Implementing the Digital Business Model into Organization Activities

as a Factor of Economic System Sustainable Development

Evgeniya Nigay

, Yuliya Lebedinskaya

and Elena Barausova

Economics and Management Department, Vladivostok State University of Economics and Service, 41 Gogolya str.,

Vladivostok, Russia

Keywords: Digital Business Transformation, Business Model, Growth Strategy, Competitiveness Management,

Algorithm for Implementing a Digital Business Model.

Abstract: The stable functioning and sustainable development of economic systems is largely ensured by the formation

of strong and competitive business structures that promptly adapt their strategic management approaches in

accordance with the external environment. Timely, comprehensive and rational use of digital tools in business

process management contributes to the growth of competitiveness at all levels of the functioning of economic

systems. The article proposes an algorithm for introducing a digital business model into the activities of an

enterprise based on the approach developed by the authors to transforming the business model of an

organization in the context of the digitalization of the economy, as well as an assessment of the consequences

of this process.

1 INTRODUCTION

Today, it is customary to distinguish three main areas

of digital transformation of business models:

customer experience, operational processes and

platform business models. Usually companies don't

introduce the changes at all three areas at once. Some

choose a growth strategy by better understanding the

client and increasing points of contact with him.

Others increase their performance through

digitalization and reengineering of internal processes

and increased employee productivity. Still others are

changing the boundaries of business models, creating

digital platforms and mastering new activities,

products and markets.

The successful operation of a business is largely

due to the need for growth, including by better

understanding of the client and increasing points of

contact with him. The main directions of

digitalization in this case are:

 strengthening the focus on the requirements of

customers and their loyalty;

 search for hidden sources of value;

https://orcid.org/0000-0003-0858-5835

https://orcid.org/0000-0002-7573-1372

https://orcid.org/0000-0003-1833-1564

 creation of prerequisites for future sources of

revenue;

 developing of competitive advantages

(Prokhorov and Konik, 2019).

2 RESEARCH METHODOLOGY

he aim of the study is to assess the consequences of

introducing a digital business model into the activities

of business structures. The objectives of the research

are: a brief description of the digital business model,

a description of the developed algorithm of

implementation in the organization's activities, an

assessment of the consequences of this process.

The theoretical and methodological basis of the

study was the key aspects of digitalization and

modeling of business processes, the foundations of

the development and functioning of business

structures, methods for assessing the effectiveness of

the implementation of digital tools in management

processes.

Nigay, E., Lebedinskaya, Y. and Barausova, E.

Implementing the Digital Business Model into Organization Activities as a Factor of Economic System Sustainable Development.

DOI: 10.5220/0010667000003223

In Proceedings of the 1st International Scientiﬁc Forum on Sustainable Development of Socio-economic Systems (WFSDS 2021), pages 261-266

ISBN: 978-989-758-597-5

261

3 RESULTS OF THE RESEARCH

The digital transformation of the customer interaction

system in the business model of the organization is

based on the so-called omnichannel approach, which

involves the integrated use of all possible digital

channels of communication with the customer,

forming a single history of contacts and customer

experience in the company. From this position, the

number of mastered, implemented digital

technologies and communication channels in the

customer interaction system can serve as an indicator

of the company's digital activity (Barausova et al.,

2021).

The introduction of digital tools into business

processes and the systematic digitalization of the

business model of the organization are both sources

of formation and maintenance of competitive

positions, as well as factors for the sustainable

development of entrepreneurial structures, markets,

and economic systems.

According to the proposed approach, four key

sectors can be identified in the structure of the

company's business model:

1) activity of the company, which includes the

main aspects, factors and subjects of the market,

ensuring the functioning and development of the

enterprise. These include key partners, key resources,

activities;

2) value proposition - key formulation of the

positioning of the company's offer, which is

characterized by the value of the company in the

consumer's consciousness;

3) Customer Interaction system includes channels

and means of interaction with customers, connected

and coordinated with the company's goals,

understanding and meeting client's needs. This aspect

contains consumer segments, customer relationships,

distribution channels;

4) the monetization of activities is a commercial

component of the company's offer, characterizes the

degree of demand for goods and is composed of a

structure of costs and revenue streams.

