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Digitization – Digital Transformation

First of all, I notice that the term “digitization” is often referred to as “digital transformation”. In my opinion, this should be clearly separated from each other.

I see digitisation as the transition from analogue to digital. This is, for example, the replacement of paper documents (holiday request, material requisition, travel expense report, scanned invoice) by forms/dialogues on the intranet. The advantages compared to conventional in-house mail with only one analogue copy are clear: faster processing on the computer without waiting times. And other new technologies and applications (e. g. mobile devices, sensors, networking and apps, frameworks, cloud storage…) ensure that more and more areas are opened up for digitization by computer science/IT.

Although this is a change (transformation) it does not mean a great revolution, but rather an expected steady growth, as it is to be followed e. g. also with progressive motorization and automation. With the usual procedures “look for qualified employees and regularly train them further; adapt the product range to the latest technology, remain innovative in your own core business” you will continue to do well… or should we use the subjunctive “would”?

An important point is the progressing digitization as a basic building block for the real “Digital Transformation”: the digital twins! The images of the analog business objects of the real world are now digitally and cross-linked available.

A striking technology for this is the emerging Internet of Things. In my opinion, this is still very experimental at the moment with funny gadgets or questionable pseudo products… But also the first steam engines, airplanes, computers and mobile phones were smiled at.

Disruptive developments

Undoubtedly and very attentively to observe is the immensely increasing generated connected data volume. Today, the technology is also available to record these data volumes as Big Data. In addition, the methods of artificial intelligence (AI) and machine learning (ML) have been added to the processing and use of this data. These data volumes can thus be controlled.

With these new and simultaneously occurring aspects, all the necessary ingredients for a disruptive development full of force and speed come together, as if the three aspects would unite as single waves to form a tsunami-like “monster wave”.
And it is precisely this wave, which is rolling towards established companies, that must be taken into account!

(Digital) transformation

This is because the processes, from customer requirements to product selection/purchase to service and support, are subject to constant change. With changing business models or completely new distribution channels, the importance of companies’ product know-how and the experience of employees towards a unique selling point can decrease. From my point of view, only these completely changed processes are the “digital transformation”.

Let’s get back to the paper documents mentioned above and their digitization in the Intranet/Internet. Is it possible to approve these documents automatically? Can an AI learn to handle the simple cases autonomously, send only complex cases to manual approvers for manual approval, and even discover hidden errors and irregularities using statistical means? I think so, yes. And only then do I see the processing transformed digitally.

And so, even established companies have to expect that their rigid sales/service routines will be replaced by completely different processes in the newly established competitors, that they will be overtaken by the competition, in a surprising way, so to speak, previously assumed to be unthinkable or unlawful. To put it vividly,”at excessive speed” or “on a forbidden track”… and that, in my opinion, is the real meaning of digital transformation: there are new players/competitors and the “cheat/trick” because they don’t adhere to the usual mechanisms and surprise everyone:

• … there is someone who runs the 100 meters at the World Cup with a short cut and wins – this is only unthinkable, not yet happened but not explicitly forbidden in the rules?
• …. or jumps under the crossbar and wins – there was something once? Right: > Dick Fosbury 1968 at the Olympic Games in Mexico.

The competitors of the > straddle style were unfortunately no longer satisfied with the tried and tested methods “sifting of the best talents, hiring the best trainers and organising the best training camps”.

The solution-invariant customer problem

The Fosbury-Flop has efficiency advantages, because the centre of gravity during the jump curve is always below the high jump batten to be crossed by the body. This corresponds to the “solution variants (customer) problem”.

This is exactly the view you as a company must have of customer problems. In other words, check your products, services and solutions in the digital environment to see whether similar (previously unthinkable) advantages in business processes can be made visible and usable in the future by networking, IoT, Big Data and KI/ML.

For example, are you a manufacturer of measuring instruments? Your customers don’t really want to buy or own any measuring devices. They only need them to check their production facilities and the quality of the manufactured products. Another process (for an exemplary simple case) could be to use the motion/vibration sensor of a mobile phone to record the resonances/oscillations of the production plant. The digitization would be accomplished and they would have the “digital twin” of the required data. These could now be compared with large quantities of known characteristic curves of intact and faulty plants (e. g. in the cloud at a service provider) of an AI. This would have involved a change from the acquisition/ownership of products to the results service.

There are similar ideas among the major automobile manufacturers who are pursuing a move away from the “owning a vehicle” model towards “mobility solutions”. It is only such changes of processes and business processes that I would like to call “digital transformation”.

Your Digital Transformation

Finally, I would like to point out the need for action in view of the possible disruptive developments. Examples such as Uber and AirBnB have shown that it is not enough to keep ahead of well-known competitors. You have to face completely new competitors and offers that can appear very fast, surprising and dominating.

Test your digital maturity level, make a workshop on new ideas/procedures and their implementation with your IT. Be ready for your own digital transformation and feel prepared for the new approaches of your competitors. We will be happy to support you!