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How you can successfully master the challenges of digitalisation

Digitalisation offers enormous opportunities, but there are a number of hurdles that need to be cleared in advance.

Geschrieben von
October 1, 2020
9 min reading time
[Herausforderung Digitalisierung] welche Probleme gibt es? Headerbild
  1. Mastering the challenges of digitalization
  2. Problems of digitalization
  3. Possibilities of digitalization
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When it comes to digitalisation, companies more than ever before need to keep up with the competition and should ideally be one step ahead in order to remain competitive in the long term. What makes digital transformation so important in this respect? New competitors are entering the market and the requirements and needs of customers are changing.

To be successful, companies must rely on innovative technologies early and in a holistic manner, by optimising business processes and providing employees with helpful solutions and services. Nevertheless, when it comes to the implementation of digitalisation, companies need to overcome major challenges. Read this article to find out which factors you need to consider in advance and what skills are needed to successfully manage the digital transformation.

Digitalisation is a very broad term with many different approaches. Some of these focus on product and manufacturing technology, while others emphasise the importance of more efficient, faster or more intelligent workflows. For some people, this is about changing a company's vision and culture. In fact, all these approaches are correct – and together they contribute to a holistic digital transformation.

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The challenges associated with digitalisation

1. Failure to embed digitalisation in an overarching strategy

It doesn't take long to understand that digital change is a complex matter and involves many individual steps. As every organisation has different processes and structures, there is no universal roadmap for managing the digital transformation. Nevertheless, there are some basic rules that have proven particularly effective in managing digital change. These include drawing up a concrete digitalisation concept, rather than following a piecemeal approach, and the integration of all sub-projects into the company's overarching strategy.

Such a strategic framework acts as an anchor for all individual projects and ensures that the goals that have previously been defined are met. Alignment with such an overarching strategy avoids the occurrence of isolated digitalisation projects running in parallel. Organisations will only be able to master the digital transformation if they integrate the different areas into a long-term corporate strategy.

2. Lack of priority at management level

A major challenge that companies need to overcome is early entry to digitalisation. Companies that are still hesitant to launch a digital transformation strategy must act promptly. After all, digitalisation is not a task to be completed quickly, but rather a continuous process. Such a transformation does not happen overnight but takes several years. Once a company has fallen behind, it is difficult to make up for lost time and missed opportunities. However, pressure to catch up should not be the main motivation for digital change. Instead, companies should be aware of the added value and the many possibilities of digitalisation for driving business growth. First of all, adopting the right approach is crucial for the whole process and the ultimate success of such projects. Frequently, digitalisation projects are initiated and implemented by the IT department. At the same time, however, promoting the underlying vision, strategy and concept and ensuring their implementation across the entire company also require a clear commitment on the part of the board.

The transformation from old approaches to sustainable and efficient processes can only succeed if digitalisation has the full backing of the company leadership and the support of middle management. Organisations often lack a layer between senior managers and professionals for ensuring that all the measures they take support and drive the chosen strategy. To this end, the appointment of a chief digital officer (CDO) has become established practice in many companies. Such a digital executive is responsible for the development and implementation of the company's digital strategy and ultimately its digital transformation. Increasingly, and especially in large companies with more than 500 employees, digitalisation is being managed by individual managers in a horizontal manner.

Digitalisation today: digitalisation managers by company size

Herausforderung Digitalisierung: Digitalisierungsverantwortliche nach Unternehmensgröße
Herausforderung Digitalisierung: So viele Unternehmen haben einen Digitalisierungsverantwortlichen (nach Größe)

3. Employees need to be brought on board

Digitalisation affects all areas of an organisation, including manufacturing, finance, HR, sales and all other departments. Through digital transformation, companies can achieve added value across the board, for example higher productivity or improved quality, which in turn lead to more satisfied customers. Although digitalisation should be understood as a company-wide strategy driven by the management, it is important not to exclude the rest of the workforce, but to involve them in the process.

Some organisations are more successful at pursuing and sustaining digitalisation than others, largely as a result of their corporate culture. Culture is notoriously difficult to pin down, turning its design and management into a major challenge. Yet it is crucial not to neglect employees in digitalisation projects. They must be brought along on the path of change so that they can gradually adjust to the new dynamics. Employees' willingness and ability to change, their social skills and IT knowledge are also becoming increasingly important. To achieve a successful digital work culture, they must be trained accordingly, which is why a strong culture of continuous training is crucial to the success of the digitalisation process.

A holistic approach rather than thinking in silos

Replacing analogue and inefficient processes is one of the overriding objectives of digitalisation. In practice, this means seamless integration of systems, eliminating manual activities or paper-based procedures, and mapping IT processes in such a way that they can be digitally processed and automated wherever possible with the help of software. This requires a holistic overview of all process steps and data, for which data and system silos have to be broken up. This is the only way to analyse, optimise and digitalise processes and their weaknesses across departments and organisations.

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Identifying opportunities for digitalisation and using the right technologies

Today, everyone is talking about the digitalisation of the economy. For many companies, the issue is linked to expectations of a boost in productivity and growth, as well as attempts to remain competitive in the future. A recent survey of German companies has shown that they don't view the digital transformation as a short-lived trend, but rather as the beginning of a radical change in work and business processes. 50% of respondents described digitalisation as one of their top 3 priorities. Many companies are therefore planning major investments in digitalisation, aware that acting too late or not at all on digital and technological change would be fatal.

In addition to mastering the use of new technologies such as artificial intelligence (AI), machine learning and big data, companies also have to adapt their work structures to ensure the success of their digitalisation projects and scale up their innovations. They have to break down existing information silos and establish an agile and collaborative culture that promotes innovation and gives employees the freedom they need.

To make digitalisation work and eliminate the associated problems from the outset, companies must face these challenges with open eyes while creating optimal conditions at strategic level. Apart from the need to clear numerous operational hurdles such as the development of a modern, future-proof technical infrastructure, a holistic vision of the entire organisation is essential. The mere introduction of tools is not enough for a successful transformation. Companies need to view working environments and processes in their overall context, dissolve existing technology silos and involve employees in the change process.

Bundesministerium für Wirtschaft und Energie in Zusammenarbeit mit TNS Infratest
Kurzstudie: Chancen & Herausforderungen – Digitalisierung im Mittelstand. United Planet, 2017.
How to Craft a Modern, Actionable Data and Analytics Strategy That Delivers Business Outcomes. Gartner, 2019.
Trendstudie: Wie sich deutsche Unternehmen in der neuen Zeit orientieren. TCS, 2019.
Digitalisierung der Wirtschaft: breite Basis, vielfältige Hemnisse. KFW, 2017.

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