DIGITAL EFFICIENCY: A TOP PRIORITY FOR COMPANIES

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TRANSCRIPTION

PATRICK: Christina, it's great to have you with us.

CHRISTINA: Hi Patrick, thank you so much for inviting me to the podcast. It's truly an honor to be here today, especially to delve into a topic as crucial as digital efficiency and its impact on sustainability. Through the work we do at SPS, we aim to demonstrate how businesses can adapt services and be a force for good. So, for me, the intersection of technology and environmental stewardship is a subject that's really close to my heart as I know it is for you too. And I'm always as keen to learn and understand how others navigate this landscape as I am to share our own learnings, challenges and successes in this area. So, in the hope that it inspires others to embark and improve on their own sustainability journey. So once again, thank you for the opportunity. I'm really looking forward to our discussion.

PATRICK: I'm so grateful to have you and I'm excited to learn from you today. I would say the first question that comes to mind is, could you start by explaining what digital efficiency means at SPS and why it's a priority today?

CHRISTINA: Yeah, digital efficiency refers to the optimization of digital processes, systems and tools to achieve maximum productivity, performance, cost effectiveness, all with minimal waste of resources. So, it involves taking structured and unstructured data and using technologies such as GenAI to streamline operations, automate repetitive tasks, improve communication, enhance data security management and mitigate risk. And by leveraging digital technologies, organizations can reduce operational costs, improve digital decision-making with better data analytics. All these efficiencies ultimately enhance customer experience and drive innovations. So, prior to COVID-19 pandemic, I think digital transformation efforts typically focused on integrating technology solutions into specific functions or customer-facing areas.

And although digital business transformation was recognized as a strategic goal, it was often the secondary consideration triggered by the immediate needs within an isolated selection of a section of the organization. However, I think the pandemic really catapulted digital transformation to the forefront of corporate strategy and the global business agenda. So as lockdowns forced the world to operate remotely, both businesses and consumers.

According to an IDC report, global spending on digital transformation is projected to reach 2.8 trillion by 2025. So that's more than doubling the investment in 2020. So digital efficiency is crucial for businesses to remain competitive in what is in what is a rapidly evolving landscape. – Christina Banahan

Swiftly adapted digital solutions lead to an unprecedented surge in online transactions and services. And the urgency to adapt to remote working environments enables companies to implement these digital solutions much, much faster than they would have done before. Confronting existential challenges and fast-tracking decision making and prioritizing digital transformation as a key strategic objective.

You know, we ourselves, we've been offering digital mail solutions for a number of years. But as a result of the pandemic, the timelines for companies adapting these or adopting these digital projects shortened considerably. So primarily due to the expedited decision-making process. Now, as you know, digital transformation has become a mantra for many companies, whether they're big or small and irrespective of the size, the journey involves automating workflows, eliminating time consuming manual tasks, incorporating intelligence and tapping into the infinite possibilities offered by this wealth of data. So, the ability to harness insight and drive action from data is the key to unlocking the limitless opportunities of digital efficiency or transformation. And it's actually really here to stay.

According to an IDC report, global spending on digital transformation is projected to reach 2.8 trillion by 2025. So that's more than doubling the investment in 2020. So digital efficiency is crucial for businesses to remain competitive in what is in what is a rapidly evolving landscape.

Impact of Hybrid Work Solutions on Productivity and Sustainability

PATRICK: You see that's very energizing, and it seems like you're in the right space at the right time. And it's a massive industry that is growing super-fast that has the potential to really transform how we do business forever. I loved your points around driving, harnessing the data to drive better decisions as well. I think we're only starting to scratch the surface. The more historical data you have as a business, the clearer your decision-making processes and the better decisions you make. And I think we live in a world as well where having that data could allow you to look at things in a more 360-degree way and drive more responsible decision making as well. And I'm excited to talk about that as well throughout the episode today. Thank you for that. I would love to hear an example of a digital efficiency initiative that you've implemented for clients and its direct impact.

