Vigil over the Digital

Disclaimer: Let me say that I have decided to use this title despite what is happening in the payments system.

Eternal vigilance is the price of liberty – Edmund Burke. As you read through the article, you will understand why I have used this master quotation.

I should call myself a digital transformer going by the currently popular use of the term since my team and I created a completely self-contained online system five years ago, doing away with manual processes and also scanning past documents and storing them in appropriately named electronic folders to facilitate easy retrieval, doing away with files, (and releasing a lot of space), and conducting interviews through some technology platform. But we used mundane terminology to describe what we had done (relative to digital). We could have said that we have digitally transformed the application process and digitized the documents to create a digital library. We didn’t want to elevate what we considered a simple solution to a manual process, using the opportunity to improve the process along the way as anyone should.

What has been happening over the last year and half (going by sustained media reports) is precisely the use of this elevated language to describe simple things to make them seem earth-shaking phenomena. There continues to be a carefully orchestrated campaign covering fields such as education, investment, payments, online ordering – in fact, anything which does away with a physical, manual process. To be sure, there is no doubt genuine digital transformation is taking place in many businesses but that is not on display. Not now.

Digital – many meanings

The word digital has many meanings and there is no consensus. Many surveys too have shown that the word connotes different meaning to different people. Surveys apart, some of the meanings are highly technical such as digital signal (the mathematics underlying it is completely different from analog signal), digital films (as distinguished from celluloid films), digital sound, digital music, digital marketing, digitally enhanced sound, music, digital restoration and so on. The most technically sound definition is this: “A digital system is one that operates using ones and zeros rather than analog signals” ((https://www.reddit.com/r/explainlikeimfive/comments/28xmu9/eli5_how_can_a_movie_be_digitally_enhanced/). Let me add one more definition specific to cinema: “Digital cinematography is the process of capturing (recording) a motion picture using digital image sensors rather than through film stock” (https://en.wikipedia.org/wiki/Digital_cinematography). By the way, anyone interested in understanding how a movie can be digitally enhanced should read this (https://www.reddit.com/r/explainlikeimfive/comments/28xmu9/eli5_how_can_a_movie_be_digitally_enhanced/).

Typically, each group of users uses it in a way that it is understood within; if you were part of a group of telecom engineers working in signaling your communication will follow what is relevant to analog signals and digital signals with the corollary mathematics. And so on. Clearly, the current (and continuing) campaigns and media coverage (in India) does not address any of these meanings. What does it address?

As many dictionaries show, one of the meanings of the word digital is anything to do with computers and that is what is being elevated to sound like a world changing phenomenon. I have no intention to be a party-pooper but I think the reading public should also know that what is being portrayed in this manner is something that has been evolving over the last (at least) 25 years. Longer, in fact.

The Payments revolution

Indisputably, the payments systems is growing although how it will continue once the world returns to pre-Covid normalcy is to be watched. Let us look at some basic data.

A story titled “Retailers are discouraging a mainstay of e-commerce in India” and updated on December 4, 2020, says that cash on delivery (COD) currently accounts for 65% of online purchases in India and that many retailers are discouraging the practice. It is widely accepted that COD built the e-commerce business in India.  E-commerce sites including Amazon, Flipkart and 1mg had suspended the COD option for some months from April as part of efforts to create contactless shopping in a bid to curb the spread of Covid-19. However, the sheer popularity of COD prompted them to restore the payment method recently. The share of COD is at 60%-65% now compared with more than 70% some years ago, according to e-commerce enabler Ace Turtle. (https://economictimes.indiatimes.com/industry/services/retail/retailers-are-discouraging-a-mainstay-of-e-commerce-in-india-cash-on-delivery/articleshow/79549610.cms?from=mdr). Another article dated June 10, 2021 suggests that 83% of customers prefer COD (https://shyplite.com/blog/cash-on-delivery-services-are-changing-the-ecommerce-Industry-in-India/).  Market studies are being done even now on the size and composition of the COD market (https://www.openpr.com/news/2271160/global-e-commerce-cash-on-delivery-cod-services-market). Another comprehensive report on global e-commerce says that “Unlike North America, cash on delivery is a top choice in Eastern Europe, India, Africa, and throughout the Middle East. Similarly, enabling direct debit is a must if your target markets include India, Africa, or Asia” (https://www.shopify.in/enterprise/global-ecommerce-statistics).

While the media has been going gaga over digital payments but I haven’t found any discussion on the increase in currency in circulation (CIC as the RBI puts it) by over 14.5% during the same period when digital payments too were happening. Should we argue that there is a cash transformation? What is missing is a sense of balance in the media narratives.  I would like to once again refer to the continuing importance of COD in e-commerce in this connection; it is not just precautionary holding alone, as some media reports have concluded.

We will have to wait for the world to settle down after the return to normalcy to see which trends get strengthened and weakened.

