Many companies have long been aware of the advantages of digitization. Yet the digital transformation is mainly still in its initial phases. So far most changes have been limited to technological aspects such as innovative tools and IT solutions. Additional opportunities remain unmined. And the organizational readiness for change is seen as the biggest barrier. Traditional, rigid structures and lack of orientation are determining the slow pace of development. More than 70 percent of representatives from the public sector think that the digital transformation in their field is especially slow and wasting potential. Such are the results of a recent study by management and technology consultancy BearingPoint, which surveyed 281 representatives of German companies.
Many companies see technological development as the key factor for digitization. For 40 percent of respondents, tools, features and data are the most important themes when it comes to digitization initiatives. Another 21 percent are focused on automation, virtualization and agility. But digital transformation requires far more than adopting innovative technologies: Completely new business processes are needed. And yet only 33 percent have begun addressing the transformation of their business models and KPIs. Changes are coming in small steps, not great and courageous leaps. Furthest ahead on the path are trade and service companies, because they rely heavily on digitization for their sales channels. This sector's maturity is very solid, estimated at 40 percent.
"Digitization projects are frequently understood to be technology solutions in companies," says Alexander Broj, Partner at BearingPoint. "Although nearly all companies have launched initiatives by now, these are frequently still in their early stages or very compartmentalized. I expect that the firms most prepared for the future are trying to define new business ideas now. Companies that feel secure in their market position and are remaining true to a traditional approach will pay heavily in the end."
Clearly it is corporate culture, structure and organization that stand in the way of the digital transformation in the companies surveyed – traditional, hierarchical, vertical and functional, rather than agile, horizontal and process-oriented. Large companies in particular have some catching up to do: Nearly 60 percent of the large firms are still run traditionally – more than twice as many as in the small business segment. Surprisingly, only one in four view financial resources as a barrier to digitization. In the large majority, budgets and resources seem to be sufficient.
Risk avoidance, lack of readiness to change and a low threshold for experimentation are preventing companies from leveraging the opportunities of digitization. One of every two respondents notes the lack of willingness to accept major changes in behavior and organization. More than 40 percent view their company as too passive, unable to make decisions and slow to act. Fifteen percent of participants see their organization as lacking direction. Not even one in twenty companies has a clearly defined line of accountability in the digital area.
The internal challenges of digitization have long been apparent, but hardly anyone has really begun taking them on. The survey results reveal the wait for the digital "savior". One out of four view "identifying and promoting visionary thinkers" as the decisive success factor for driving the culture change. The mastermind who can push the organization forward with vision and drive is sought, including outside the organization. Managers are needed who will lead the organization into the future. Internal innovative capacity is strongly underrated. Only 16 percent of those surveyed view the establishment of a can-do culture as a decisive factor.
Based on the study's results, BearingPoint has formulated five approaches to support companies' digital transformation:
1. Customers, customers, customers: a stronger orientation to customer wishes
2. Act like a startup: accept errors and attempt new things courageously
3. Invest like a venture capitalist: seek allies and develop innovations externally as well
4. Expand IT infrastructure: adapt IT to business needs
5. Reach the tipping point to new thinking: break down rigid structures and advance cultural change