Digitalization, also known as digital transformation, seems to hover over companies in Germany like a specter. Many managers feel overwhelmed by the complexity of the topic and would prefer to close their eyes to it. As a result, they are currently often hesitant to either continue with digitalization or even begin it at all. In addition to the budget and time factors and a lack of will to change, incorrect prioritization is the biggest inhibitor to operational modernization. According to a Bitkom study, every third company wants to cut back on investments in digitalization this year. But that would definitely be the wrong way to go. Instead, we should deal with the topic more intensively in order to take away its horror. That’s what we’re doing in this article. 

Don’t panic! The good news is: There is no one digitalization or digital transformation. Rather, these are collective terms that summarize various technologies and developments. A differentiated view in each individual case is therefore necessary to find out which digital opportunities are relevant for one’s own company – be it immediately, in the medium or in the long term. The next step should be to clarify what concrete need for action results from this. 

Digitalization may not sound as bad as it did a few years ago. But here’s the bad news: it won’t just go away. Every industry and every company is affected, and the transformation will never be complete. Over the past 25 years, revolutionary technologies have made their way into our personal and working lives, and the speed at which new technologies are taking over our everyday lives is constantly increasing.

What exactly is digitalization?

But what exactly is digitalization? Digitalization initially describes only the process of digitally capturing content or converting analog information into digital formats. For example, anyone who writes a text in a computer program like Word is a digitizer. A digital photograph is also a digital information carrier – in this case, an image. In the context of change processes, digitalization is also often used as a synonym for automation. Existing processes are mapped digitally or digitally supported and recurring process steps are automated in order to optimize workflows. If business areas, business models or entire companies are mapped digitally and continuously scrutinized, adapted and optimized, this is referred to as digital business. This involves the use of new digital technologies to improve business processes. 

What exactly is the difference to digital transformation? 

In contrast, digital transformation does not just focus on adapting business areas, business models and processes to new digital opportunities. Rather, digital transformation takes a fresh look at fundamental problems and uses technology to solve them in new ways. Existing processes are questioned and, if necessary, completely differently modeled or even replaced by the use of new technologies. 

Digital transformation therefore means that problems are solved using the most suitable and available technical means. The availability of a new technology is rarely the trigger for a digital transformation. Rather, it is about solving problems or providing new approaches for customers. A customer-centric perspective thus becomes the driver of digital transformation.

Take advantage of your opportunities! 

It is important not to miss the opportunities of this transformation. Today, we can all send e-mails and use digital photography. The development of the cell phone was followed by the quantum leap to the smartphone. However, these two examples also show the dangers of the digital transformation. NOKIA, once the world market leader in cell phones, missed the transition to a smartphone manufacturer, lost its market leadership and became irrelevant. Only recently was the brand revived as a sales brand of the manufacturer HMD Global. KODAK invented digital photography, but failed to appreciate its potential and exploit this invention accordingly. After the collapse of the traditional photographic film market, the former industry giant also plunged into irrelevance. 

Missed opportunities are a real danger for companies of all sizes and in all industries. It is therefore important for every manager to critically scrutinize his or her own company and the products and services it offers time and again and to measure them against the needs of the market.

But where to start? 

First, take a breath. Digitalization and digital transformation are not insurmountable tasks. With the right strategic orientation and the willingness to further develop one’s own company, the prerequisites for long-term economic success can already be created today. The key is to identify the potential in your own company, assess it realistically and prioritize it accordingly. The first step is always the most important. The time for waiting is finally over; no responsible person can afford to stand still any longer. Those who continue to hesitate will inevitably be overtaken by the competition. 

As a rough rule of thumb for companies, digitalization usually pays off in two areas – the automation of previously partially or completely manual processes and the increase in efficiency to reduce costs. These potentials must be leveraged in order to make one’s own company fit for a successful digital future. On the other hand, digital transformation enables completely new, data-driven and scalable business models. In the process, important decisions in the company’s economic activities are delegated to highly developed algorithms. In addition, the new digital possibilities are creating an environment in which more and more innovations are required in an ever shorter time. Established and proven processes must be reviewed to determine whether they still hold up in the changed market environment. 

In this context, the ability to innovate is the key to successfully mastering digitalization and the digital transformation and entering the future in a stronger position. 

Our experts will be happy to advise you on the first, or even the next, sensible steps to digitize your company. Get in touch with us!

Tags:
#Digitalization #ITStrategy

About the author

Mathias Herrmann

CEO at ALLEHERZEN

Mathias Herrmann is an internet entrepreneur going back to the Internet’s early days with a deep interest in digital and future technologies. For over 20 years, he has been helping companies make the most of their data by forging innovative solutions – without forgetting the people behind the data.

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