CHRISTINA: Yeah, the one that comes immediately to mind is the hybrid workplace solution. So that includes digital mail, virtual reception, desk bookings, hospitality bookings and smart lockers. And these are all available on one platform. So, it creates a connected office that fosters better collaboration and support, regardless of if the team is working onsite or remotely. And hybrid and remote working models are now increasingly becoming the standard, offering numerous benefits for both employees and employers alike. So, for employees, they really appreciate the flexibility that hybrid models offer, allowing them to balance work with personal commitments. And this balance leads to reduced stress and enhanced overall well-being. Working from home also removes the need for that daily commute. So, that saves time and it saves travel costs. And the time saved can also be devoted to personal pursuits, so further improving that work-life balance. And many find, not all, but many do find that they are more productive at home, away from the typical office distractions and interruptions. So this environment can foster a higher quality of work and more effective or efficient time use. And for employers, there's cost savings, you know, with the reduced in office presence, companies can save time on it, can save money on real estate and on utilities and other office expenses. And hybrid and remote working enable companies to recruit talent from a much broader geographical area. So not just those within a commuting distance. And therefore that helps organizations find the best candidates. And offering flexible working arrangements has seemed to boost employee satisfaction and loyalty. And thereby lowering turnover rates and maintaining a stable, experienced workforce. As organisations, I think, navigate the new norms of work, it's clear that the integration of digital technologies and the adoption of this flexible working model, they're not just trends, they're essential strategies for future-proofing organisations.

Overcoming Challenges in Digital Transformation

PATRICK: Absolutely. I can still remember the first day of COVID four years ago. And I was really struggling. before that, I've never taken a Zoom call or a video call. we would take conference calls. And the first day I logged in, I think it was like March, probably around this week, four years ago. And I took a video call without me being on video, because I've never seen myself on a video call before. So It's insane to me how quickly we as humans adapt. And I love hearing all the amazing things you're doing at SPS, because not only does it align with how the world is moving and you're driving that change, but also it has a ton of positive impact. So throughout this episode, I'm excited to unlock how all these digital initiatives are driving sustainability goals and driving better economic outcomes for cities, countries, and the world. One question that comes to mind is how does digital efficiency tie into a company's overall sustainability goals?

CHRISTINA: Yeah, that's a good question. I think it's crucial for achieving both our own sustainability goals and that of our clients through various impactful measures. As I previously mentioned, digital tools facilitate the adoption of remote and hybrid work arrangements. And this directly contributes to a reduction in carbon emissions linked to commuting and to business travel. The shift towards less commuting not only decreases emissions and improves air quality, contributes to reduce congestion and less strain on public transport systems, particularly around certain times of the day. And I know that there have been concerns raised about the impact on city trade. Remote working, I think, does encourage local spending and potentially revitalizing local economies. In addition, I think digitization and cloud-based technology means that organizations can significantly cut down on the use of physical resources like paper and ink and the transportation required for delivery. This approach not only saves natural resources, but it also lessens the waste production and significantly reduces the environmental impact. And while there is still a persistently high demand for paper, we have implemented various initiatives to mitigate the impact that this has on resources for our clients. For example, we have omni-channel customer communications, which enables recipients to select their preferred communication channel. So by managing activities across all available channels, organizations can ensure a seamless and integrated customer experience. This approach not only caters to diverse preferences, but it also enhances engagement by meeting the customers where they are. And I think that's important.

PATRICK: I love your last point, Christina, about meeting the customers where they are. And I also loved your earlier point about automating existing workflows. What I love about what you're doing is you're truly disrupting the world, but you're not really trying to change how we do it, but you're trying to adapt to human behavior and trying to make it more efficient, more effective, more digital, more automated, and in some cases, even more productive. And I love that.
In a way, you remind me a lot of what we do at ESGFLO as well, which is trying to leverage technology to be able to automate existing workflows so we can give time back to humans to be more creative, to be able to drive decision-making. Because if you're a site manager or an office manager spending your day dealing with documents and paperwork, you don't have time to think about how to make something faster, how to drive decisions, how to make the entire office just more pleasant to work in. And I think what you're doing is giving people time back to focus on what matters, which is being more creative, driving better decisions, which is very honorable and very energizing.

