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Digital transformation: strategy, technology & future prospects

Deep Dive

Agenda:


Business success without digital transformation? In times of rapidly advancing digitalisation, this is hardly conceivable. The question today is not whether companies should embrace digital transformation - but how they can best utilise it to be successful and achieve sustainable growth.

Strategy and technology are the key

A clear digital strategy and innovative technology are essential to efficiently drive the digital transformation in companies. At the same time, it requires new business models, new products and services and a new way of organising companies. Digital transformation is a central part of the corporate strategy and runs through all departments.

How to successfully navigate the digital transformation

In this article, we will take a deep dive into the world of digital transformation. We will look at various aspects, from digital infrastructure and cloud computing to big data and data analytics. We will show how digital business models and commerce platforms can revolutionise companies. We will also be looking at Industry 4.0 and the digitalisation of the world of work, as these are key elements of digital transformation. Agile organisations, change management, workflow management and process optimisation will also play an important role here. Let's go!

Introduction to the digital transformation

Digital transformation is the catalyst for success in today's business world. It refers to the comprehensive change in business processes, products and services through the intelligent use of digital technologies. This change is not just an option, but a necessity in order to remain competitive in an increasingly digitalised world.

The development of digitalisation is progressing

Over the last ten years, digitalisation has undergone a fascinating journey. From the rise of the mobile internet to the development of artificial intelligence, the global economy is experiencing unprecedented technological change. Companies that want to keep pace need to continuously adapt to these changes, strategise accordingly and invest in the right technologies.


Difference between digitalisation and digital transformation

The terms "digitalisation" and "digital transformation" are often used interchangeably, but have different meanings and focuses:

Digitalisation

Digitalisation refers to the process of converting analogue information, documents, processes or products into digital formats. It involves converting physical information into digital data that can be processed on computers or other digital devices.

Digital Transformation

Digital transformation goes beyond digitalisation. It is a more comprehensive and strategic approach that encompasses not only the transformation of analogue into digital processes and products, but also a fundamental redesign of business models, corporate culture and strategic goals.

Digitalisation usually focuses on the efficiency and automation of existing processes and business areas without necessarily making fundamental changes to the business strategy or business model.

Digital transformation aims to increase a company's competitiveness and innovative strength by adapting to the requirements and opportunities of the digital era. This can mean tapping into new markets, offering innovative products or services and pursuing more customer-centred approaches.


Definition and relevance of digital transformation

In a nutshell: digital transformation is the profound change in business processes, products and services through the targeted use of digital technologies. It enables companies to fundamentally change the way they work in order to become more competitive, efficient and innovative. Digital transformation is the way in which companies successfully master the opportunities and challenges of the digital age.

The main areas of digital transformation

The digital transformation covers various key areas that can offer companies significant competitive advantages:

Digitalisation of business processes

The automation of processes optimises efficiency and enables a faster response to customer needs. 

Digitalisation of products and services

By integrating digital technologies into products and services, companies can offer their customers an improved customer experience.

Digitalisation of the customer experience

Personalised interactions and tailored offers strengthen customer loyalty and enable more effective marketing.

Data-driven decision-making

Analysing large volumes of data enables well-founded business decisions and the identification of new business opportunities.

Innovation promotion

The digital transformation promotes the development of new products and services that can change the market.

Advantages of digital transformation for business development

The digital transformation in the various key areas has a number of tangible benefits for the company's business. These include, among others

Increasing competitiveness

Companies that consistently implement the digital transformation are able to react more quickly to changes in their market and achieve competitive advantages.

Improving customer loyalty

Through personalised interactions and tailored offers, companies can build a closer relationship with their customers and strengthen their loyalty.

Increased efficiency

The automation of processes reduces operating costs and increases efficiency, which leads to better utilisation of resources.

Development of new business areas

The creation of digital platforms or ecosystems opens up new sources of income and business opportunities.

Agility and adaptability:

Companies can strengthen their flexibility and adaptability in order to adjust to changing market conditions.  

Digital infrastructure and cloud computing

A solid digital infrastructure and cloud computing are essential for successful digital transformation. They enable companies to meet the rapidly changing requirements of ongoing digitalisation, become more flexible and increase their competitive advantage.

Digital infrastructure: the foundation of digital transformation

A company's digital infrastructure comprises all digital resources, technologies and networks that are needed to support business processes and requirements. It forms the foundation on which the digital transformation is built. A robust digital infrastructure enables organisations to become more flexible, agile and efficient. Here are some reasons why digital infrastructure should be considered in any transformation process:

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Faster response to changes

A flexible digital infrastructure enables companies to adapt quickly to changing market conditions and seize new opportunities.

