The term “digitalization” refers to the digital transformation of society and, thus, the economy. Digital transformation entails finding new markets and business models, as well as new methods to engage with customers. It involves utilizing the power of cutting-edge technologies to accomplish unexpected tasks. Today, digitalization is not an option but a necessity. Therefore, companies, which are key market players, must participate in the digitalization process. Digitalization may lead to significant problems regarding regulatory risk and compliance, which indicates the importance of operating in accordance with regulatory risk and compliance principles.
Benefits of Digital Transformation
A digital transformation project with the correct strategy, tools, and timing provides several advantages to businesses. For instance: employees become more efficient in their tasks; new business solutions save time and costs; parties become more accessible within the organization; data analysis becomes easier; management is handled more effectively; products or services are delivered internationally; thus, turnover increases; economic crisis is mitigated, and competition accelerates. Moreover, the use of new technologies is expected to lengthen the life of businesses.
Digital Transformation Process
Each digital transformation process begins with a specific plan in the form of a strategy or a current situation analysis. A company should determine its digital strategy after determining its main strategy, and the relevant staff must be assigned to the determined strategies. The reason for this is that a project’s staff is critical to its success, and outsourcing may be required for its management. External resources can be received from a variety of entities, including universities, independent consultants, and research organizations. The subsequent and most important step is the marketing stage. The key point here is to draw attention to the project. At this point, some intermediary resources may be useful. In marketing, it is critical to provide information through various tools and to promote the project through social media. Following the dissemination of information during the marketing stage, the feedback should be thoroughly reviewed. In fact, for an organization wishing to survive, responding to its customers’ complaints and desires in a satisfactory manner is at least as crucial as the service itself. Efficiency is the final stage of digital transformation. Cost reduction should be one of the essential goals while taking actions aimed at enhancing efficiency.
The Importance of Digitalization for Regulatory Risk and Compliance
Another critical aspect of digitalization is what it entails for regulatory risk and compliance. First of all, there is no question that regulatory risk and compliance is fundamental in securing businesses in legal matters. This is also applicable to digitalization, and it is critical.
As we know, companies are also taxpayers. Therefore, companies must fulfill legal and tax liabilities during their digitalization process. Articles 253 and 254 of the Tax Procedure Law no. 213 regulate the duty of keeping books, documents and records. As a result, those who are required to keep books and documents must retain them for 5 (five) years as of the calendar year following the year they were issued. Companies must pay attention to this issue as part of their digitalization efforts.
Moreover, since companies are data controllers of their employees and other people with whom they are involved in relevant activities and procedures pursuant to Personal Data Protection Law, they must respect the General Data Protection Regulation (GDPR) and Personal Data Protection Law no. 6698 (“Law”). Thus, pursuant to article 4 of Law no. 6698, companies established under the laws of the Turkish Republic must guarantee that while they process personal data, that “processing” is:
a) Lawful and fair
b) Accurate and kept up to date where necessary
c) Carried out for specified, explicit and legitimate purposes
ç) Relevant, limited and proportionate to the purposes for which it is carried out
d) Stored for the period laid down by relevant legislation or the period required for the purpose for which the personal data are processed. Otherwise, a company risks incurring severe legal and criminal penalties.
In conclusion, digital transformation is essential for businesses in today’s dynamic economy. Companies that manage all data flows online, provide real-time access to customer information via digital means, ensure digital integration between customers, stakeholders, and suppliers, measure production data instantly, reduce the margin of error up to one thousandth, collaborate with universities and industries while developing new projects will inevitably differ from companies that operate with traditional business models. Since digitalization is a technical process, corporations must collaborate with companies and law firms specializing in this field to accomplish their digital transformation and deal with the legal challenges associated with the process. A digitalization process carried out in line with regulatory risk and compliance principles promotes organizations’ innovative efforts by assisting them in avoiding legal and criminal penalties and other losses.
