Digital transformation or digitalization is a much (and hotly) debated topic these days. Digitalization not only offers a wealth of opportunities to redesign processes with new technology. Rather, it promises to completely change your company based on (data-driven) business models.
While in the first two episodes we wrote about the general approach to digitalization and the smart scan to evaluate application architecture, today we would like to share some insights from the field with you.
Market study on digitization
In the episodes above, we have already highlighted the importance of business strategy for any digitalization initiative. If digitalization is merely used as a means to introduce any new technology into a company, the idea of digital transformation is grossly misunderstood. Digitalization can only flourish if it is used to rethink and redesign a company’s own business strategy and business model.
In order to obtain ideas and points of reference for the design of the business model, we conducted a study to examine how companies are dealing with digitalization today.
The study was carried out by a team of students from Hanover University of Applied Sciences and Arts (Germany). They examined 18 German and international companies from various sectors (automotive, mechanical engineering, retail). The study was based on publicly available material about the companies; an interview was conducted with one company.
Results of the study (excerpt)
All companies show that it no longer works to simply sell the product that has been produced for years. They are developing new products (13 out of 18) as well as improving existing products (5 out of 18).
The new products are often software services designed as a platform and offered in the cloud. These efforts lead to data transparency:
Data from the original products (e.g. from a farmer’s harvester) is collected, recorded in the cloud and made available to the customer (i.e. the farmer) for better work planning (e.g. the use of harvesters or clearing machines or the analysis of work based on KPIs).
This is supplemented by the inclusion of other data sources in the cloud platform (e.g. from seed or fertilizer manufacturers).
Once such a platform has been set up, extensions are possible in order to build an ecosystem of products and services around the original product: An engineering company from the sample typically sells sensors and the like, including sensors for cars and parking lots, which are used by its customers to build parking management solutions. The data from the sensors is forwarded to the company’s own cloud platform, where an app is also offered that can be used to retrieve the sensor data (e.g. to find a free parking space).
It seems that all of the companies surveyed are still struggling with digitalization, looking for the right initiative to implement and the right overall strategic path. In this context, it becomes clear that there is still a lot of work to be done “on the inside”, i.e. in terms of business processes and data management. Customers quickly notice whether a new app is just a “digital facade” or whether it really offers them added value.
But apart from all the digitization efforts and business model discussions: Merry Christmas and a Happy New Year 2017!