Catalyst for Change: The Impact of COVID-19 on Digital Transformation

PATRICK: I would love to talk about the how. I think we've spent a lot of time talking about the what and the why, and I'm sure our audience is very curious to hear about the how and some of the challenges that come with implementing these solutions. So the question that comes to mind next is: Implementing digital solutions often comes with challenges. What hurdles have you faced with your clients and how have you addressed them?

CHRISTINA: Yeah, that's another really good question, Patrick. So I think before COVID-19, the challenges associated with digital transformation were more pronounced. The pandemic served as a catalyst, compelling companies to swiftly adapt. So there was less resistance to change, both from the employees and from the employers who were accustomed to traditional work methods. Nonetheless, addressing these concerns involves change management strategies, such as training, workshops, and clear communication on the benefits of digital adoption.

The human aspect of digital transformation is critical. It’s about managing the impact of new technologies on the workforce and emphasizing leadership, culture, and employee engagement. And also, with the increased reliance on digital solutions, comes a heightened risk of cyber threats. To mitigate these risks, we bolstered our cyber security measures through secure cloud services, data encryption, and security audits. Data protection and privacy are really complex issues, particularly on a global scale. So we've responded by implementing strict data governance policies, conducting privacy impact assessments, and ensuring compliance with all the relevant regulations.

The introduction of advanced digital technology also highlights the skills gap within the workforce. So we've addressed these by promoting ongoing education and professional development, ensuring employees enhance their digital competencies.

Another big challenge is integrating new digital technology solutions with existing infrastructure, especially when dealing with legacy systems. So we've tackled this by choosing compatible solutions and working closely with organizations’ IT and compliance departments.
As digital solutions automate more processes, maintaining personal connections with customers can become more challenging. So it's essential for organizations to view these solutions as tools to augment rather than replace customer interaction, focusing on personalization and upholding high customer service standards. I think historically, many leaders view digital transformation as an investment into new technology. However, this perspective often overlooks the essence of transformation, which is about developing the business, the culture, and the operations holistically.

Every business must evolve, and becoming data-driven is essential in an organization's evolution. True transformation really does require a vision of where the organization must compete over a multi-year horizon. So it's crucial to understand that digital transformation transcends technology. It's about leveraging technology to revolutionize business models and operations.

The technology itself is merely the enabler that helps execute this transformation. But in reality, the digital landscape is very complex, and keeping pace with this rapidly changing landscape can be really challenging with new digital innovations continually promising to revolutionize the workplace.

Organizations who understand the digital transformation fundamentals—identifying key technologies, formulating strategies for effective implementation, and aligning digital initiatives with the company's broader objectives—ensure that technology investments yield real tangible benefits.

So to sum it up, successful transformation requires not just technology but a strategic approach, the right organizational culture, effective change management, innovation, and a clear understanding of where to upskill and where new talent or new skills may be needed.

PATRICK: Thank you, Christina. I loved your point around augmenting existing processes or human activities versus replacing them. I remember when I was working back at Bain & Company, we were advising an insurance company in the United States. And one of the processes that we implemented was using technology to enable humans to be more empathetic. You can't replace human empathy, at least not with today's technology, and I don't envision that happening in the next few years. But helping humans in a busy world full of noise tap into their empathy is something that we were able to do, and it reminded me of that example. So really energizing again, and exciting to see all the amazing things you're doing.

I actually would love to hear about an example from you. Can you talk about an example of a digital efficiency initiative that you've implemented for clients and its direct impact?

CHRISTINA: Yeah, digital efficiency takes commitment. So we've been doing digital transformation for over 20 years, and we have seen a lot of companies struggle. It's often seen as an operational improvement or improving cost-effectiveness, but it should really be viewed as transformative while also improving sustainability.

