For the second time in a row, the motto “d!conomy” set the tone at the IT industry’s CeBIT trade fair. (Click here to read about CeBIT.) This single word denotes the digitisation of the economy and its markets, the public sector and its administrations as well as society as a whole. In other words, our world is undergoing a digital metamorphosis so momentous it requires an exclamation mark. An exclamation mark that applies to every industry and every business. No organisation or business model can escape its reach, whether B2B or B2C, charity or tax administration.
IT is the necessary lever to get the digitisation ball rolling. Instead of marginalising it as an afterthought, organisations must prioritise their IT in all strategies and undertakings. That’s because IT doesn’t just facilitate communication amongst departments, it serves as the very linchpin of their operations. And this fact has initiated far-reaching changes to corporate structures. Executives and IT managers now sit at one and the same table, even at the highest echelons. The Chief Digital Officer (CDO) personifies of a new paradigm.
Often a company’s digitisation efforts are further fuelled by its marketing and sales departments. These teams want to mine digital data in order to target new customers more effectively and nurture existing customer relationships through customised services. Devices connected to the Internet of Things are also increasingly coming into play, relaying important information such as maintenance alerts to equipment operators.
The possibilities of digitisation are endless. Organisations would do well to support anyone who seizes the opportunity to lay the groundwork for a successful future.
Digitisation conjures up images of disruption, and indeed, the two go hand in hand. Just ask the music industry. The familiar CD, itself a digital medium introduced years ago, nearly drowned in the maelstrom generated by its more compact rival, the MP3 file. Although initial music-sharing platforms were deemed illegal, the underlying idea has since evolved into a highly profitable business model.
The need to stay ahead of the curve was clearly understood by steel giant Klöckner—a forward-thinking representative of the old industrial tradition—who decided to revise its business model before others beat it to the punch. Klöckner reinvented itself by developing the kloeckner-i.com platform to systematically digitise steel-industry processes. Instead of defending a cumbersome corporate culture, it embraced a start-up mentality, drawing on external resources to tackle the project.
Ströer, the market leader in outdoor advertising, took another route, albeit with the same systematic approach. By expanding its value chain through the acquisition of numerous digital service providers, Ströer is now able not only to lease out electronic advertising space, but also to use it to market proprietary content and optimise data-driven campaigns.
The common element of both companies’ initiatives is that they critically examined their respective business models and equipped them to ride the wave of future developments. Because the next disruption is just around the corner.
While e-commerce is rediscovering its brick-and-mortar roots, conventional business is going digital. The two diametrically opposed sales channels are increasingly crossing paths. Retail stores have begun enticing their customers with digital shop windows, interactive fitting rooms and displays that let them order out-of-stock products. Conversely, online purveyors are opening physical shops, such as Zalando in Berlin, the OTTO brand Edited in Germany, and Alibaba in northern China. Even Amazon has opened its first bookstore in Seattle, with some speculating that hundreds more will follow or that Amazon may even take over another major retailer entirely.
The Digital Transformation Index, developed by the consultancy Arthur D. Little, measures the digital maturity of various industries in order to compare them. According to this index, German businesses still have plenty of scope for improvement, with the automotive industry, mechanical engineering and logistics expected to lead the way.
Other areas to watch are the education and public sectors. Although schools and administrations have introduced new digital platforms to facilitate access to information, they’re still not the star pupils they could be.
Against this backdrop, the German Minister of Economic Affairs and Energy, Sigmar Gabriel, introduced the country’s Digital Strategy 2025 at CeBIT. The strategy outlines ten steps to propel Germany forward and gives reason to believe that the country will soon pick up the pace. Mr Gabriel has also taken over responsibility for Germany’s new Digital Leader Award. The event, held in Berlin in late June, recognises the country’s top digitisation projects, and anticipation for next year is already running high.
Digitisation is no longer optional, it’s become a hard and fast fact of life. There’s no getting around it. What’s more, digitisation is an ongoing process, a never-ending transformation.
Corporate leaders must internalise this truth in order to progress. It doesn’t matter how far the company has already come, what’s important is that they take the first (or next) step. They must also find a partner who can show them where they currently stand and where to go next.