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Scalability

With the right digital infrastructure, companies can grow more easily and adapt to increasing requirements without having to make expensive hardware investments.

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Data security

A well-designed digital infrastructure ensures the security of company data and protects against cyber threats.

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Increased efficiency

The digital infrastructure enables the automation of processes, which leads to increased efficiency and cost savings.

Cloud computing: the driving force behind digital transformation

In addition to infrastructure, cloud computing offers significant advantages for digital transformation. The term "cloud computing" refers to the provision of IT resources, including computing power, storage and applications, via the internet. Here are some reasons why cloud computing is important for the digital transformation of companies:

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Scalability and flexibility

Cloud solutions enable companies to scale resources as required, making them more agile and better able to respond to market developments.

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Cost efficiency

The use of cloud services eliminates the cost of purchasing and maintaining hardware, resulting in significant cost savings.

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Accessibility and collaboration

Cloud solutions enable employees to access data and applications from anywhere, which promotes collaboration and increases productivity.

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Faster innovation

With access to the latest technology and tools in the cloud, companies can develop innovative products and services more quickly.

The importance of big data and data analysis in the digital transformation

Data is an important basis for making faster, smarter and more efficient decisions as part of the digital transformation. The major challenge here lies in the growing flood of data that companies are exposed to today. Against this backdrop, the importance of data analysis continues to grow unabated. Companies that invest in big data and data analysis will be able to make the most of the opportunities presented by digital transformation and achieve sustainable success.

Why are big data and data analysis important?

Digitalisation has triggered a veritable explosion in data production. Every company, regardless of its size or industry, generates enormous amounts of data. This data provides valuable insights that enable companies to continuously optimise their business strategy. Here are some key reasons why big data and data analytics are crucial for optimising business strategy:

Informed decisions

Data analysis enables companies to make informed decisions based on facts and trends rather than mere assumptions.

Competitive advantage

By using data, companies can achieve competitive advantages by better understanding customer needs, accelerating product development and developing more efficient business processes.

Customer orientation

Data analyses help companies to better understand their customers, anticipate their preferences and create personalised offers.

Risk management

By analysing data, companies can identify risks at an early stage and take appropriate action before they become major challenges.

Operational excellence

Data can be used to optimise business processes, reduce costs and increase efficiency.

Innovation

Data offers the opportunity to develop new products and services that can change the market.

Digital business models and commerce platforms

Digital business models and commerce platforms are decisive factors for success in the digital transformation. This is because they enable companies to adapt to the constantly changing requirements of the market. The right combination of business model and commerce platform can help to promote growth and innovation and achieve a sustainable competitive advantage.

The evolution of business models in the digital age

The digital age has brought about profound changes in how companies create added value and serve markets. Traditional business models are increasingly being supplemented or even replaced by digital business models. Here are some reasons why digital business models are gaining in importance:

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Customer centricity

Digital business models are often more focussed on the needs and preferences of customers, which leads to higher customer satisfaction and loyalty.

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Scalability

Digital business models can be scaled more easily to open up new markets and appeal to a wider audience.

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Innovation

They enable companies to bring innovative products and services to market more quickly and stand out from the competition.

Commerce platforms: Drivers of growth

The platform economy has long since become the shining symbol of the digital transformation. E-commerce largely takes place on online marketplaces and platforms - in other words, in online shops and ecosystems that encompass the products of a large number of different providers. This setup brings supply and demand together perfectly and has many advantages for customers, suppliers and companies:

Sales and expansion
Customer experience
Efficiency
Analyses and data
Agility
Sales and expansion
Customer experience
Efficiency
Analyses and data
Agility
Sales and expansion

Commerce platforms enable companies to expand their reach and sell products or services to customers all over the world.

Industry 4.0 and digitalisation of the world of work

The term "Industry 4.0" has become an important part of the digital transformation of the global economy. It refers to the fourth industrial revolution, which is characterised by digitalisation and the use of technologies such as artificial intelligence, the Internet of Things (IoT) and big data. This revolution has not only fundamentally changed the way companies produce and manufacture, but also the world of work itself.

The change in production and manufacturing

Industry 4.0 has revolutionised manufacturing and production processes. By integrating IoT devices and sensors into machines and systems, companies can significantly increase the efficiency and quality of their production. Here are some of the key benefits:

Automation and efficiency

Machines can communicate with each other and adapt autonomously to optimise the production process. This leads to fewer errors, less waste and greater efficiency.

Predictive Maintenance

Thanks to IoT sensors, companies can monitor the condition of their machines in real time and predict maintenance requirements, which minimises unplanned downtime.

