Digital transformation Overview

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Digitisation or the subsequent Digital Transformation is understood as the emergence of completely new Business Processes and/or Business Models. These digital business processes are both newly developed and newly designed. The aim is to support these processes utilizing the help of digital technologies (software based). Digitisation - and therefore Digital Transformation - usually have an enormous impact on the organisation of a company.

Digital Transformation – How Can it Be Implemented?

Like all aspects of business, Digital Transformation does not take place in a standalone vacuum, but instead always in a competitive context, it makes sense therefore to compare your company's digital capabilities with those of your strongest competitors and with Industry leading examples.

You should as yourself::

  • Where does your Industry stand overall on the Digital Maturity Spectrum?
  • Who are the Digital Leaders in your Industry? How can you compare with them?
  • What are the triggers for a Digital Transformation threat to your current Business Model?

All are crucial questions that you should answer to get an overview of your status quo in the competitive environment.

After you have completed an inventory of your company's digital capabilities, you can understand how your industry might change and how you need to prepare for the future.

Clearly identify the existing existential threats your business will face in the coming years, then think about solutions to convert these threats into strategic competitive advantages for you.

 

Sign Posts of Digital Disruption

How vulnerable is your industry? 

This model from Bain points to potential disruption based on three criteria: Cost, Customer Experience and Business Model.

Radically Lower Costs
pig
  • Low Yield Processes
  • Under utilized or poorly allocated resources
  • Highly routine processes
Increased Customer Experience
star-rate
  • Poor Customer understanding and slow learning
  • Formulaic Customer experiences and value propositions
  • Formulaic and inflated costs
New Business Models
bulb-61
  • Intermediary Traders
  • Re-defining of the Value Chain 
  • Data and Analytics Platforms

Sign posts of Digital Disruption – Source: Bain


The Essence of Digital Transformation ...

  • Why does Digital Transformation have such an enormous impact on a company
  • What are the main differences compared to life before digitalisation?

Digitisation or the subsequent digital transformation is understood as the emergence of completely new business processes and/or business models. These are to be supported with the help of digital technologies. Digitisation - and therefore also Digital Transformation - usually have an enormous impact upon the organisation of a company. 

What Are the Main Differences Compared to the Time Before Digitalisation? 

Previously or classically, an organisation or a business process was supported by information technology; in the future, new business models will be designed with the help of I.T. 

For example, let's take a news headline from 1st June 2020, in which Microsoft announces that they want to replace journalists with A.I. This concerns the expiry of contracts of dozens of employees (approximately 50) in the Microsoft MSN news service. These journalists will be replaced by A.I. algorithms. It is the logical continuation of the transformation of human work from semi-automated to fully automated by software. This will lead to a re-organisation of processes and eventually an overall re-organisation. The important thing to remember is that this is happening today and is no longer a prediction of the future.

Digitalisation is also giving rise to new business models. The so-called "share economy" serves as an example of this. Companies have emerged that ensure through networking that people and consumers can suddenly share property without owning it themselves. Thus, it is suddenly possible on platforms to share flats (airbnb) or to share one's own car (via or blablacar). Of course, previously it was possible to rent both cars and holiday homes or apartments. However, these platforms are directly geared toward the overall automation of such processes and digitalisation of the entire process, thus transforming the entire transaction directly into information technology (I.T.) and away from human intervention.

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The Digital Transformation Received an Unexpected Boost With the Outbreak of the Corona Pandemic.

Few Experts could have guessed the speed with which work in the home office became necessary. This also applies to application of digital technologies such as the use of Video Conferencing and other communication tools for networking employees. The classic phases of weighing up, evaluating and testing have virtually disappeared. The departments and staff concerned have jumped straight into using these new technologies, and what's more it works! Working, no matter where and at what time, has been taken to a new level by this recent Digital Transformation!

In the prevailing present culture, it was almost unthinkable to be able or even allowed to work in a ‘home office’. According to a study by Forrester, only about 14% of employees did so. At the same time, the sales force - due to travel activities - was usually the most active in the home office. Here, too, the Digital Transformation is clearly visible.

Even general meetings of public limited companies and conferences at Ministerial level, such as the ‘GAIA X’ conference on advancing digitalisation in Europe, are conducted online as a matter of course with the help of digital technologies.

What needs to be considered when using these digital technologies in the context of a Digital Transformation?

  • The Organisation must be able to cope with this change.
  • The management of employees will change.
  • Business processes will change.
  • The use and acceptance of Digital Technologies will change.
  • Demands from employees and leaders to drive Digital Transformation forward will increase.
  • Investment in I.T. Technologies, ERP Software and collaboration tools will increase.
  • Workplaces will likely be equipped increasingly with mobile devices enabling the participation in the change of communication.
  • Employees will articulate their attitude to remote working more strongly when applying for and filling jobs.

Thinking and acting will change to an unprecedented degree with the use of Digital Technologies. On the one hand, this is done to make digital business models (the actual digital transformation) possible at all and, on the other, to increase the reaction speed of the organisation through the Digital transformation. This creates a competitive advantage that was previously unobtainable.

 

What Impact Does a Digital Transformation have on Existing I.T. Structures in the Company?

 

The Organisation Has to Cope with This Change

  • The management of employees will change.
    Business processes will change.
  • The use and acceptance of Digital Technologies will change.
  • Demands from employees and leaders to drive Digital Transformation forward will increase.
  • Investment in I.T. Technologies, ERP Software and collaboration tools will increase.
  • Workplaces will probably be equipped more and more with Mobile Devices to participate in the change of Communication.
  • Employees will articulate their attitude towards remote working more strongly in the context of job applications and staffing.

Thinking and acting are changing to an unprecedented degree with the use of Digital Technologies. On the one hand, this is done to make Digital business models (the actual Digital Transformation) possible at all and, on the other hand, to increase the reaction speed of the organisation through the Digital Transformation. This creates a competitive advantage that was previously unobtainable.

 

What Impact Does the Digital Transformation have on Existing I.T. Structures in the Company?

  • The requirements for the scalability of software will increase.
  • Teams coming together for projects will become more and more the norm.
  • Existing ERP Software will be reviewed for scalability and remote work use.
  • ERP Systems will tend to be found more in the Cloud.

The Market research company ‘Captera’, a subsidiary of Gartner, has determined that the use of Software in the Cloud has continued to increase in the SME Sector. In the meantime, Cloud solutions have overtaken programmes stored in the company's own data centre. In April 2020, 43% of German SMEs used programmes in the Cloud (mostly ERP Software). At the same time, the share of users in their own data centre has fallen back to 17%. With these figures, it becomes clear how strongly the Digital Transformation has already arrived in everyday life. This also means that the requirements for digitalisation are changing in the organisational models of I.T. Managers. Filling positions with I.T. Specialists to implement the Digital Transformation will not become easier because all companies are competing for employees with the same digital skills.