Digital Transformation

Competition is good for business

Market leaders are used to competition. But with digitalization penetrating all sectors of industry, unexpected new competitors are coming to the fore, with the capacity to become threateningly large in a short period of time. To successfully assert themselves, companies need to become completely digitalized.

03 Feb. 2017
Sport Zielgerade Cewe Konkurrenz
(Photo: Shutterstock.com)

The history of Kodak is surely one of the most oft-cited examples of missed opportunities . How this photography pioneer missed the trend toward digital photography, finally having to declare bankruptcy in 2012, is a well-known example of the potential consequences of clinging to an antiquated business model and failing to adequately innovate.

A positive counterexample is that of Cewe. In contrast to Kodak, this company based in the north German town of Oldenburg recognized the opportunities presented by digitalization a full 25 years ago. At a very early stage it introduced the service of digitalizing analogue photos on diskettes and CDs, making it a pioneer back then. At first many customers and competitors could only shake their heads and chuckle at this seemingly exotic niche product. But no one is laughing anymore.

Digitalization drives innovation

In 1997 Cewe became the world’s first retail chain to accept digital files for photo printing, which catapulted it to a leading position in its sector: Whoever wanted to put digital photos on "analogue" paper could scarcely afford to ignore this provider. "For Cewe, digitalization serves as the foundation for further innovation and is a genuine stimulus to our creativity," explains Dr. Rolf Hollander , CEO of Cewe. "For us, it opens up ever new opportunities to continue to develop and generate new business models. Our digitalization focus is primarily on the areas of e-commerce, customer services and process optimization," he concludes. In other words: Digitalization is the purveyor of numerous and varied business opportunities.

Heidelberg Druckmaschinen, a manufacturer of printing presses, also came to recognize the advantages of digitalization – and not a minute too soon. That is because, after years of being a market leader, the Heidelberg company was close to going under. Due to the financial crisis of 2007-2008 , the market for sheet-fed offset printing presses collapsed, shrinking by 50%. In 2009 the company was close to insolvency. The company laid off half its staff, and its share price went from an all-time high of 45 euros down to less than 3 euros.

Reinventing the company

But now that is all a thing of the past. Today the Heidelberg company is known not only as an innovative idea-giver for the printing industry, but for entirely other sectors as well. New digital printing technology makes it possible to implement new product designs, even in batch size 1. Even 3-dimensional shapes like soccer balls can be printed using the new machines. The company has moreover developed a series of innovative applications featuring connectivity and full-tier integration. The "View2Connect" software suite makes it possible to implement new communication and collaboration platforms on the basis of 3-D CAD product data, creating new cooperation opportunities along the supply chain – including development, purchasing, production, assembly and service.

This software even landed Heidelberg the "Digital Leader Award" in the category of "Spark Collaboration" last year. And, what’s more: in 2016 profits weighed in at 9 million euros – following a loss in the same amount the year before.

Retailers under pressure

But industry isn’t the only sector of the economy where digitalization is making rapid strides. Retailers, above all, are struggling to cope with the impact of online shops and price transparency. The Globus retailing chain is coping with this situation not only by offering low prices, but also by relying on the power of digitalization. For some four years now, the company has been heavily involved with digitalization – including on the research side. At its headquarters Globus has teamed up with the German Research Center for Artificial Intelligence and the University of Saarland to operate the "Innovative Retail Laboratory".

Globus is breathing life into digitalization using a type of model supermarket. The objective, according to Dr. Ralf Jung , deputy director of IT at Globus, is to use the Internet and smart phones – two technologies which "have completely changed our society", to "come closer to our customers and offer them added value," he concludes.

In practice, this means that instead of having to search for products up and down the aisles, the customer can use an interactive terminal to see where products are located on a map of a supermarket in the German town of Koblenz. The store’s "Scan & Go" system allows the customer to scan individual items while still shopping, then pay the final amount at a self-service cash register on the way out. This reduces waiting time down to virtually zero.

And Globus is also working on digitalization in the background: The holistic approach to fulfilling individual customer wishes, the use of real-time data and the inclusion of environmental impact considerations in the production process are on the "shopping list" of IT managers. And this means Globus most probably has basically the same agenda as the other big German retailing chains. That’s because the Web competition never sleeps.

Digital transformation is changing supply chains and disrupting conventional business models, creating completely new commercial opportunities in the process. Digitalization is changing the rules of the game. The digital economy – the d!conomy – offers boundless opportunities. At CeBIT you’ll discover the business solutions of tomorrow.

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