Individualisation

The flexibility of Industry 4.0 enables the mass production of customised products to meet the specific needs of customers.

The role of technology in the modern workplace

In the era of Industry 4.0, technology plays a central role in the workplace. It is not only changing the way tasks are carried out, but also the relationship between man and machine. Here are three examples that illustrate this progress:

Collaborative robots (cobots)

Cobots are robots that work alongside humans and assist with repetitive tasks. They increase productivity and allow employees to focus on more challenging and creative tasks.

Augmented reality (AR) and virtual reality (VR)

AR and VR offer training and simulations in an immersive environment. In industry, they enable employees to learn and perform complex tasks safely.

Artificial intelligence (AI) in customer service

AI-based chatbots and virtual assistants support customer service by answering frequently asked questions and forwarding customer enquiries efficiently.

Agile organisation and change management

The combination of agile organisational structures and effective change management enables companies to adapt flexibly to the requirements of digital transformation and successfully manage change. This is crucial in order to be successful in today's digital economy.

Advantages of agile organisational structures 

Agile organisational structures offer numerous advantages that support companies in their digital transformation. Here are some of the most important ones:

Faster response to changes

Agile organisations can adapt quickly to new market conditions and react faster to customer needs.

Continuous innovation

The agile principles promote a culture of innovation in which employees can contribute new ideas and implement them quickly.

Better cooperation

Agile teams work closely together, which improves communication and increases efficiency.

Customer focus

Agile organisations are strongly focused on the needs of customers and can implement customer feedback in real time.

Increased employee satisfaction

The autonomy and co-determination that agile teams enjoy lead to higher employee satisfaction and loyalty.

How change management supports the digital transformation

Change management is the key to the successful implementation of changes in an agile organisation. The term "change management" describes the process by which organisations plan, implement and control change to ensure that it is effective and accepted by employees. Here are some steps and principles that change management uses to support digital transformation:

  • Clear communication: It is important to communicate the goals of the digital transformation and ensure that all employees understand and accept them. 
  • Training and training programmes: Employees need to acquire the necessary skills and knowledge to be successful in the digital environment.
  • Feedback and adaptation: Continuous feedback from employees makes it possible to adapt the change process and ensure that it is effective.
  • Leadership and leading by example: Managers should actively support the change process and lead by example.
  • Measurable success: Clear key figures should be defined to track the progress of the digital transformation and ensure that the goals set are achieved.

Workflow management and process optimisation in the digital transformation

Effective workflow management and process optimisation are essential for the success of digital transformation. Companies that continuously improve and automate their workflows can increase their efficiency, reduce costs and ultimately strengthen their competitiveness.

What is the difference between workflow management and process optimisation?

Workflow management refers to the design, automation and monitoring of work processes in an organisation. It is about ensuring that tasks and activities are carried out in a structured and efficient manner. Process optimisation, on the other hand, aims to analyse and improve existing business processes in order to save time and resources.

Potential of workflow management and process optimisation

In combination, workflow management and process optimisation offer companies the opportunity to optimise their workflows, reduce costs and increase the quality of their products or services. Here are some of the key benefits:

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Increased efficiency

By automating tasks and eliminating unnecessary steps, companies can increase their productivity.

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Cost savings

Optimised processes reduce resource requirements and lower operating costs.

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Quality improvement

Clearly defined work processes minimise errors and contribute to the delivery of high-quality products or services.

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Better decision-making

Workflow management and process optimisation provide transparency about the progress of tasks, which facilitates decision-making.

Proven processes for effective workflow management

Effective workflow management requires careful planning and implementation. Here are best practices to help companies design and optimise their workflows:

01

Analysis and documentation

Effective workflow management requires existing processes to be identified and weak points and bottlenecks to be documented and analysed.

02

Automation

Companies need to identify those tasks that can be automated to minimise human error and increase speed.

03

Standardisation

Clear standards and guidelines ensure consistency in work processes.


04

Feedback and improvement

Feedback from employees and customers should be collected on an ongoing basis in order to improve and adapt processes.

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Use of technology

 The use of technologies such as artificial intelligence (AI) and machine learning helps companies to optimise complex tasks and decision-making processes.


Human resource management in the digital age

Human resource management (HRM) has undergone a profound transformation in the digital age, bringing numerous benefits for companies. The focus is on digital HR technologies and solutions that enable efficient talent management and optimised personnel administration. Companies that utilise these tools effectively can gain a clear competitive advantage and attract and retain the best talent.

