=Paper=
{{Paper
|id=Vol-2740/20200373
|storemode=property
|title=System-Integrated Methodological Approach Development to
Calculating the Digital Transformation Index of Businesses
|pdfUrl=https://ceur-ws.org/Vol-2740/20200373.pdf
|volume=Vol-2740
|authors=Iryna Strutynska,Lesia Dmytrotsa,Halyna Kozbur,Liliya Melnyk
|dblpUrl=https://dblp.org/rec/conf/icteri/StrutynskaDKM20
}}
==System-Integrated Methodological Approach Development to
Calculating the Digital Transformation Index of Businesses==
https://ceur-ws.org/Vol-2740/20200373.pdf
System-Integrated Methodological Approach
Development to Calculating the Digital Transformation
Index of Businesses
Iryna Strutynska, Lesia Dmytrotsa, Halyna Kozbur, Liliya Melnyk
Ternopil Ivan Puluj National Technical University, Ternopil, Ukraine
{ringtons999, dmytrotsa.lesya, kozbur.galina, liliana.mel0512}@ gmail.com
Abstract. The current state of digital technology in domestic business is dra-
matically different from the world one. As there is currently a problem with the
low digital literacy of society and business executives at all levels, the use of a
European methodology for determining the digital intensity index with appro-
priate indicators is not entirely acceptable for domestic businesses. Given the
lack of data on the ownership of certain digital technologies by 2017, it is un-
clear whether domestic businesses are ready to integrate the global digital de-
velopment trends, according to which the EU determines the relevant indices.
For this reason, it is necessary to develop its own methodology for determining
the index of digital business transformation with appropriate indicators, which
would take into account the current state of affairs, reflect with in-depth analy-
sis of the level of digital transformation of business structures, while being flex-
ible to respond promptly to new phenomena and the emergence of new digital
technologies so that in the future it will be harmonized with international meth-
odologies for comparing Ukraine with the most developed countries of the
world.
Keywords: Digital transformation, Digital Agenda of Ukraine 2020, digital
tools, digital literacy, Digital Transformation Index.
1 Introduction
The task of developing a methodology for calculating the Digital Transformation
Index [1] was envisaged for implementation in 2017-2018 within the framework of
the “Action Plan for the Implementation of the Concept of Development of the Digital
Economy and Society of Ukraine for 2018-2020: Item# 1. “Regulatory, organizational
and methodological support”: Task #3: a) Identify indices, indicators and methodolo-
gy for assessing digital development and maturity in Ukraine in accordance with in-
ternational practices (Digital Economy and Society Index [2], Networked Readiness
Index [3], Broadband Penetration Index [4], Computer Literacy Index [5], etc. [6]); b)
Ensure regular assessments of digital maturity and determine Ukraine's digital devel-
opment projections by 2020; Task # 4 “Identify and implement statistical methodolo-
gies and statistical observations to obtain statistics on Ukraine's digital development,
Copyright © 2020 for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
taking into account international practices” [7; 8]. However, till these days, the tasks
remain documented only and require rapid implementation.
Establishment and approval of the national methodology for determining the index
of digital transformation of business will allow to assess the level of digital maturity
of business structures, which in turn will be an impetus for further study of the impact
of digital technologies on the economy.
The annual Digital Business Transformation Index would serve as a tool for moni-
toring and evaluating business performance in the digital economy, helping to identify
barriers to small and medium-sized businesses, formulating a list of prioritized eco-
nomic, legal and regulatory measures (reforms) to improve digital implementation
technologies in business activities of domestic business structures and would facilitate
the integration of domestic business into the digital economy of the world.
2 Methodology of the Digital Maturity Index Calculating
The subject of study is economic entities (micro, small and medium-sized enterprises,
with the status of legal entities and individuals) of Ternopil region.
The assessment will be based on the results of a comprehensive sociological sur-
vey. Complex sociological research includes the means of both quantitative and quali-
tative data collection that characterize the level of digital transformation of business,
namely: • Interviews of managers (owners) of small and medium-sized enterprises
and individual entrepreneurs; • Focus groups with representatives of business and
business associations; • In-depth interviews with representatives of central and local
government and local self-government.
An innovative questionnaire was developed to collect annual statistics to deter-
mine the Digital Transformation Index. This questionnaire consolidates the main
points of the existing survey forms used in the EU «Community survey on ICT usage
and E-commerce in enterprises») [9] and Ukraine «The use of information and com-
munication technologies at the enterprises in 20_») [10]. The main advantage is that
the analysis of this innovative form (questionnaire) will help to determine the real
picture, namely, the qualitative use of digital tools in the activity of domestic business
structures and will help automatically calculate the Index of digital transformation of
business structures. It is this format that will identify the problem areas and develop
practical recommendations for those who will undertake the survey.
