How digital is your business? Check against the digitization index

Every year since 2016, Visma has looked at how digital Swedish companies are. Now it's time for the latest results. Visma's digitization index has looked at several key processes and asked companies how far they have digitized them. The result? Digitization continues to increase, but not as fast and as far as it could and should.

We'll take a closer look at how digitization is progressing and why not everyone is taking advantage of it. You can also test how you are doing on the digitalization index.

Visma's Digitization Index measures the degree of digitization and automation of financial and administrative processes in businesses with more than 25 employees. The decision-makers who have responded have themselves been asked to state how far their business has come with the digitization of seven processes. (Incoming invoices, authorization flow, automatic payment from payment proposals, outgoing invoices, travel accounting to payroll, time reporting to payroll and automatically updated key figures.) The digitization rate is indicated on a scale from zero to 100 percent how far the digitization of each process has come. The median for this year's index is 62.7%. Compared to the 2017 index of 40.9%, we see that progress is being made. However...

While Sweden is a relatively digital country, we are being overtaken by our Nordic neighbors. The survey shows that few actually fully digitize their operations. What is prioritized are processes that reduce the risk of errors and delays, such as time reporting and certifications. But the digital solutions Swedish companies use can do so much more. They have the platforms and the conditions to fully digitize, but are only using a fraction of the opportunities available. In short, we have the tools, but not the insights to fully utilize them.

You can also see for yourself how digital your business is by answering seven simple questions in this test. You can then see how you compare to other Swedish companies.

Another finding of the report is that businesses with a high level of digitalization also have higher profitability per employee. This is not particularly surprising. After all, the whole point of digitization is to get rid of time thieves and increase efficiency. When time-consuming processes are automated, a company's time, resources and expertise can be spent on creating value. No one has ever been successful doing administration.

So how profitable is it to be at the forefront of digitalization? According to the report, the difference between a company with a digitization index of 0-25 and companies with an index of 50-75 is a whopping SEK 253,000 in median earnings per employee. Not exactly small potatoes. And a good motivation to review how you can improve your digitalization.

For more information on how to increase your profitability with digital solutions, read our posts Can you afford not to get a new ERP? and How to calculate the ROI of your new ERP.

Visma's Digitization Index looks at seven key financial and administrative processes. We will take a closer look at these processes and see how they can be improved.

1. Incoming invoices. In this year's index, the percentage of the company's invoices that are received fully digitally directly into the financial or business system is 51%. 25% of the respondents in the survey say that they do not have or use this process. The digitization of supplier invoices is a process that has steadily increased in the surveys. No wonder, given that the Network for Electronic Business (NEA) estimates that it is possible to save SEK 77 per invoice. There is every reason for companies to digitize the invoice process.

• Outgoing invoices. The percentage of invoices that businesses send electronically (i.e. not by email or post) stands at 57.1% this year. 11.9% of respondents say they do not have or use this process. The digitization of outgoing invoices has also increased significantly. There is also money to be saved here; SEK 10 per invoice according to NEA. Those who have not started this important and profitable digitization process say that they do not have the time or skills. But there is a lot of time to gain and help to get. If you want to know more about e-invoices and all its benefits, please read our post Why you should start with e-invoices.
  
• Automatic payment from payment proposals. The percentage of supplier invoices received that are paid automatically directly from the financial system, without logging in to online banking, is 65.7% this year. 36.9% say they do not have or use this process. This is a process that has not seen much change in recent years, which is a great shame. There are efficiency and quality gains while security increases when the payment process is digitized. The tools are already there once you start digitizing your invoice processes.
  
• Travel expense claims to payroll. In this year's index, the percentage of business travel expenses that are done digitally in a dedicated system is 57.1%. 44.7% say they do not have or use this process. The digitization of expenses and travel expenses has increased significantly between 2017 and 2018. Finance departments are grateful for this, as it relieves them of workload and streamlines flows. Another bonus is more control and better management of common expenses and travel costs. Want to know more about how digital travel expense reporting works, and everything you stand to gain from it? Then read our post Simplify your business travel - manage your travel expenses on your mobile.
  
• Time reporting to payroll. The percentage of employees' working time that is recorded digitally in a dedicated system stands at 82.5% this year. Only 22.5% say they do not have or use this process. The automation of time recording is a process that has been growing steadily in recent years. It tends to be an eye-opener for how much faster and more efficient digitizing an administrative process can be. Today's customizable and smart solutions can also provide industry-specific functionality that makes the process even smoother.
  
• Authorization flow. In this year's index, the percentage of companies' incoming invoices that are approved and certified entirely digitally is 87.2%. Only 24.6% say they do not have or use this process. Of the processes examined in the digitization index, a digitized authorization flow is the process that Swedish companies have come the furthest with. Gaining more control, fewer bottlenecks and the ability to manage everything in one place is probably the motivation behind it. Gains that can of course be made with the other processes as well.
  
• Automatically updated key performance indicators. The degree (%) to which companies say they have digitized the process of constantly having access to updated key figures is this year at 53.9%. 37.6% say they do not have or use this process. Automatically updated KPIs and digital decision support have increased significantly between 2017 and 2018, but much more can be done. It is believed that Business Intelligence will be an accelerator of digitalization. If you want to know more about how digitization of your business allows you to work smarter with key figures, forecasts and trends, read our post Why the ERP system is the CFO's best friend.

Swedish companies have come a long way in terms of certain processes, but are missing out on other opportunities. For example, if you have started to certify invoices digitally but have not digitized the part of how the invoice comes in, you are missing a lot. If you look at your business and see where else you can make digitalization gains, you can increase your profitability. By automating unnecessary administration, your skilled staff can create more value, for example by analyzing and making wiser decisions, developing new products and services, and providing better customer service.

Not sure where to start? Or what gains you can make by digitizing your business? Talk to us at Traventus! We'll be happy to help you work smarter and more fun.