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What’s the future of digital?

What will happen to digital transformation initiatives after the Corona crisis? Will the momentum continue, or not?

Finally! Economic forecasts are picking up, unemployment figures are falling, and economically speaking, the end of the Corona crisis seems to be in sight. What does this mean for digitalization? Will the momentum continue or slow down?

Corona pandemic: key to successful transformation?

In Germany, among other countries, the Bundesbank in Frankfurt expects economic growth to be “significantly boosted”. But will the country also become fundamentally more digital? Opinions still differ: black, white, a lot of grays. In September 2021, 'Die Welt' spoke of the “fairy tale of the German digital race to catch up” and referred to a recent study by the European Center for Digital Competitiveness. In its “Digital Riser Report 2021”, it ranks Germany 17th among the G20 countries. A representative Bitkom survey in spring 2021, on the other hand, concludes: “Companies are feeling the economic benefits of digitization.” Only 12 percent of the 500 companies surveyed across all industries would still doubt the benefits of digitalization.

Driving digitalization after the Corona crisis

SAP CEO Christian Klein, for his part, called for a digital ministry for Germany at the annual congress of the SAP user association, DSAG. According to a DSAG survey, however, the digitalization momentum of 2020 has already slowed down again. Only 54 percent of the companies surveyed still believe they will make rapid progress with digitalization. A drop of 7 percentage points compared to 2020. “There is still a lack of courage to make changes,” says DSAG Board Chairman Jens Hungershausen.

Bitkom President Achim Berg, on the other hand, says: “Corona has led to a digitization push in people's minds. Now we must succeed in driving digitization forward in practice as well.” According to the survey, the digitalization of business processes has become more important in almost all companies (95 percent) as a result of Corona. Those who set themselves up digitally can not only better weather times of crisis “but will also benefit from it in a post-lockdown period.”

Digitally mature companies have a clear advantage

What’s the truth? Is Germany finally speeding up digital transformation? Or are we moving back to square one? After all, the economy suggests that much is back on track. So why continue to transform digitally? However, going back to the 'business as usual' of the pre-Corona era is not an option. The skeptics must recognize that 'more digital' companies were able to respond faster and more flexibly to the changed conditions during the Corona crisis. This is not a matter of cross-industry comparisons. Some sectors in the economy were simply hit hard for different reasons, digital or not. Within industries, however, there were winners and losers. Digitally mature companies were better able to cope. The winners were better able to adapt to short-term changes in requirements and, in some cases, saw the crisis as an opportunity and took advantage of it.

Corona has led to a digitization push in people's minds. Now we must succeed in driving digitization forward in practice as well.

Achim Berg, President of the Bitkom industry association

Digital status quo in medium-sized enterprises

There are key factors that all success stories have in common. Innovativeness, more flexible organizations, and quick adaptability have helped to better deal with the crisis. This also has a lot to do with modern IT landscapes in the companies. Take retail, for example. The fact that digital technologies are worthwhile is shown by the digitization index calculated annually, which reflects the digital status quo of German SMEs. The top digitizers in retail also generated higher revenues in the Corona year and came through the crisis better than businesses at a low digital level. Forty-four percent of retailers made short-term adjustments to their business model or products during the Corona crisis. Digital solutions helped them maintain business operations and adapt well to new demands. According to the study, 36 percent of respondents, therefore, plan to gear their business model even more strongly than before to digital services.

Strengthening resilience: responding more quickly to change

Diagram of the process before the implementation of the digital solution

The example also shows that companies today can no longer wait months or years to introduce important services. Almost three-quarters of business leaders now believe that rapid responses to change make the difference between success and failure. Accelerating time-to-value must be a priority now more than ever. The companies that successfully responded to the pandemic were able to deal with change more quickly and adapt effectively to new demands. They are likely to be more resilient in the future.

Smart data analytics push e-commerce

Companies today need to be able to adapt their operations and customer propositions at an unprecedented pace – but all too often, they are prevented from doing so by outdated systems, processes, and methods. Spanish apparel group Inditex, which owns brands such as Zara and Bershka, began using digital technology years ago to upgrade its store operations while boosting online commerce. For example, the group identified a strong trend toward more clothing for the home through data from its inventory management system. The group had already accelerated its product cycle and shortened the time between designing and selling its collections. True, Inditex's sales plummeted in 2020. But Zara, with a rapidly adapted product range, reported 74 percent growth in the online channel in the first half of 2020 and a net profit of 214 million euros in the second quarter.

Outlook: Digital transformation is only imperceptibly slowed down

Only the most adaptable will succeed in tomorrow's ever-changing markets. The pandemic has presented unpredictable challenges to businesses across all industries – but people have responded with ingenuity and found new ways to survive. The Corona-driven pace of change we have experienced will slow only imperceptibly even as the pandemic subsides, and the ability to evolve in the face of such change will remain critical to business success.

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