The own degree of digitisation has become the decisive competitive factor for many companies. The objective is to quickly respond to new market conditions and to the changing media behaviour of customers.
Often, this means abandoning the rigid structures of a purely product oriented portfolio – in favour of a solution and service-oriented business model. The successful accomplishment of this significant transition needs to be governed by a digital strategy which is implemented in a tiered manner. It needs to establish clear responsibilities which are applied and supported by all employees. Through this, companies will be able to master the process for the attainment of a viable business concept in the future, exploit new market potentials and create the foundation for long-term success.
Regardless of whether one observes the manufacturing, trading or health care sector: Today, all industries are being fundamentally transformed by digitization. This should be considered as an opportunity. Whoever manages to assume a pioneering role here, will have a competitive edge – vice versa companies will suffer fatal competitive disadvantages if they ignore this digital trend. The primary aim is to develop innovative business models and to open up new market segments – but at the same time create opportunities to optimize the value creation processes and efficiency, which in turn can provide the (financial) headroom for the development of new business approaches. A clear shift away from just the product towards service-oriented models is currently emerging. Smart Services is the keyword here. Start-ups like Airbnb and Uber have demonstrated how to dominate the market with digital platforms – without even owning a single hotel or car. Today, customers expect quick solutions from a single source that are fully aligned to their media behaviour. This doesn’t just apply to consumers, but also increasingly to the B2B (business to business) area. Because today young executives and contracting entities are digital natives, who have already integrated the new possibilities into their everyday life, and therefore also expect them in the business environment.
The path towards the digital company must be planned meticulously, and should be implemented in a tiered manner. A company isn’t digital just because it utilizes digital tools internally, and has a digital workflow for internal processes. Digitization is significantly more complex. How can I digitize my business model (before others beat me to it), how can I digitally enhance the customer relationship and thereby drive customer loyalty, how can I become agile, always scrutinize my actions, and reinvent myself if necessary? Cloud, Big Data, Mobile are today’s key technologies – and in the future there will be others. To be successful in this environment requires clear responsibilities. One option is the implementation of a Chief Digital Officers, to act as the key driver for the digitisation. According to a study conducted by the industry association BITKOM, however, so far only two per cent of German companies with more than 500 employees have created such a position. Usually the CIO or CTO is simultaneously responsible for the development and implementation of the digital strategy. The challenge however is not to design the digitization solely based on the technology, but rather with a key focus on the market, emerging customer needs and competitive situations.
Living the digital culture
The crucial factor is that all involved parties must act in a unified direction. Because the digital transition will affect the future of the entire company, and hence all of the employees. Digitisation absolutely shouldn’t be imposed from a superior level, but rather ambitiously implemented at all levels. It is therefore of significant importance to establish a digital culture. As with every change, this effort will be inhibited by employee’s fears: They are worried about their jobs, or perceive the changes sceptically. Executives should take these concerns and worries seriously and respond to them accordingly. They must become “Change Managers” and perform persuasion work to motivate the employees, mobilize stagnant processes and structures again, and identify the developing opportunities for themselves. Focus groups and staff trainings will help to prepare the workforce for the upcoming changes. Even if the acceptance has been established, employees need an adequate training to be able to efficiently apply the new methods and to further develop their digital expertise. E-learning tools and training platforms, for example, are perfectly suitable for this.
Digital structuring of everyday work
Employees can benefit in many ways from the digital opportunities in their daily work. If, for example, rigid working models are abandoned, they will receive a greater degree of flexibility and can freely decide when and where they perform their tasks. Because today many tasks can be performed with a Smartphone or Tablet, for example, while traveling on a train or in the Home Office. Collaboration tools facilitate the close cooperation within a team, even if the members are distributed across several sites. A multi-touch device in the Conference Room ensures that everyone can digitally contribute to the results of a meeting on the big screen either on site or from a remote location, and integrate into applications. Such collaboration models also facilitate the cooperation with partners and corporate customers.
Additionally, the introduction of an enterprise app is a valuable asset. It enables the quick and easy provision of important information, no matter where a staff member is located. Facts, figures and insights are often spread and divided across several departments, making their utilization somewhat cumbersome. The trick is to transition existing information into available information through the application of new technologies. This greatly enhances a company’s agility. Thereby, the IT must always remain manageable, easy to use and provide a true added value.
Opportunities for B2B
While many digital business models have established themselves in the B2C (business to consumer) area, companies are lagging behind in the B2B sector. Even though there is also a necessity here, as well as a vast range of opportunities. The fundamental aim is to offer products and services as flexibly as possible, and to provide a proper response to rapidly changing customer requirements. Whoever succeeds at this will gain a valuable competitive advantage.
A first point of entry into the digital world can be the supplementing of the traditional sales activities with a digital distribution channel, for example, a portal which offers customers a quick and easy access to customized solutions. A model that is especially attractive for IT vendors: Here, they can score with services that simplify the management of complex IT applications and infrastructures for their customers in the context of digital transformation. Such E-commerce models are setting trends, and also meet the rising demand for ITaaS (IT as a Service). For companies it’s a highly beneficial aspect if they are provided with an opportunity to simply purchase their entire IT from a one-stop portal: a cloud marketplace with offerings for infrastructure, platforms and applications, a self-service Web portal for users, and a backend for administrators and IT managers. If everything that IT departments need for the procurement and management of their IT and cloud solutions comes from a single source, this will provide significant workload relief. Companies want to choose from a catalogue of turnkey digital solutions and integrate additional own services, in order to establish practical application scenarios quickly and in an agile manner.
Experimenting and measuring success
Who dares wins – this also applies to the digital transformation. It takes courage to try something new and tolerate failures, in order to act agile. This also means abandoning a project, when it becomes evident that it’s not highly promising. For this, companies need an adventuresome environment and agile structures. Especially large companies are often hesitant in this respect. They try to compensate the uncertainty through an excessive planning effort, thus getting in their own way. But in the digital age, speed is what matters.
However, it is equally important to always re-evaluate certain measures. Because the digitisation should not be an end in itself, but rather always provide an added value for employees and customers. Perfectly suited for this are proven methods for measuring success. Initially, companies should evaluate their indicators in the areas of innovation, collaboration, processes, mobility, organisation and business intelligence. Productivity improvements become transparent based on the analysis results, from which action recommendations can then be derived. This will enable companies to save valuable working hours, and also considerably reduce their process costs. An example: A manufacturer of laboratory equipment with approximately 12,000 annual production orders and a production time of 30 minutes per device, was able to achieve a significant reduction in operating costs, for example, through a targeted IT consulting: As a result, 1,500 work hours were saved, that could then be utilized for higher-value tasks.
There is much to be done
The road to a digital operation industry is only at the halfway mark in Germany, according to the industry association Bitkom. At the same time, the Bitkom survey saw nine per cent of all enterprises in Germany among the pioneers in the area of digitalization. But in total only 40 percent of those surveyed have a digital strategy – so there is still much to be done. The gradual execution of approaches, creation of clear responsibilities, and the inspiring of employees for the new opportunities will lay the foundation for success. Ultimately agile structures and measurable results are the key factors.
Dr. Bernhard KIRCHMAIR, CDO Axians Germany
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