Evolution

Unless I am mistaken, the beginnings (of what is called digital) can be traced to payroll processing which began in the mid-1970s followed some years later by MRP (manufacturing resources planning) to be replaced by ERP (enterprise-wide resources planning) which, in a fundamental sense, ushered in information captured in non-physical manner across an entire company. Yet, it was a misnomer because there still were other software addressing specific applications, with subsequent years witnessing an enormous proliferation of such software (something I have written about earlier) leading to the need for system integration and opening up a new business for Indian IT companies.

Again, unless I am seriously mistaken, this process continues today but with a difference; now there is not just such discrete software but many apps too. We now have system integration not just related to software but also apps. Today, integrating multiple apps into a platform from where users can access all has itself become a business. You may have read about many leading business groups developing a super-app that will be a single integrated app that will let you do through one app what you will otherwise do with many.

I would like to refer here to what Fidelity Information did in the aftermath of the 2008 housing mortgage crisis which began in the US and rapidly spread to many other countries bringing in its wake severe pain and adjustment to individuals and companies. It shook people’s confidence so badly that many potential investors felt the need to consult someone they trusted before deciding to make a specific investment. Fidelity Information helped people chat with others about any aspect of investment and, if they decided, to actually make the investment, all in a single loop. As I have mentioned in an earlier article, business is all about closing loops and making things easy for customers.

QR codes have been there since 1994 but it is only in the last few years that they are being used to facilitate payments because an entire ecosystem has sprung up (or actually made to spring up!) Many of the payment facilitating companies have been around for at least 20 years – Square, PayPal among many others. The tech media extensively covered these developments (as others too) consistently since then. It is a different point to note that few have actually built a profitable business in payments. But that is a different story.

In fact, ever since we began actively using the internet and HTML technology, there have been significant advancements in the use of technology in many areas such as entertainment, health, housing and so on. At some stage when a critical mass has been reached, there were qualitative jumps moving to a higher level such as 3-D for example. As far back as 2000, some realty websites would show a 360 degree video of houses for customers to get a good idea, and later many began using virtual reality, augmented reality, extensive use of animation in customer engagement and marketing activities. Voice-activated chats or silent chats was possible in 2000 or 2001 itself. It is just that no one went to town about it, as is happening now.

The internet & education (digital education, if you please)

Around 2006-07, a global company focused on education earned more than $1 billion in digital education (their language) but no one made a big thing out of it.  In the year 2000, MIT put on the internet for free a whole gamut of courses which came to be called MOOC – massively open online courses. In the subsequent years, NPTEL has been offering (for free) so many video courses like a classroom lecture. For instance, there is a series of 30+ lectures each of about an hour duration on Computer architecture by an IIT Madras professor. In fact, many IIT professors have offered courses free for anyone to go through. You will find many sites devoted to a specific subject or even topic; there is one individual who has set up a site dedicated to Fourier Transform and keeps updating it, a rich resource.

If you had the sincerity and the patience, there is so much you can learn from what is freely available on the internet. I just can’t understand why students aren’t just referring to these extremely useful material. Some of them may not be very engaging but you are not in this for entertainment! If someone took the trouble to curate such content, they can create appropriate reading for students at various levels, paying attention to the needs of the curriculum. Learning is a process that should engage the learner and teacher but there are many ways of doing this. In a country with extremely poor children, there is a need to find and organize such engagement models.

People have this mistaken notion that engagement is inherently digital but textbooks can also be engaging. I have read textbooks on mathematics for school children by NCERT (National Council for Education Research and Technique) and found them so easy to read and nudging you to think in an active manner. Almost as if they are talking to students!

So, what is the problem?

Yes I think the question needs to be asked. One answer, I am venturing, has to do with the time we are living in now. I characterize this period we have been going through as the ‘going to town’ times – at periodical intervals some idea gets marketed in a carefully orchestrated campaign as if this is the greatest show on earth. In 2014, Singapore Telecom stopped calling itself a telecom company and rechristening themselves as digital services providers. No eyebrows were raised and no one magnified it. What is happening today in India and played out on television and other media seems slanted towards some goal.

In the mid-1990s, many companies renamed themselves to some Leasing & Finance company because of the success of Mazda Leasing & Financing, Harshad Mehta’s company, followed later by software, later by fintech and biotech, and so on. Now it is digital and cloud. The eye is glued to the value! Many later just disappeared!

That apart, perhaps, the heightened attention is owing to the enormous growth in social media which has shown the ability to ‘create’ eventful phenomena out of nothing. And that has sown the seeds of exaggeration that we see today which makes the mundane look monumental.   And many gullible people get taken in. Even the media gets carried away because of all the glitz and glamour that goes with anything technological. It is easy to get carried away because technology can be (and often is) fascinating. But we need to think through, take stock of what is happening. As I have said at the beginning, ‘eternal vigilance is the price of liberty’.

Takeaways

Digital has a rigorous meaning with an accompanying mathematics

One usage has gotten disproportionately highlighted

The mundane is elevated to the monumental

Digital payments have increased but so has currency in circulation

Genuine digital transformation is not easy and not just a matter of software system

Reality is always a hybrid