implementation of those strategies
accordingly. Besides this, it will be easy for AMP limited to cope with change.
 Furthermore, AMP limited can hire experienced employees to monitor IT infra. They will
be responsible for overall IT operations. so, any change or initiative required should be
easily implemented.
 AMP limited can install high security measures in database so that data and information
is protected. Also, it will be helpful in protecting it from cyber attacks.
 AMP limited management can conduct IT audit in particular time period so that those
areas can be identified in which improvements are required. It will be easy to make
changes only in those areas and enhancing operational efficiency.
Proposed digital solution or initiative
It can be referred as another digital initiative that can be implemented by AMP limited.
The company can opt for cloud computing in which services can be provided via third party
(Pfohl, Yahsi and Kurnaz, 2017). It is a platform in which all IT related operation are
performed by third parties. They are paid by companies according to services provided. It is an
emerging concept which is basically used by many companies. Here, from installing till
delivering services is done. Thus, it reduces work load on organization. So as AMP limited
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belongs to service sector, it can also use cloud computing. This will enable them to deliver high
quality services. This is because it will be easy for business to maintain their competitive
advantage in industry. Moreover, cloud computing concept will be beneficial as services will be
delivered directly. AMP limited will not have to install any IT infra. Other than this, firm will
focus on their operations. they can develop strategies on how to grow in different market and
what new services can be developed.
But on the other hand, AMP limited will have to depend on third party (Büyüközkan and
Göçer, 2018). Any problem or issue in it will highly impact on quality of service and its delivery
process. Furthermore, AMP limited will have to share profits with cloud company. This will
result in reducing their profit margin.
Conclusion
The research concluded that several business trends like digitalization, industry 4.0, etc.
has impacted on service sector both in positive and negative way. Moreover, the ease and access
of services can be done quickly. with help of internet real time services is provided. Aside from
it, new entry of not for profit organization in service sector has resulted in increase in
competition. This has reduced the profits of companies. It is essential to conduct IT audit so that
resources needed in digitalization can be identified. Continuous learning culture can be built by
organizing training, evaluating systems, etc. there are several benefits of digital initiative like
reduced cost, new services, etc. at last AMP limited can develop strategies to cope up with
change.
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Benefits of digital transformation. 2017. [online] Available through :
<https://www.enterprise-cio.com/news/2017/jun/26/10-benefits-of-digital-transformation/ >
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