Effects of Digitization on Companies : Part XI

This article is continuation of part X.

Companies are hesitant to take digitization measures, and only one in three companies attach strategic importance to digital transformation. Companies tend to be cautious when it comes to developing new perspectives through digital initiatives. The progress of digital adaptation in the energy, utilities and logistics sectors is slow. There is still no urgent need here. The banks, insurance companies and media companies are setting the tone more clearly. The front runners are the companies in the IT and telecommunications industry, which, however, tend to have a digital orientation of their business models anyway. Since the middle class is more demand-oriented and economically not very experimental, the lack of clear demand signals for digital transformation had a rather negative effect on them. The different digital innovation forces of the heterogeneous industry also had a significant impact. This can be interpreted from the strategic orientation towards digital change. Furthermore, the different strengths of innovative efforts are evident in the development of the work and business processes. Only around half of the companies use this approach. Social media communication is seldom integrated into business processes, but paper as the medium for these processes has already been largely replaced. Three in four companies state that less than 30% of their business processes are paper-based. Also, about every second company has business processes free of media discontinuity.

The investment behaviour of the industry supports this approach. Only 12% of the product and service providers do not plan any additional budget about the digital change, whereas every fourth provider shows a very ambitious investment commitment.

The pronounced willingness to invest correlates with the development of new business models. Two out of three of the companies are pursuing initiatives to supplement or even replace existing business areas in favour of new technologies and digital approaches.

Since the information and telecommunications industry has a high investment outlay compared to the other industries and has a low perception of risk about new business models. The banks lack digital credit brokerage. Video counselling and other digital approaches to social media are rarely used. More and more financial technology companies, so-called FinTechs, are positioning themselves in traditional markets of the financial sector. At the moment, however, it is technology companies such as Apple, Google or Amazon who are competing with banks with their digital methods.

The situation is similar in the insurance sector. Few insurance companies even offer digital portals to enable customers to manage their contracts online. The digitization process is only making steady progress here.

There is a rethinking in the financial sector. Every second of the companies surveyed explains the great strategic relevance of digital transformation. Only every fourth company in the surveyed banks and insurance companies does not yet see any need for action or is undecided. In terms of innovative business models, financial companies are becoming a minority. Only two-fifths aggressively and prioritizes new digital marketing approaches and almost a third work very purposefully but less committed on this project. Further findings of various studies show that the internal organization of the industry is already relatively free of the medium of paper. This results in low use of this medium in business processes and a reduced incidence of media breaks in the most important processes.

Significant optimization is required, however, about the integration of social media communication, especially in customer documentation. The mobility of work and business processes can also be expanded.

Despite classic media such as books and magazines, the media and entertainment industry shows sustained growth potential. The demand of customers for individual offers and linked media content in combination with mobile and entertainment devices with internet connection are causing the industry to grow steadily.

This development can be traced back to the new business models of the companies, which are positioning themselves in the market in a future-proof manner, the focus on innovative business models is high. This industry does not shy away from high investments to secure the future. Two out of three of the companies are already investing significantly or want to invest a lot to advance the digitization process. However, it is still largely unclear who should control the digitization strategy. Change in management programs is also rare.

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