What are companies doing to get a handle on digitization?

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Peter Klingenburg comments

One thing has become clear, and that is that the digital transformation is no trend - it’s a necessity. Companies must start to think digitally and take a critical look at their business models at all stages of the process if they are to remain competitive. But what practical steps are individual companies taking to get a handle on digitization? Are SMEs going about it differently to multinationals? And what obstacles do they face? To find out some answers, T-Systems Multimedia Solutions hosted the Digital Transformation Live Talk in Munich – with some interesting results.

Grafik: ein Gesicht kommt aus einem Pixelschleier in schwarz weiß

Only when companies start thinking digital and adjust their business models continuously to the test, they can survive in the market.

PAC analyst Andreas Zilch is certain that digitization will radically transform our private and professional spheres. But it is up to us to determine exactly how. So how are corporations and SMEs changing? Large corporations are generally considered to lack agility and flexibility. Yet with the dawn of the digital age they are faced with no alternative but to incorporate and foster innovation – and they have to do it fast. It's not necessarily about re-inventing the wheel every single time. Sometimes it just needs turning a little. One possible solution could be to integrate start-ups into the company using accelerator schemes, like E.On and Deutsche Bahn are doing. Small-scale pilot projects and landscapes that give employees space to experiment can help with trying out innovations outside of the usual processes. An open corporate culture that is accepting of mistakes is not the preserve of only start-ups, as U.S. management consultant Laurence Johnston Peter aptly puts it: "The way to avoid mistakes is to gain experience. The way to gain experience is to make mistakes." – With one exception: Anyone can make a mistake, but avoidable mistakes should be avoided.

Practical measures by SMEs

So how are small and medium-sized enterprises doing it? Furniture fittings manufacturer Hettich Holding takes a very pragmatic approach. And its digitization measures deserve serious attention: Machines not only report independently when they are due for maintenance; they even call up the relevant technician. Trying out new solutions and talking about them is the maxim at Hettich. The company has also set up a steering committee to discuss digital developments on a regular basis, with Managing Director Andreas Hettich's personal backing. And that is part of the key to success. Because, whether corporations or SME, digital transformation is difficult without the support of top-level management.

The important thing, then, is to create space for entirely new ideas and not only take employees along on the digital transformation journey, but to get them actively involved. By doing so, companies will foster an open culture of sharing that is indispensable for transformation.

In the Internet of Things, who does the data belong to?

It is also important to consider digitization from another, completely different, perspective. What are the legal hurdles? Lawyers are up against two challenges: They must monitor the market to see what the business transactions and contracts of the digital age could look like. At the same time, there is a distinct lack of clearly defined jurisdiction in relation to the Internet of Things. Detleff Klett, lawyer and expert in IT law and data privacy, has some questions: What actually happens when machines speak to each other? When they exchange and generate data? And who does this data belong to? Can machines enter into contracts? Who is liable? The expectation is that Germany will become increasingly international as a result of digitization, also in legal terms. For example, maintenance on an elevator in China that is carried out from Germany will require an international contract.

The conclusion of the discussion panelists: There are still a lot of questions to be answered. But analysts, company representatives and lawyers were all in agreement about the fact that companies are becoming more aware of the need for digitization. There are no blanket guidelines that apply to all companies – digitization is a very individual process. And one that looks completely different each time. The digital transformation has not only revolutionized the world: Rather, it is an evolutionary process, that in all likelihood, will be never-ending.

Carsten Klingels (E.ON), Hanno Harland (Deutsche Bahn), Norbert Günther (Hettich Holding), leading Industry 4.0 analyst Andreas Zilch (PAC), and lawyer and expert in IT law and data privacy, Detleff Klett (Taylor Wessing), took part in the Digital Transformation Live Talk panel discussion in Munich on June 15, 2016.