The indicators for determining the Digital Transformation Index of business struc-
tures can be divided into 4 groups (see Fig. 1).
Based on consolidated structural indicators of digital transformation of business
organizations, it is possible to devise a formula for determining the generalized Digi-
tal Transformation Index of business:
HIT SummH H SummI I SummT T (1)
where «HIT» – index of digital transformation of business;
Digital |Transformation Index of Businesses
Digital literacy of human
capital Groups of digital Digital Infrastructure
Information Indicator (skills and competences) instruments (hardware, digital
(Digital literacy human (Digital Instruments equipment)
«H») «І») (Technology «T»)
1. Field (type) of the activity I. Very simple 1. Satisfaction with the
your business is doing; 1. Low level of digital quality and speed of the
literacy (0-0,1); ( =0,09);
2. Organization type; Internet (Broadband
II. Simple ( =0,07);
3. Does the enterprise import 2. Fundamental level of Internet 30 Mbps or
or export? III. Average ( =0,06);
digital literacy (0,11-0,3); higher) (0 to 1)( =0,5)
4. Does the enterprise have its IV. Complicated
2. Digital equipment
own business model? 3. Intermediate (transitional) ( =0,05); (hardware):
5. For the last three months level of digital literacy V. Very complicated 2.1. The level of
have you referred to other (0,31-0,7); ( =0,03). employment of workers
specialists in the IT for help by computer equipment
with hardware, setting the 4. Progressive level of
digital literacy (0,71-0,9); (computers, laptops) (0 to
computers, etc.
1) ( =0,3);
6. Does the company have as 5. Highly specialized (0,91- 2.2. Level of providing
of today full-time IT 1) employees with mobile
specialists or contracts for
Internet devices for
the maintenance of
efficient work
computer equipment by
(smartphones with
specialized companies?
specialized applications)
7. Name of the enterprise
8. Number of employees (0 to 1) ( =0,2).
They will be displayed on an
information platform to show
the level of Digital
Transformation of Businesses
Fig. 1. Groups of indicators for determining Digital Transformation Index of businesses (Note:
developed by the authors).
SummI – summary of the status of the functioning of digital instruments integrat-
ed into the business processes of the organization;
SummT – summary indicator of the functioning of the digital infrastructure of a
business organization;
H – weight factor indicator H;
I – weight factor indicator I;
T – weight factor indicator T, where
H I T 1 . (2)
Given (2) in our case, the weight factor indicator H will be 0.3 ( H = 0.3), be-
cause "Digital" literacy (or "digital" competence) is recognized by the EU as one of 8
key competences for a fulfilling life and professional activity. Weight factor indicator
І is 0,5 ( I 0.5 ), because it is the use and implementation of certain groups of digi-
tal tools in the structure of the business processes of the organization that transform
the existing business model of the organization and act as an imperative for innova-
tive development of the organization. The weight factor indicator T will be 0,2 ( T
=0.2).
The human literacy rate of an organization's human capital assets is determined by
the formula
mH
SummH ni( H ) k i( H ) (3)
i 1
where ni(H ) – an indicator of the digital literacy level of an organization's human
capital assets;
k i(H ) – weight factor indicator ni(H ) ;
m H – number of expert opinions.
Summary of the status of the functioning of digital tools integrated into the busi-
ness processes of the organization
mI
SummI ni( I ) k i( I ) (4)
i 1
where ni(I ) – an indicator of the level of functioning of digital tools in an organiza-
tion;
k i(I ) – weight factor indicator ni(I ) ;
m I – number of digital instruments.
Summary indicator of the functioning of the digital infrastructure of a business or-
ganization
mT
SummT ni(T ) k i(T ) , (5)
i 1
where n i(T ) – an indicator of the level of functioning of digital tools in an organiza-
tion;
k i(T ) – weight factor indicator n i(T ) .
mT – number of digital infrastructure.
34 respondents (entrepreneurs of Ternopil region) were surveyed in order to ap-
prove the appropriate methodology in the framework of the study on determining the
level of digital transformation of business structures. [11; 12].
To determine the consolidated indicator of the digital literacy status of the human
capital of the organization (H) we use formula (3). Evaluating the answers of the ex-
ecutives to the questions of the developed questionnaire, in our case mH 1 ,
ki( H ) 1 . That is why
SummH n (H ) ,
where n (H ) – expert assessment of the level of employee digital literacy.