The advantages of digital human resource management 
Compared to traditional HRM, the digital age offers numerous advantages. These include:
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Increased efficiency

Digital HR tools and systems enable faster and more efficient management of HR information and processes.

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Improved communication

Digital platforms facilitate communication between employees and promote collaboration within companies.

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Better talent management

Digital solutions enable better identification, recruitment and retention of talent.

Talent acquisition and retention in the digitalised world

Digitalisation offers companies the opportunity to attract and retain the best talent worldwide. At a time when competition for skilled labour is more intense than ever, this is crucial. Here are some ways in which digitalisation is improving talent management:

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Global talent search

Companies can search for skilled labour online and find candidates from different parts of the world.

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Personalised further development

Digital learning platforms enable employees to continuously improve their skills and develop further.

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Better employee retention

By using HR technologies, companies can better understand employee needs and offer personalised incentives.

The importance of digital HR technologies and solutions 

HR technologies and solutions are playing an increasingly important role in HRM. Here are five of the most important HR technologies and solutions and their respective areas of application:

Applicant Tracking System, ATS

ATSs help to manage applications and identify suitable candidates.

Human Resource Information System (HRIS)

HRIS facilitate the administration of personnel information, payroll accounting and performance management.

Employee Self-Service (ESS)

ESS platforms enable employees to manage their own information, which reduces the administrative burden.

Learning Management System (LMS)
LMS enable the administration of further education and training programmes for employees.
Performance Management Software

This software supports the performance assessment and improvement of employees.

Customer Data Record and Data Clean Rooms

Customer Data Record (CDR) and Data Clean Room are two important tools in the digital transformation. They help companies to use data effectively and protect the privacy of their customers.

The growing importance of customer information in business strategy

At a time when personalised offers and tailored services are more in demand than ever, customer information has become a decisive factor in business strategy. Companies collect and analyse data in order to better understand customer behaviour, anticipate customer needs and create personalised offers.

Data protection in focus

The increased collection and processing of customer information requires companies to handle data management responsibly. This is because customers are increasingly concerned about the protection of their privacy. At the same time, data protection regulations such as the General Data Protection Regulation (GDPR) set strict rules for the handling of data.

The importance of data clean rooms

Data Clean Rooms provide secure environments where companies can safely share and analyse data without violating customer privacy. These clean rooms allow organisations to take advantage of data analytics without exposing customers' sensitive information. 

The following four key concepts are primarily used in data clean rooms for the secure processing of personal data:

"Good" data silos

In a data clean room, data silos are created to keep data in separate environments. There are usually two main silos: a "raw" data silo, which contains the sensitive data, and an "analytical" data silo, which contains the processed data.

Separation of tasks

Data owners and data processors are separated from each other. Data owners provide the raw data, while data processors, such as data scientists and analysts, work in a separate area to analyse the data without having direct access to the original sensitive data.

Data protection techniques

Data protection techniques are used within the Data Clean Room to ensure the confidentiality of the data. These can be methods such as differential privacy, anonymisation or pseudonymisation to ensure that individual users cannot be identified.

Accountability and control

A data clean room often involves logging and monitoring to ensure that data is processed in accordance with data protection guidelines.

Conclusion and outlook

In this article, we have looked at a wide range of aspects of digital transformation that are crucial for organisations. Here are the key insights that organisations should keep in mind as they drive their digital transformation:

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Strategy and technology

Digital transformation requires a clear strategy and the effective use of technology in order to optimise business processes and achieve competitive advantages.

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Customer focus

The customer's needs and preferences should take centre stage. Personalisation and customer satisfaction are crucial.

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Agility and change management

An agile organisation and effective change management enable companies to adapt flexibly to change and drive innovation.

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Data management and data protection

The management of customer data and data protection are of paramount importance. Data Clean Rooms offer a secure way to utilise data without violating privacy.

Outlook: The future of digital transformation

The digital transformation will continue to develop in the coming years and bring new opportunities and challenges. Here are some trends and developments that companies can expect in the future:

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Artificial intelligence (AI)

AI will play an even greater role in the automation and optimisation of processes.

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Blockchain technology

Blockchain will become more important in securing transactions and ensuring data security.

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Sustainability and ethics

Companies will increasingly focus on sustainability and ethical business practices in order to meet the expectations of customers and society.

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Cybersecurity

In view of increasing cyber threats, companies will have to invest more in cyber security.

Digital transformation is a continuous process that is constantly evolving. Companies should therefore always be flexible, focus on the needs of their customers and utilise innovative technologies in order to take advantage of the opportunities offered by digital transformation and achieve long-term success. It's time to set the course for a digital future. Let's get to work!


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