Transformations in the "Customer Interaction"

sector in the business model offered are implemented

on the basis of an omnichannel approach.

The omnichannel approach involves the

integrated interaction of the company with the client,

through the use of a single harmonized channel

system, which gives the impression of continuous

communication.

Comparing the traditional channels and the multi-

channel approach in the pre-digital era with the

modern innovative omnichannel approach, it is

necessary to emphasize following, the multi-channel

approach reaches the consumer through the

maximum possible number of channels, the main task

of which is to ensure maximum coverage, frequency

and customer engagement based on the principle of

"the more, the better." The omnichannel approach, in

addition to the significant expansion of the range of

digital interaction tools used, connects each channel

together with a single accounting system, interacting

with customers comprehensively, simultaneously on

all channels and individually on each channel

separately (Nigay et al., 2021).

In the system of customer interaction and

customer experience management, the omnichannel

approach includes three main aspects.

1. Omnichannel marketing. In general, it assumes

a digital integrated approach to customer experience

management based on the involvement of an agreed

set of communication tools: content marketing,

messenger marketing, SMM marketing, email

marketing, and others.

2. Unified platform BPM (Business Process

Management) + CRM (Customer Relationship

Management). A single platform (as a digital service)

in the presence of a CRM system allows you to

"switch" a client from one channel to another, (using

the CRM system database) without breaking the logic

of the client's interaction with the company, with the

subsequent development of a development strategy,

modeling and performance evaluation for each

business -process.

3. Transactional context. When introducing and

using digital customer engagement tools in an

omnichannel approach, you cannot focus on digital

engagement alone. It is necessary to remember about

the client's route, which he takes from getting to know

companies in the digital space to the possible

conclusion of a transaction offline.

All three components are necessary for customer

experience management, which is aimed at

comprehensive, systematic support of the client at all

stages of the interaction process, from making a

decision to purchasing goods and services, both

through digital and offline channels. As a result,

interaction with the client is built in two directions:

1) consultative interaction;

2) transactional interaction.

Consultative interaction directly depends on

omnichannel marketing, transactional interaction

with the client occurs due to the development of the

transactional context - building a clear vision of the

“client's route” (which way he can go from digital

online channels to traditional ones). In the nt the

"real" stage of interaction with the client, process of

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262

digitalization, it is necessary to take into accouwhile

maintaining effective interaction with the client

across all channels.

The structural digitalization of the customer

interaction system based on the omnichannel

approach is shown in Figure 1.

Figure 1: Digitalization of the customer interaction system

in the business model of the organization.

Block "Relations with the client" in the

framework of the general business model is

responsible for how the relationship with the client is

formed and describes the types of relationships. The

introduction of omnichannel marketing in this block,

as a rule, is carried out using the following tools:

1) SMM marketing;

2) messenger marketing.

All the tools for interaction with the client in this

block operate on the basis of a single platform of

business processes connected to a CRM system, with

a clear vision of the client's route until the moment of

the transaction.

2 The Consumer Segments block defines which

groups of people and organizations the company

expects to attract and serve. The introduction of

omnichannel marketing in this block involves the use

of the following tools:

1) content marketing;

2) e-mail marketing;

3) targeted advertising.

All the tools for interaction with the client in this

block operate on the basis of a single platform of

business processes connected to a CRM system, with

a clear vision of the client's route until the moment of

the transaction.

3 The Sales Channels block includes

communication, distribution and sales channels that

provide direct interaction between the company and

the consumer. The introduction of omnichannel

marketing in this block includes such tools as:

1) mobile app for shopping;

2) website.