We believe that managers are the right people who are experts in assessing the
skills and competencies of their own staff.
Analyzing the answers of the conducted sociological research, calculating and as-
signing to the respective groups of digital tools the weights for a clear gradation of the
importance of digital tools (main drivers) in the context of transformation of business
processes of an organization formula:
19
SummI ni( I ) ki( I ) ,
i 1
(I )
where k i – is the value of the weighting factor for the digital instrument groups.
In accordance with formula (5) consolidated indicator of the functioning of the
digital infrastructure of the business organization, the indicator "T", calculated by the
formula:
SummT n1(T ) k1(T ) n2(T ) k2(T ) n3(T ) k3(T ) , (6)
(T )
where n1 – Internet rate and quality satisfaction (Broadband Internet 30 Mbps or
higher) (0 to 1);
n 2(T ) – indicator of the level of job security for employees of computers (comput-
ers, laptops) (0 to 1);
n 3(T ) – an indicator of the level of provision of employees with mobile Internet
devices for effective work (smartphones with specialized applications) (0 to 1).
(T )
k1(T ) – weight factor indicator n1 . The quality of the Internet is a necessary pre-
condition for smooth implementation of the processes of digital transformation, there-
fore k1(T ) equals 0,5
(T )
k 2(T ) – weight factor indicator n 2 Digital infrastructure (business structure
hardware), therefore k 2(T ) equals 0,3.
(T )
k 3(T ) – weight factor indicator n 3 . Providing business structure employees with
mobile Internet devices for efficient work (smartphones with specialized applica-
tions), therefore k 3(T ) equals 0,2..
The calculations on all indicators of the Digital transformation of business struc-
tures are shown in Table 1.
Table 1. Summary data on indicators “H”, “I”, “T” of interviewed respondents.
# The value of The value of
The value of the
Respond- the indicator the indicator The value
indicator «Т»
ents «H» «I»
1. 0,4 0,225 0,5
2. 0,6 0,276 0,75
… … … … …
34. 0,6 0,669 0,665
Note: calculated and structured by the authors based on the research
The summary as well as the level of the Digital Transformation Index by all re-
spondents and indicators are shown in Table 2
Table 2. The value of the Digital Transformation Index for the respondents.
Levels H I T
Very high (4; 6; 21; 7; 12; 16;
(0,81-1) (26) 19; 20; 22; 24; 27;
8; 26; 32; 33 9 )
High (25; 27; 33 (2; 3; 10; 13; 18;
(25; 26)
(0,61-0,8) 3; 2) 28; 29; 31; 34 )
Medium (15; 24; 28
(7; 24; 27; 34) (5; 1; 14; 15; 25)
(0,41-0,6) 4; 1; 7)
Low (8; 9; 10; 13; 14; 21; (1; 2; 4; 8; 9; 10; 13;
(0,21-0,4) 29; 30; 31; 32 14; 15; 19; 20; 22; 28; (11; 30)
5; 6) 31; 33; 21)
Very low (11; 12; 16; 17; 18; 19; (3; 5; 6; 11; 12; 16; 17;
(8; 17; 23)
(0-0,2) 20; 22; 23; 34) 18; 23; 29; 30; 32)
Note: calculated and structured by the authors based on the research
The analysis of the results showed that the level of the majority of respondents is
lower than the average level of digital transformation. Therefore, immediate changes
in governance and significant work are needed to implement available digital technol-
ogies and tools, as well as to increase the digital literacy of human capital.
3 Conclusions and Recommendations
The results of the research will help to get a better understanding of the problems and
the real state of digital maturity of business structures on the example of SMEs of
Ternopil region, to develop a methodology for finding the digital maturity index of a
particular enterprise or industry as a whole, as well as to develop specific recommen-
dations (roadmaps) for implementation that will promote the growth of digital maturi-
ty and further transformations at the micro and macro levels.
In a future version of this article, we consider it necessary to conduct research
based on the collection and analysis of real business transformation digital statistics
for a particular region, and to develop a digital platform to automate the process of
data collection, processing and automatic definition of the Business Transformation
Digital Index and to obtain specific recommendations (roadmaps) to increase the level
of the Index. Implementation of appropriate roadmaps will increase the digital trans-
formation index and increase business competitiveness.
The results of this research will help create an appropriate eco-culture for deter-
mining digital maturity, create healthy competition between respondents to compare
the results of the Index, and help raise the level of digital literacy of business owners
and, accordingly, the human capital assets of organizations.
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