WHAT IS DIGITALIZATION?

WHAT DOES THE DIGITALIZATION OF BUSINESS PROCESSES MEAN?

Rapid changes in business processes and business models are challenging traditional companies. The information technologies are one of the main drivers of these changes.

Summary
  • Digital business processes are the heart of digitalization
  • Data generated in production by machines (ERP), data generated in logistics (supply chain) or in marketing and sales (CRM) are the new currency.
  • Evaluations of these data in the context of the business processes used areelementary components of a digitalization in order to increase competitiveness.

New technologies such as Cloud Computing, Big Data analyzis, social media communication and mobility solutions, also in business management, lead to more strategic added value within the organisations at lower costs than before. Thus depicts the basis for further or new profitable company growth.

In recent years, the term digitalization has not been used to describe the transfer of analogue information to digital media, but the transfer of working methods (including private lifestyles) to a digital level. Thus, this automatically leads away from an autonomous local offline world into an “always on” online world, in which everything is constantly networked and exchanging data.

In the private environment, the digitalization is reflected in so-called wearables (small portable acquisition devices), which transfer the data to data storage devices. Pedometer, heart rate and all sports data including GPS tracking data are collected and usually transferred and stored in the cloud. There, they are available to the user for evaluation and publication.

The further development of the old Web 2.0 (shaped by Tim O’Reilly in 2004) is the basis of the Internet for today’s use in business processes. The ideas behind the concept of digitalization are the following:

Use of the Web as a platform: Replacing local machines with online applications can mean that it is no longer necessary to install and maintain software on local machines, but to obtain it via the Internet. Enabling applications there and also processing and storing data (cloud computing).

The inclusion of the collective intelligence of the user community. The user should no longer be just a consumer, but should also become active as a producer and share its knowledge with others. This can be done within the company or within the framework of special interest groups outside the company. (Examples are social networks that are used in professional applications such as Xing or Linkedin, or the influence of so-called influencers in content production on platforms such as YouTube).

The value of the data will increase in the future. In future, the control of data stocks and their interpretation or evaluation will become the most important production factor. In industrial applications, this data includes information on inventory, supply chain structures, Kanban key figures and many other production and logistics information, which were traditionally stored in ERP software and ERP solutions and databases. This information will be available to many other users in the future. This means that a continuous optimization of production, flow of goods and logistics can be carried out within a complete value-added chain. It will no longer be necessary for all users to move within an ERP system, but by exchanging data it will be possible for all participants to work “in a collaborative manner”.

The creation of software, not only for one single platform, but also beyond the boundaries of many devices will become standard. Today it is already possible to transfer the same data and evaluations that a computer displays in production to portable smartphones or tablets anywhere in the world. Therefore, there is no dependency on a location any more.

IMPORTANCE AND IMPACT OF DIGITALIZATION ON COMPANIES

What are the latest questions:

  1. How are the distribution structures changing as a result of the digitalization?
  2. How does the use of smartphones as information and communication centers change the access to customers and employees?
  3. How to design and secure data sharing when sharing data in the cloud?

These three core issues are changing corporate organizations and business processes.

Digitalization as the main innovation driver

Several studies, including BITKOM, delineate, that 60% of companies in which the internet plays a leading role in business processes, focus on the development of innovative, new products. For companies in which the web does not play this major role, it is only 40%. This means that the ability to innovate increases with the use of internet technology. Companies with a high level of digitalization are leading in terms of internationalization (BITKOM 2011).

It is clear and predictable that this development will continue. It will also cover areas that are not currently in focus. This includes initiatives to allow road users (connected cars) to communicate with each other, or to strengthen online consultation within the framework of health services, or to use intelligent networks in the field of energy generation and distribution. All this will lead to new digital business processes, which will have to be reflected in existing ERP systems or in new ERP software solutions to be installed.

THE IMPACT OF DIGITAL BUSINESS PROCESSES ON THE PRODUCTION LIFECYCLE

Further dissemination of the success model of flexible value chains and value-added networks will lead to new, previously unrealized optimization potentials within the framework of cooperation between specialists from marketing, sales and development.