Businesses just now embarking on the digitisation journey will have to standardise their IT infrastructure and bring it up to speed. Only then will they be able to implement cloud solutions and transform their processes and services. The entire endeavour relies on the perfect orchestration of an ensemble of tools to achieve harmonious results. And that’s something we as an experienced IT partner excel at.
Digitisation also spurs automation. Robots are multiplying, and they’re getting smarter as we head towards artificial intelligence in ever greater strides.
In some areas, the competition for jobs between man and machine will certainly continue to intensify. Elsewhere, however, the two will work side by side, with digital implements occupying supportive roles of varying importance. Bechtle, for instance, has introduced smart glasses in its logistics processes, while other companies are already employing augmented-reality solutions for maintenance and repairs.
Regardless of their degree of virtualisation, these tools enable people without extensive expertise to operate intricate machinery and carry out complex manufacturing processes. Ultimately, no one knows how many jobs will be gained or lost through digitisation.
One thing, however, is certain: new digital devices and applications are and always will always the product of human ingenuity. This goes beyond just software engineering and programming. That’s because the people most familiar with an environment are the ones who work in it day in, day out. Regardless of what department they work in or where they rank on the totem pole, their experience is instrumental in digitising the right processes and doing it in such a way that productivity does actually increase.
That’s why management must take care not only to drive digitisation on a technical level, but also to ensure that the concept is fully absorbed into their corporate culture. In order to realise its full potential, digitisation must take into account every employee and their panoply of skills. Transformation is most effective when it runs both horizontally and vertically, from the shop floor to the top floor, hitting every department along the way.
Enter the CDO.
Chief Digital Officers are the newest actors on the executive stage, and a growing number of sizeable German firms have or are looking to hire one. Market researcher Gartner expects 90 percent of large-scale organisations worldwide to have filled a CDO position by 2019. In the past two years alone, the number of CDOs has swelled from 400 to 1,000. Companies exploring this development for themselves can check out a study and 90-day action plan at deloitte.ca/chief-digital-officer.
Isn’t an IT business digital by nature? Yes and no. The paradigm shift currently under way encompasses much more than just hardware and software. In future, everything will be digitised. In preparation of this inevitable progression, Bechtle has revamped its own IT department to provide the Group’s entities with all-round support. The end result is the CIO Organisation, an in-house service provider that helps boost business. Bechtle’s sales units interface with the CIO Organisation’s business account management team, who communicates and “translates” requirements and expectations on both sides to prevent any misunderstanding.
Bechtle also does the same for customers. Our IT business architects understand not only how IT processes work, but also how they play into business processes—that’s the crux of digitisation. These architects have the necessary expertise to design and construct appropriate business models and fit them with the right IT landscape.
The twelfth edition of Bechtle’s Competence Days, held in 2016, delved into the question of how digitisation sets companies up for continued success. More than 2,500 visitors flocked to Neckarsulm for the two-day event, which featured over 70 presentations and various live demos. Attendance figures like these are yet another indication that digitisation is a hot topic amongst IT decision-makers.
The Future of Insurance
Not only can you transfer physical fitness data to your smartphone, you can also share it with your insurance provider—and get a bonus in return. The flip side is that premiums may go up for people who choose not to upload how many kilometres they ran or how many push-ups they did. These developments are mirrored in the auto insurance industry, which measures and rewards defensive driving. Digitisation has certainly gotten a solid foothold in insurance. Maybe Google will leverage its troves of data and go into insurance as well. Or mutual insurance schemes might be completely overhauled through Facebook Groups. The possibilities are endless.
Digitisation isn’t just hype—it’s here to stay. But neither is it a revolution that wreaks havoc from one day to the next. It’s an evolutionary process characterised by steady, long-term progress.
Now is the time to begin heading down the digitisation road. Various IT processes and services are already available to guide you along the way. They deliver pragmatic, concrete solutions tailored to your particular degree of digitisation. And because they’re flexible, you can figure out what works for you, develop them incrementally and explore beta strategies.
Whether you’re led by a Chief Digital Officer or not, the single most important thing to do is take tangible action. Keep looking forward—you’ll find your way.
Published on Oct 20, 2016.