I can give you a couple of examples, but the reason for introducing the solutions was different. We have a team at the high-tech campus in Eindhoven, which is a fantastic campus. It has over 235 high-tech companies and employs 12,000 people, including world-class innovators, researchers, and engineers. Collectively, they are on a mission to become the most sustainable campus in Europe. Since 2012, SPS has been a key contributor in that quest. We revolutionized the traditional mailroom and logistics services, transforming them into a hybrid workplace solution.

One of the groundbreaking implementations was a self-learning, voice-controlled mail sorting system. And this system, alongside a meticulous tracking system for inbound goods and an online booking platform for all shipments, marked a real sustainable change for campus logistics.

The campus actually went a stage further by digitizing business documents, such as patents and invoices, which would have been posted or shipped to over 20 countries around the world. And we’ve introduced carbon-neutral last-mile delivery using fully electric equipment.

Furthermore, we're working on and supporting projects like the Urban Mobility Hub for drones. The overall result of this project is that we are moving over a quarter of a million letters and parcels annually with 22 smart locker hubs on-site. This has resulted in reducing shipping costs by over 20% and cutting delivery time significantly, from 24 hours to less than eight hours. This is all on a campus that prides itself on carbon-neutral delivery.

We have another client, a leading global integrated payments company with over 60,000 employees. They've been a client of ours for a very long time, since 1997. We provide them with a range of services, including office logistics, digital mail, and secure check printing across EMEA and APAC. The global pandemic for them really accelerated innovation and the shift toward remote and later hybrid work environments.

Initially, we adopted an interim solution using an MFD for scanning, but this evolved into a comprehensive digital mail solution. The service expansion began in the UK and quickly expanded across Europe and Asia. In fact, we went live in five countries across APAC, launched simultaneously after a six-week implementation, which really demonstrates how quickly solutions can be adapted and scaled.
We now deliver digital mail for this company to over 14 countries, making 830,000 documents accessible to employees working remotely. The reduction in emissions from this solution alone is substantial when you take into account all the factors we previously mentioned, such as couriers and commuting. In addition, flexible working arrangements are now offered to their employees.

A final example I can think of is a client who's a global market leader in industrial automation and software, and they have 320,000 employees. We've partnered with them since 2012, and we have continuously evolved our enterprise workplace portfolio, transitioning from traditional office logistics to encompassing services for a hybrid workforce. Initially, the client was relying on a dual provider strategy for their two main locations, which had about 80% of their employees.

The client's aim was to enhance the employee experience, so that’s the view they were taking. They wanted to enhance their employee experience through digital services and aligning with their cultural vision in what they termed "new work." So when SPS introduced hybrid services, such as hybrid mail and smart lockers in 2022, it led to expansion to all their German locations, making SPS the single preferred supplier for enterprise workplace solutions.

But the significant point here is that the initiative resulted in increased employee satisfaction. So the initial drivers, I think, can be a reduction in CO2, increased employee satisfaction, or improved efficiency, but the results can have a positive impact on all these areas.

Sustainability as a Core of Digital Efficiency Projects

PATRICK: This is again, very inspiring. I was reflecting on a framework that I always use, which is at the end of the day, businesses buy services for three reasons or one of three reasons. One is to reduce cost and one is to reduce risk and one is to increase revenue or expand EBITDA. It seems to me that at least in today's world, and it seems to me you're touching upon all these three with the power of your digital solutions.

Obviously, I envision a world where we live, where businesses are also optimizing for sustainability as well. And my hope is that sustainability drives cost reduction, risk reduction, and increase in revenue. It seems like SPS, you found that secret formula that allows you to get all four. If you were to take a step back, I would love to hear from you about how you measure success of your digital efficiency projects in terms of sustainability.

