Legal Advice

Digitalisation in Business

What is digitalisation: Digitalisation entails converting information into a digital format. Digitalisation in business is the use of technology in the day-to-day operations of the business. The adoption of digital technologies into businesses is regarded as significant.

Significance of digitalisation in businesses: Digitalisation is important in businesses as it is used as a model to improve operational efficiency and effectiveness. It is also an important tool to deal with the unpredictable and uncertain nature of businesses.
For example, businesses that adopted and embraced digitalisation during the Covid-19 pandemic faced fewer negative impacts as opposed to those that did not adopt a digitalisation model. A company’s success today depends on its agility. Thus, digitalisation helps in creating a competitive advantage.
Digitalisation is also important to reduce human errors, thus reducing operational costs.

How digitalisation in businesses can go wrong:
It is important that businesses develop a strategy that aligns with the business’ strategy, goals, and objectives. Lack of a clear strategy that is aligned with the business means that the strategy is bound to be ineffective and fail to deliver the desired results. Furthermore, digitalisation can go wrong where companies do not set out realistic expectations, resulting in poor implementation.

Digitalisation can be complex and requires a significant investment of time, money, and resources. Therefore, it is important for businesses to carefully plan and execute these projects to minimise the risk of failure. This also requires training employees to ensure that they are well-prepared and can easily adapt to the use of new technologies and associated changes.

Digital transformation can be expensive, especially for small businesses. Digitalisation can, in these instances, be done in phases in accordance with the business’ financial capabilities.

Digitalisation in businesses can raise security and privacy concerns for business, customers, and employees. Companies therefore ought to implement security measures to mitigate these risks.
• For example, in 2021, Kroger announced that it would be investing $1.2 billion in digital transformation initiatives. However, the company has since faced several challenges, including technical difficulties with its new self-checkout machines and a data breach that exposed the personal information of millions of customers.
• In 2019, a company called Equifax in the United States of America (USA) was fined $700 million by the Federal Trade Commission (FTC) for failing to protect the personal data of its customers. The FTC found that Equifax had failed to implement adequate security measures, which allowed hackers to steal the personal data of over 145 million people.
• Furthermore, in 2020, Zoom was fined $85 million by the FTC for failing to protect the privacy of its users. The FTC found that Zoom had collected personal data from its users without their consent, and that it had failed to take adequate steps to protect this data from unauthorised access.
• These challenges have a detrimental effect not only on the company’s financial arm, but also has the potential to cause damage to the company’s reputation and good name.

How to avoid digital transformation failures:
One way to reduce digitalisation failure is to start on a small scale and then scale up the project if it is successful. It is important for businesses therefore to constantly measure their progress based on their strategy and track their results.

Companies also need to be adaptable and flexible as the digital landscape is constantly changing.

It is also important for companies to consider the legal and ethical implications associated with digitalisation. For example, businesses should be careful not to use digital technologies in a way that discriminates against customers or employees.

Businesses should also be transparent about how they collect and use personal data i.e., in terms of the Protection of Personal Information Act (POPIA). By being ethical and transparent, businesses can build trust with their customers and employees.

Businesses can also adopt best standard practices such as the International Organization for Standardization (ISO)/IEC 27001 standard. This standard provides businesses globally with a framework for protecting their information assets, including personal data.

Another example is the Payment Card Industry Data Security Standard (PCI DSS). The PCIDSS assists businesses to protect against possible fraud and data breaches.

Digital transformation can be a daunting task, but it is essential for businesses that want to stay competitive in today's economy.

It is also essential for businesses to consult with experts to ensure that they adopt appropriate digital technologies and ensure that they comply with laws and regulations. Businesses can also make use of international standards as guidelines.

Digital Intellectual Property

Digital intellectual property (IP) is any intangible asset that is created or stored in digital format. Digital IP includes computer software, music, videos, photographs, databases, websites, and e-books. IP is protected in South Africa by a number of laws, including the Copyright Act, the Patents Act, the Designs Act, and the Trade Marks Act.

Digital IP is afforded protection by law, much like traditional IP. Copyright protects original works of authorship, such as literary, dramatic, musical, and artistic works.

Trademarks protect words, phrases, symbols, and designs that are used to identify and distinguish goods and services from those of others.
Trade secrets protect confidential information, such as customer lists, formulas, and manufacturing processes.
For businesses to protect their digital IP, it is important to use strong passwords, encrypt their data, back up files, regularly check for risks of IP infringement, and lastly, take legal action if IP is infringed.

Social Media and Intellectual Property

Social media is a powerful tool for sharing information, ideas, advertisement, and selling of goods and services. However, it can also be a hatchery for intellectual property (IP) infringement. IP infringement includes copyright, trademarks, industrial designs, and patents.
It is vital that companies and their employees are cautious when using social media to avoid legal recourse. Individuals and businesses need to always obtain permission before using external or third parties copyrighted content. This includes photos, videos, articles, and music, although these may already exist in the public domain.

In a reported judgment in 2017, the High Court awarded damages to the photographer after the respondent had posted the photographer's copyrighted photo on his social media account without consent. The respondent’s claim that he had found the photo on the internet and that he believed it was in the public domain was regarded by the court as an insufficient.

Businesses also need to be careful when using external or third parties’ trademarks, logos, and designs.
Businesses should regularly check and monitor their social media accounts for unauthorised use of any of their IP.