Information on customer experience (data on

purchases, views) is recorded on the basis of a unified

BPM (Business Process Management) platform. At

the same time, the client's route is monitored from

viewing the offer to completing the transaction. At the

same time, when planning sales channels in the

system of interaction with a client, it is necessary to

coordinate their work in both digital and traditional

directions (Blizkiy et al., 2021).

The most sensitive and mobile in terms of

adapting business processes are small and medium-

sized businesses, which today are actively

introducing digital tools into management and

operational solutions, thereby achieving increased

productivity, efficiency, and competitiveness

(Lebedinskaya and Nigay, 2019). As a substantiation

of the proposed approach, the results of the

implementation of a digital business model in the

activities of LLC Partner-DV, operating in the market

of fasteners and structures in Vladivostok, were used.

Since the main field of activity of LLC Partner-

DV is wholesale and retail sales, it is the system of

interaction with the client that is of the greatest

importance for it. The building blocks of this system

in the company's business model are:

1) relationship with customers;

2) consumer segments;

3) sales channels.

Figure 2 shows the structure of the customer

interaction system in the basic business model of the

enterprise before the improvement of digital tools for

influencing customer experience.

Initially, the company had only a CRM system of

digital elements of customer interaction, which was

used exclusively for working with the B2B segment,

including construction companies and retail chains.

Figure 2: Basic structure of the system of interaction with

clients of the business model of LLC "Partner-DV",

Vladivostok.

The website (as a digital sale channel) was

targeted at the B2C consumer segment. The site also

•Omnichannel

marketing

•Unified BPM

platform

•Transitional

context

Customerrelations

• Omnichannel

marketing

•UnifiedBPM

platform

• Transitional

context

Customerssegments

• Omnichannel

marketing

•UnifiedBPM

platform

• Transitional

context

Saleschannel

 Individual work with

client

 Loyalty program

 CRM (for wholesale

clients)

 Retail

 Chains

 Wholesale

 Digital

B2B

 Retail chains

 Construction and development

companies

B2C

 Individuals (for personal use)

 Individuals (construction workers)

Implementing the Digital Business Model into Organization Activities as a Factor of Economic System Sustainable Development

263

served as an informational role for the target audience

of B2B.

Digital communication channels were used in the

form of e-mail and the WhatsApp messenger - mainly

as a personal initiative of sales managers. Thus, the

ratio of the personnel involved in the work using

digital tools of communication with the client was

0.15, which is typical for the follower strategy in the

use of digital technologies in the activities of the

enterprise. general (Nigay & Popova, 2019).

It should be noted that the haphazard use of digital

tools leads to a decrease in both overall indicators of

digital activity and efficiency in general (Razumova

and Levine, 2019).

Thus, in the context of the digitalization of the

market and the economy for small businesses, the

transition to a new digital business model that links

all the digital channels of interaction with the client

on a single management platform, as well as

consistent with the system of traditional (offline)

communication channels, is becoming an urgent area

of activity. The algorithm for the transition to a new

business model in relation to the activities of Partner-

DV LLC is shown in Figure 3. Improvement of the

customer interaction segment in the business model

of the enterprise is based on the use of an

omnichannel approach and includes consistent

coordination and a complex combination of digital

tools along with with the formation of offline

customer experience (transactional context). This

facilitates the generation of a flow of integrated and

complete organization-to-consumer communications.

Figure 3: Algorithm for the transition to digitalization of the

customer interaction system in the business model of the

enterprise based on the omnichannel approach.

Figure 4 shows the transformation of the system

of interaction with the client of the business model of

LLC Partner-DV in the context of digitalization based

on the omnichannel approach.

Figure 4: Transformation of the system of interaction with

the client of the business model of LLC "Partner-DV" in the

context of digitalization based on the omnichannel

approach.

All three blocks of the system: customer

relationships, consumer segments, sales channels are

in constant close interaction and require coordination

of activities in each direction.

In the block "Relations with the client" on the

basis of the omnichannel approach, the following

tools have been introduced: SMM marketing, a

unified BPM platform (integration with the existing

CRM system), messenger marketing (Blizkiy et al.,

2021).

