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How are we preparing for a digital future?

If we take the right path to digitalization, we will lead the way to a sustainable and promising future

March 10 2022Steffen Kuhn

Master digital disruptions

Those who sail with the wind of digital transformation and make sure to utilize it correctly can actively shape future changes of their business. But how do you get the most out of digitalization? And how do you sail through the sea of digital disruption?

The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails

Sir William Ward

Resilience in the wind of change

Digitalization is a fundamental part of the systems of today and tomorrow, something which we saw during the pandemic too. Companies that focused on digitalization are coping much better. And the journey continues. The opportunities presented by digitalization are too great and the risks too high to approach the topic in an opportunistic or inconsistent way. Here, it helps to have a clearly formulated digitalization strategy with a vision of your objective that addresses the relevant areas. Digitalization champions consistently cover the following areas:

  • setup and development of digital products and services through to completely new business models and/or digital ecosystems
  • digitalization of customer communication and retention
  • optimizing core processes through to operational efficiency / excellence
  • organizational and cultural transformation including skill development
  • using new technology and infrastructures such as data analytics, AI, or cybersecurity as a key enabler of digitalization

How to safely sail the sea of digital disruption?

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Value creation thanks to data-centricity

The winners of today and tomorrow are companies in which a data-centric culture and way of thinking is dominant. But what does this mean in practice? Data are the core of the digitalization strategy and firmly rooted in the business: all processes, decisions, and products must be based on a robust foundation of data. For a long time now, data have no longer been a "nice to have" but rather the basis of all business activities – from the development of new market strategies, through process optimization, right up to recruiting. But data alone are not enough: data-centricity requires democratization of the tools which turn data into information that is critical to a company's ability to compete in the market. This is the only way to holistically improve value creation.

Innovations create an advantage

Digitalization is the foundation upon which businesses consistently network their processes in order to gain insights into real-time data flows and open up new value chains. While manufacturing companies optimize their production processes using IoT and predictive analysis and design new products using digital twins, cities and municipalities realize innovative smart-city projects with the same technologies. Digital parking guidance systems or intelligent lighting solutions, such as those found in the Spanish city of Gijon, are just the beginning. Such digitalization projects and, for example, the availability of smarter public services decide which metropolises will be home to tomorrow's skilled professionals. This new competition to attract professionals to live in certain areas is also driving forward new work concepts, because most people have greater freedom to choose their main place of residence thanks to digitalization. According to Gartner, 48 percent of employees will continue to work remotely after the pandemic.

Path toward optimal customer experience

A woman holds a digital sphere in her hands

Setting sail in the wind of change is clever. As is plotting the right course. While the seafarers of antiquity oriented themselves on the high seas using the position of the sun in the sky, the fixed point for companies trying to navigate various challenges should be the needs of their customers. In practical terms, this means consistently digitalizing customer processes and analyzing customer touchpoints in order to best anticipate their problems and desires. Only with this information are highly personalized customer experiences possible across all touchpoints, providing customers and users with genuine added value. Daimler is showing what this looks like in the automotive industry with its networked vehicles. To create new business models and glean key insights from the customer data that they have harvested, many businesses are focusing on advanced analytics solutions with AI functionalities. A promising trend: By 2050, AI could improve user-friendliness, personalization, and conversion across more than 75 percent of all digital service touchpoints.

Business sovereignty is king

In addition to the opening up of new value chains, digital sovereignty is becoming an increasingly important prerequisite for a successful transformation. Only those who make themselves as independent as possible from players outside the EU while retaining control over data and IT infrastructures are equipped to deal with disruptions and benefit from the full value creation potential of digitalization over the long term. With initiatives such as Gaia-X – or, especially for the automotive industry, Catena-X – T-Systems and Deutsche Telekom, together with many other businesses, are already laying the foundations for this. This will not only enable the development of robust AI use cases in future, but also simple, secure, inter-company data exchange.

Security checkpoint

No digitalization without cybersecurity. The threat level is increasing and businesses are becoming a frequent target of cyberattacks. Experts estimate that by 2025, cybercrime could result in damages of more than 10 billion US dollars worldwide. One thing is clear: those who fail to consider aspects such as IT security in their digitalization projects right from the outset run the risk of suffering damage sooner or later. Technology is here, but that's only half of the equation. The security culture within companies is just as important. The best threat detection systems only help if employees are well informed about threats – this applies both to senior management and the respective departments. Only when coupled with a comprehensive awareness of current risks can technologies reach their full potential. KAESER, the compressed air specialist, serves as an example of how businesses can access virtually all business applications from anywhere in compliance with the highest security standards.

Set the compass to sustainability

A woman looks at a digital surface

Does digitalization encourage sustainability? That's a big "yes" from me. Some 84% of all IoT applications are already contributing to the achievement of sustainability goals. When digital technologies are properly implemented, efforts towards greater sustainability within companies become simpler and more targeted. For example, specialized analytics solutions already make it possible to precisely record key figures such as CO₂ emissions or water consumption and quickly react to the threat of defined threshold values being exceeded. Digital solutions for collaboration and support as well as new work initiatives in turn greatly reduce the volume of travel within companies. For example, Coca-Cola Europacific Partners Deutschland uses mixed reality glasses to provide remote support in the event of machine malfunctions instead of having experts travel to give on-site assistance for each breakdown.

Bringing all partners onboard

Why do 70% of transformation projects fall short of their goals? In addition to a non-existent or unsustainable digitalization strategy, 93 percent of employers are reporting skills gaps among their own IT staff. This makes it all the more important to bring partners onboard who have industry knowledge, a broad portfolio, proven transformation and security expertise, and who know how to combine the advantages of digital technologies and sustainability strategies. There are other important factors here too. As products and services are now developed in partner ecosystems and platform business models dominate, co-innovation methods help to bring different capabilities together. In addition, competitors can also be considered as partners. Instead of working against one another, competitors must often cooperate to ensure their success and defend their markets. With such a robust framework for co-innovation and cooperation, European businesses are increasing their competitive advantage on the international market.

What's beyond the horizon?

Digitalization has long helped open the doors to a better quality of life. For example, doctors can have more time for their patients, because, in future, AI will deal with all administrative tasks. Service technicians can win back valuable family time because they are able to provide remote support to machines. The quality of life in cities can also be raised to a new level with holistic IoT and smart city concepts in terms of intelligent traffic control or smart energy concepts. And, with fast mobile communications standards and secure IoT solutions, it isn't just the quality of urban living space that is increasing but also care provision in hospitals. The opportunities are diverse, and one thing is clear: with a sustainable digitalization strategy and the right partners, companies have the opportunity to raise their sails in a way that allows them to master the digital disruptions of tomorrow and navigate toward a sustainable, promising future.

Digital Maturity Assessment

An ideal tool for organizations to check whether they are on the right track with their digital transformation.

About the author
IM-Kuhn-Steffen

Steffen Kuhn

Managing Partner , Detecon

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