The intersection of digital efficiency and sustainability represents a significant opportunity for organizations. It's not just about mitigating risk or complying with regulations; it's about creating a better future for the planet and future generations. By leveraging digital technologies with a sustainability mindset, we can build more resilient, efficient, and sustainable businesses and communities. – Christina Banahan

CHRISTINA: Yeah, there's actually a number of ways that you can do it. So firstly, you can assess the environmental impact by quantifying the reduction of CO2. This includes savings from decreased business travel and commuting that we mentioned earlier, as well as a reduction in resources such as your paper, ink, couriers, and postage, all measured in metric tons of CO2 saved. In addition to that, you can monitor your waste reduction. Operational efficiency is another crucial measure. So we can track things like process completion times, labor hours saved, and reduced error rates, which obviously have an impact then on customer satisfaction.
The impact on the workforce is also a significant consideration. Organizations can determine employee engagement with digital tools and their perception of the company's sustainability efforts through feedback mechanisms or surveys. And assessing their satisfaction with the availability of hybrid or remote working options can also be included. HR can analyze trends such as attrition or application rates compared to previous years. A vital one is customer satisfaction. That provides invaluable insights into the success of digital initiatives. Feedback on user experience and their perceived value of sustainability efforts helps organizations understand the effectiveness of the projects from the customer's perspective.

By integrating these metrics, organizations can gain a comprehensive view of the impact of digital efficiency projects on sustainability. This multifaceted assessment helps identify where organizations are not only doing well, but also highlights opportunities for further advancement.

PATRICK: I'm curious to hear from you if you can think of any metrics or KPIs that you can share with the audience to be able to highlight the progress made in the last few years.

CHRISTINA: Yeah, sure. Specific KPIs really do offer a tangible sense of the progress that's being made. For example, we set our own carbon reduction targets and help clients reach their own reduction targets as a result of introducing digital initiatives. Once an organization has measured its CO2 and resources, you can set specific reduction KPIs relating to quantifying the reduction in physical resources, such as paper and ink, which can be tracked through volumes purchased. Waste reduction can also be quantified, and therefore reduction targets and KPIs introduced.

We also monitor improvement in operational processes, such as increased process completion speed, labor hours saved, and reduced error rates, all of which contribute to a leaner and more sustainable operation.

The documents and information that we hold are very sensitive, so we place a lot of emphasis on the highest standards of compliance, cybersecurity, and data protection. For example, our KPIs include zero compliance breaches on anti-corruption, anti-trust, and anti-money laundering. We've also set KPIs that ensure we successfully re-certify in all our relevant ISOs.

When it comes to IT security awareness, our KPI is that we train all users on a yearly basis. We also set KPIs for better-than-market security scores with platforms like Microsoft and Tenable. We have KPIs to ensure 100% of all new employees are trained in compliance and data protection in their first six months. Additionally, for business resilience and risk management, we have a KPI to include all our service level agreements with clients, and we conduct business continuity plan exercises in all regions.

Not only does this make us more sustainable, but it also makes our clients more sustainable because they are assured of the quality and security of the data we process on their behalf. Two critical KPIs for us, and I believe for all organizations, are around customer satisfaction. For us, that's our net promoter score, which is world-class, and our contract renewal rate. We've also set targets within our employee satisfaction surveys, and we always act upon the feedback that we receive. So for any organization, it's important to gauge both employee and customer satisfaction levels and their perception and feedback on the company's sustainability efforts.

PATRICK: That's amazing, Christina. I love seeing how passionate you are about this, and it's very contagious. I know you, as the director of ESG at SPS, are basically at the cusp of two big trends or two big global transformations that the world is going through right now. Like one, as you said, is the digital transformation, and the other is the sustainability transformation. And it seems like you're sitting at the intersection of both. Looking forward, how do you see digital efficiency evolving in the context of ESG?

CHRISTINA: Yeah, and I think this is another area where ESGFLO is at the forefront of this. As we look toward the future, digital efficiency is poised to play a transformative role within the context of ESG. The drive toward digital transformation is fueled by evolving customer expectations and a regulatory landscape that is increasingly focused on environmental impact, data protection, and human rights.

In addition, the competitive landscape is further accelerating this push, making innovation in digital technologies not just a matter of survival, but a strategic imperative to unlock new possibilities and values. Technologies like cloud computing, machine learning, generative AI, and blockchain are all at the heart of this transformation, offering businesses the tools to become more efficient, adaptable, and, importantly, more sustainable. Digital solutions can enable smarter environmental monitoring and reporting, leading to more effective and transparent practices.