In the block "Consumer segments": content

marketing, email marketing, targeted advertising.

In the “Sales Channels” block, within the

framework of the omnichannel approach, the

emphasis is placed on strengthening the sales function

of the existing website and creating a mobile

application for making purchases operating on

various operating systems.

4 RESULTS

The introduction of omnichannel marketing is the

largest layer of work in improving the company's

business model, covering all blocks of the Customer

Interaction segment. A description of the activities

carried out is presented in Table 1.

Working-off transitional context

Unification of the channels to the single BPM platform

(with CRM system)

Implementation of omnichannel marketing

 SMM marketing

 BPM+CRM

 Messenger

marketing

 Mobile applications

 Website

 E-mail marketing

 Targeted advertising

Omnichannel

Sales

Clientsrelations

Customers

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264

Table 1: The sequence of implementation of the digital system of interaction with the client of the organization's business

model.

Clients Relations

SMM marketing Messenger marketing Unified BPM+ CRM

1 Choosing platform (Facebook, Twitter,Instagram etc)

+ profile customization

1 Choosing mix of applications

(depending on TA)

1 Seting goals and

objectives

Sales Channels

Application for mobile phone purchases (Android и

iOS

)

Webpage development

1 Placing of the order and development of the

application

1 SEO and web search optimization

2 Promotion of the app via App Store и Google play

market, Google ADS

2 Setting of operations. Promoting the importance of

webpage among employees.

3 Setting KPI & software audit. 3 Analysis of the results of web

romotion.

Customer Segments

Е-mail marketing Content marketing Targeting

1 Plan and strategy 1 Strategy 1 Marketing and competitors analysis

2 Layout and content 2 Content 2 Target audience

3 Contact base 3 Publications content plan 3 Unique creative content

4 Direct-mail optimization 4 Promotion 4 Analytics

5 Evaluation(KPI) 5 Promotion campaign

Sales channels for this campaign should be

developed through the creation of an application for

purchases and the development of an Internet site.

Taking into account all predictive estimates of the

expected effects from the implementation of a digital

business model, we can give an overall assessment of

the effectiveness of the proposed business model for

the company "Partner-DV" LLC (Table 2).

Table 2: Predictive assessment of the expected effects of the implementation of a digital system of interaction with the client

of the business model of the organization of LLC "Partner-DV".

Competitiveness assessment Economic fssessment Innovation assesment

Changing the position of the company

in the market

Changing the “follower” strategy to the

“candidate fo

leadership” strategy

Growth of economic

performance indicators - 28%

Increased use of digital tools for customer

interaction (digitalization rate 0.57)

Evaluation of the proposed improved business

model of LLC "Partner-DV" assumes the following

change in indicators.

Increase in revenue up to 114,499 thousand

rubles. already in the next period will change the

company's market share from 7.71% to 12.79%, as

well as improve the rate of growth of the market share

from 89.83% to 106.48% - this will contribute to a

change in the position on the competitive market map

from a weak position competitive position and

deterioration in growth rate, on the position of a weak

competitive position with an improvement in the

growth rate (Krasova and Xiu, 2016).

5 CONCLUSION

The proposed theoretical and methodological

approach to transforming the business model of an

organization in the context of digitalization, assessing

the consequences of digital transformation involves

improving the system of interaction with a client

based on an omnichannel approach and a complex

combination of digital and traditional channels of

interaction (Nigay et al., 2021). The transformation of

the model of the system of interaction with the client

acquires particular importance in the activities of

organizations that form direct client experience, when

Implementing the Digital Business Model into Organization Activities as a Factor of Economic System Sustainable Development

265

comprehensive, integrated information and

consulting support of the client is required at all

stages of making purchasing decisions. This is

facilitated by the integration of digital and traditional

customer interaction tools. It is proposed to assess the

consequences of the transformation based on the

determination of the company's competitive position

by the methods of competitive analysis; assessing the

economic effect, as well as assessing innovative

indicators (Salova, 2020)

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