Digitalisation has changed the business world at an unprecedented pace in recent years: Use of digital communication tools for faster and more efficient interaction, the automation of standard processes to reduce costs, a shift to online commerce and digital marketing, and new digital business models. These changes have led to greater efficiency, customer loyalty and new market opportunities for those companies that have invested in digitalisation – mostly large corporations.
Medium-sized companies are therefore lagging far behind large companies and are in danger of being left behind. A look at the digitalisation index shows that large companies (202) achieve an index value that is 1.6 times higher than that of SMEs (124). This means that large companies are already far ahead in terms of digitalisation.
A closer look at the use of information and communication technologies reveals that large companies are also well ahead of SMEs here: Only 10% of SMEs state that their use of information and communication technologies is very high. The figure for large companies is just under 30%. However, the gap is not so great in all areas. The gap is significantly smaller for digital business models and processes.
This lead of large companies is putting SMEs under increasing pressure to digitalise their business models and processes. This pressure is primarily the result of customer expectations, which take digital services and products for granted as standard.
In addition, digitalisation often leads to considerable cost savings, meaning that companies that take this step too late or not at all will fall behind the competition: The ability to keep pace with the digital transformation is therefore not just a question of modernisation, but also a crucial component for maintaining and increasing competitiveness in an increasingly networked and automated business world.
Transformation challenges
A lack of strategy and an inadequate implementation plan are often core problems in the digital transformation of companies. Embarking on digitalisation without clear guidelines leads to aimlessness, inefficiency, and immeasurability of success. This often not only leads to financial losses but can also lead to frustration and a loss of confidence in the digitalisation project. It is therefore crucial for the success of the digital transformation to develop a sound strategy and create a detailed, targeted implementation plan.
Another major challenge for companies is the technological complexity resulting from the multitude of software applications, platforms and technologies required for digitalisation. This complexity can overwhelm many companies. Selecting suitable, future-proof technologies requires a deep understanding of your own business goals and the technological solutions available. In addition, integrating these technologies into existing business processes is another challenge that requires both in-depth technical knowledge and significant resources. This integration must be seamless so as not to disrupt business processes and increase efficiency.
The introduction of digital technologies creates a flood of data that needs to be managed efficiently. Companies must not only be able to collect and store this data, but also to analyse and process it in order to put it to good use. The right data management is crucial in order to gain valuable insights from the data volumes and to be able to make data-based decisions. This requires powerful analysis tools and the know-how to interpret data patterns and translate them into strategic action. Mastering the possibilities of artificial intelligence is also a success factor here.
Another critical aspect of digitalisation is the increased risk of cyberattacks and data breaches. With increasing digitalisation, companies are becoming easier targets for cybercrime. It is therefore of the utmost importance that companies invest in robust security systems to protect their sensitive business data. This includes not only technical protection, but also training employees in cybersecurity and data protection issues.
Finally, the lack of qualified specialists in the field of information technology and digitalisation is a major obstacle. The demand for IT and digitalisation experts often exceeds the supply, making it difficult for companies to find and retain talented and qualified employees. This skill shortage can significantly impact a company’s ability to successfully implement and sustain digital initiatives. To close this gap, investment in the training and development of the existing workforce, as well as an attractive corporate culture that attracts talented professionals, is essential.
Digital transformation is no easy task, but for most companies it is imperative if they are to remain competitive. You can use this increasing pressure to digitalise to make processes, products, and internal structures more efficient. What’s more, by positioning your company digitally where your customers are, you can secure sustainable growth and ensure that you can continue to operate successfully in the market in the future.
Digitalisation Guide
Step 1: What does the strategy look like?
Without a well-founded strategy, there is a risk that only costs will be incurred for uncoordinated individual measures, but the actual goals will not be achieved. Before embarking on digitalisation, however, it is not only important to clearly define the specific goals, but also to be aware of the obstacles in your company. Your problems may differ from those of other companies. It is often worth looking from the outside to quickly identify blind spots.
Work out what goals you want to achieve with the help of digitalisation, identify the biggest bottlenecks on the way to these goals, determine which technologies and resources are needed and draw up a clear and realistic roadmap for implementation.
Too often we have seen overly ambitious goals set that exceed the capacity of the organisation. The result of this step is a clear and actionable strategic plan that includes goals, measures and KPIs for future development.
Step 2: Change culture – why is it important?
Digitalisation requires an adaptation of the corporate culture, and it is crucial to motivate employees to be open to new technologies and working methods. This is often where employees’ fears come to the fore: Will I still be needed? Do I even want to learn this any more? Will I still enjoy my work in the future? It is important to communicate the benefits of digitalisation clearly and openly, and to actively involve employees in the transformation process.
Training is essential here but should be tailored to the different levels of knowledge of employees in order to promote understanding and acceptance of digital processes. A culture of openness in which employees are encouraged to give feedback and express concerns helps to break down resistance.
Although this is a lengthy process, it is essential for success. You will ensure that your employees are actively involved in shaping the change and significantly reduce the risk of the project failing due to resistance.
Step 3: Build up skills or outsource?
The digital transformation entails fundamental changes in many core business areas. Building up expertise is therefore essential. Without a sound understanding of the digital opportunities and challenges, strategic decisions could be made that are not in line with the organisation’s long-term goals.
Given the skills shortage, the decision between building internal IT expertise or hiring external service providers is crucial. Both options have advantages and disadvantages.
Building up IT expertise internally allows for greater control and customised IT solutions that are closely linked to the company’s goals. However, this requires significant investment in staff and their training and presents challenges in recruiting and retaining qualified staff.
Hiring external service providers means gaining immediate access to expertise and technology. External providers can respond quickly to specific needs, but there is a risk of reduced control and potentially higher (long-term) costs.
Regardless of whether you build or buy in internal or external expertise, you will build an effective team and ensure that your goals are met.
Step 4: Which infrastructure is the right one?
During the transformation, you will often encounter unknown or unexpected obstacles. An adaptable digital infrastructure is crucial for success here in order to be able to make changes, adjustments and additions quickly.
Therefore, invest in a robust infrastructure and rely on data-driven analyses. Select your systems and tools in such a way that you can react flexibly to changes. The use of business intelligence tools and artificial intelligence can help you gain valuable insights from your data and make informed decisions.
Implement strict security measures to protect your data and systems from cyberattacks. Train your employees to deal with security risks and keep your software and systems up to date.
Step 5: How is continuous optimisation ensured?
We recommend continuous optimisation in the area of digitalisation. This requires continuous evaluation and adaptation of digital tools and processes.
Regular feedback from employees and customers helps to identify where improvements are needed, and which new technologies or methods can be implemented. This approach makes it possible to react flexibly to changes and promote innovation.
It is also important to establish performance indicators (e.g. NPS) to measure the success of digital initiatives and make targeted adjustments. An approach with Objectives and Key Results (OKR) is ideal here.