They reduce energy consumption and carbon footprints through scalable solutions that lessen the need for physical infrastructure, enhance supply chain transparency through blockchain, foster responsible and ethical sourcing, and reduce environmental and social risks. Digital efficiency also strengthens governance practices by promoting transparency, accountability, and ethical decision-making. The space you're in holds huge potential for technology to streamline ESG reporting and improve accuracy with AI and machine learning.
However, it's also worth highlighting the need to address the challenges posed by bias in generative AI models. It's crucial for organizations leveraging these new technologies to remain aware and cautious in their application. Strategies for mitigating bias include diverse data sourcing, continuous model monitoring, and applying ethical guidelines to ensure that AI-driven decisions are fair, transparent, and accountable. By proactively managing these hurdles, organizations can harness the potential while also minimizing risk.

PATRICK: I loved your examples, and I totally agree with the bias elimination and making sure you're leveraging those tools accurately and precisely. With the speed at which we're moving, it's important to note that these things happen sometimes, and being aware of them is extremely important.

PATRICK: Christina, I'm curious to hear what role do you think technology will play in the future of sustainable business practices today?

CHRISTINA: I think technology stands as the cornerstone in the future of sustainable business practices, and its role extends beyond operational efficiency to fundamentally transforming how businesses meet their ESG goals. Technology facilitates a shift towards more sustainable, socially responsible, and economically viable practices across various domains.

So, informing decision-making with advanced data analytics helps balance profitability with sustainability, as we discussed earlier. It advances energy efficiency through innovations in renewable energy and optimized energy consumption in buildings and transportation. It also supports a circular economy via digital platforms that manage product life cycles and encourage sustainable consumption and production.

The rise of digital communication tools has made remote working far more feasible. And I think as these technologies continue to evolve, they will further support flexible work arrangements. Another area is innovating sustainable products, where advancements in material science allow for the creation of biodegradable materials and products designed for recycling. Technology will also enhance transparency and accountability through better data collection, analysis, and reporting. Digital efficiency can provide verifiable and immutable records of a company's environmental and social impacts, making it easier for businesses to report on sustainability metrics accurately and transparently, something ESGFLO is certainly at the forefront of.

So, in essence, technology is not just a facilitator but a transformative force in the evolution of sustainable business practices. It provides essential tools and solutions for tackling environmental challenges, enhancing social wellbeing, and achieving economic growth in a responsible and sustainable manner for the long term.

PATRICK: Christina, this is great. I feel like we are at the cusp of a digital revolution. And I have a feeling I'm going to be listening to this episode in 10 years, and it’ll be like you're telling me we're riding horses, but we're switching to automobiles right now. I feel like we're exactly at that point in history. So thank you for all the amazing thoughts. As we wrap up, Christina, what final thoughts would you like to leave our listeners with regarding the intersection of digital efficiency and sustainability?

CHRISTINA: I would like to emphasize that the intersection of digital efficiency and sustainability represents a significant opportunity for organizations to unlock the power of possibility. The journey towards sustainability is not just an environmental or social imperative; it’s a strategic business opportunity. Digital efficiency really serves as the bridge helping us achieve our sustainability goals while driving innovation, competitiveness, and economic growth.

It’s important to recognize that while technology provides the tools and solutions to address many of our sustainability challenges, the key to success lies in how we implement and integrate these technologies into our daily operations, strategies, and culture. Moreover, collaboration—both internally within an organization and with other organizations—plays a critical role in this journey. Sharing knowledge, resources, and best practices can accelerate progress toward our common goals.

So, I would encourage organizations to embrace innovation and remain adaptable. The landscape of technology and sustainability is rapidly evolving, presenting both challenges and opportunities. We must remember that this pursuit of digital efficiency and sustainability is not just about mitigating risk or complying with regulations—although those are important. It’s about creating a better future for the planet and future generations.

By leveraging digital technologies with a sustainability mindset, we can build more resilient, efficient, and sustainable businesses and communities. This is our chance to redefine what success really looks like in the 21st century and beyond.