Every company strives for something and operates on the market to meet a specific need. Expectations, requirements and market conditions are currently changing ever more rapidly - in the past year alone, there have been enormous changes. You can only keep up if you know how to deal with these changes.
High energy prices, a shortage of skilled workers, supply bottlenecks and cost pressure along the supply chain mean that organizations need to digitize more than ever. In order to continue to survive, adaptability and the pursuit of improvement are required. This requires measures to be taken - one of which is digitalization.
It is also clear that digitalization is not a trend that will go away tomorrow and that you can let pass you by. Everyone will have to digitize, otherwise their future viability will not be secured in the long term. Companies that have been active on the market for years, in some cases decades, have not come this far because they have resisted change, but because they have mastered it at the right time.
Digitalization has several dimensions
Digitization comes into play in companies in different ways. Depending on the altitude, there are differences in influence and timing. If you want to introduce more digitalization in the company in a very practical way and ask the employees, it is mainly about the modernization and digitalization of work processes and tools. The introduction of digital tools at this lower level is a "low hanging fruit", meaning it is obvious and comparatively easy to implement: In most cases, such measures don't cost the earth, there are countless on the market, they make everyday work easier and you show employees that something is changing.
At the middle, less short-term level, it's all about the digital patchwork. The merging of various isolated solutions (internally and externally). A wide variety of solutions cover different needs, but information is often not transferred and has to be transferred manually - or simply gets lost. This is inefficient and error-prone.
The three levels of digitalization in the company
An end-to-end IT infrastructure is set up to ensure a smooth flow of information. This also applies to order processing and suppliers. If long routes, printed, scanned and filed papers are on your agenda, this is one of the classic examples of digitization potential. Here you can find out how digital you should be when it becomes clear where and how efficiency is lost due to breaks in systems and processes, where errors and misunderstandings occur and with what level of digital maturity your environment is approaching you. By fax? Via an order portal?
The highest and most complex level takes the longest. It is the strategic level, where measures need to be coordinated and evaluated to ensure competitiveness with the help of digitalization. This is not just about the introduction of new software or systems, but also about the structure and processes of an organization - because you need to become more digital not only to compete with other providers, but also to be an attractive employer. This is where a strategic and long-term change needs to be initiated - in areas such as corporate culture, innovation management and digital working methods. This can be the most uncomfortable of all levels, as it puts the cornerstones of an organization to the test. Nevertheless - or rather precisely for this reason - it is so essential.
How digital does my company need to be?
With the various dimensions in mind, the question arises - how do you find out how digital you need to be? First of all, digitalization offers an almost infinite number of possibilities, but not all of them deliver the necessary added value. It is clear that you need more than no digitalization and less than 100%. That's why it helps to remind yourself of a few questions: what digitalization options are available and where? What added value does it bring, what pains, problems and expenses are eliminated? Is there a problem in these areas that can - and should - be solved by digitization? These key questions help to find solutions for the lower and middle levels and also provide information on how much digitalization is necessary.
It is also worth looking forwards and backwards - to customers and suppliers. Are there special software requirements there? How can digitalization help to increase customer satisfaction? This is an important key question that should be included in the strategy development process.
Digitalization takes place in the two strands of administration and production
Be it through increased efficiency, paperless administrative processes or transparency by providing customers with an overview of their orders. How far along is your competition?
It is obvious to look at what competitors are doing, but your own structures in terms of processes and production methods, workforce, supply chain, customer requirements and company equipment can be very different. Companies know their goals and their organization best and what others are doing today does not necessarily have to be their own solution for tomorrow. It is helpful to look at the potential of framework conditions and then, of course, the level of digitalization also depends on how far ahead a company wants to be in the market, what role cost and time pressure play in this, which leads to processes having to be optimized and working methods having to be digitalized. A mix of complementary measures that can be implemented in the short and medium term ensures that the company stays ahead while the strategic approaches are shaped. Examples include "tidying up" communication channels according to the motto "less is more" or carrying out value stream analyses, as they reveal dependencies, efficiency losses due to breaks in systems and processes, but also optimization potential. If an overarching goal is paperless production, for example, paper cannot simply be banned. It is important to evaluate beforehand: Why is paper being used here? Is it because it has always been that way? Or because there is no digital solution? Or for reasons of control and security, because something is in black and white? Incidentally, this is the most common reason.
Another measure that can be implemented quickly is the recording of machine data. This allows key figures such as overall equipment effectiveness (OEE) to be generated and improvements to be derived. The following applies: the conclusions and derived measures are only as helpful as the data quality is good. With a view to impulses from other companies and sectors - and because you are not immune to operational blindness yourself - external support from associations or consulting companies can also help. Maturity level analyses that are supported externally are a common approach, as you gain far more from them than from self-completed questionnaires.
It is important to pursue a specific goal and communicate it, rather than blindly running in many different directions, as this only leads to more isolated solutions.
Two strands offer digitization potential
There are two strands in every company that offer potential for digitalization: administration and production. Regardless of whether they provide services or manufacture their own products. The interactions between administration and production make up the entirety of an organization. It only works if processes are robust, regardless of whether they contribute directly or indirectly to value creation.
Isolated solutions or individual areas that have been digitized through and through create additional disruptions in systems and processes, which is why a holistic view and awareness of interactions are essential. First of all, you should analyse exactly what the origin of what is to be digitized is. In many cases, it is a process-related problem - grown structures, incomplete information flows or rigid communication channels cause friction losses along the processes. A lack of standardization in processes is also a common problem, as are unwritten rules that can also slow down processes. However, if changes are made in the course of process analyses and old, objectively no longer sufficiently efficient processes are optimized, the need for individual digitalization measures can already be eliminated - or reduced. Of course, this does not apply to all problems.
Once you have recognized that a problem can be solved with digitalization, you should ask yourself a few key questions. Where is the pain or the problem the greatest, where are the effects the strongest? This is not always where people are "shouting" the loudest. Where can digitalization have the greatest effect? Are there solutions that serve several areas at once?
This has several advantages: firstly, there is usually a time factor and a budget that is limited, so the greatest possible added value should be generated. And secondly, it reduces isolated solutions that only make the digital patchwork bigger and more colorful. This in turn causes inefficiencies due to disruptions in systems and processes.
Interim conclusion:
- There are three levels for tackling digitalization in a company (the lower, middle and upper levels - see chapter "Digitalization has several dimensions")
- All are necessary, but differ in terms of influence and timeframe
- These levels must be taken into account for production and administration respectively
- The competition can be used as a guide, but customer satisfaction and efficiency internally and along the supply chain are primarily important
- When taking measures, the interactions should be kept in mind and the digital patchwork should be reduced, not increased
- Sometimes the problems are not solved by digitalization because they have their origins in established processes
- If these process difficulties are not resolved, you will end up with a digital but still inefficient process and little will be gained from digitalization.
The human factor
One factor that plays a role in every company and in all digitalization measures is the human factor. Digitalization and every initiative that is taken has an impact on people's everyday working lives - regardless of the type of activity, whether in production or administrative processes. Whether it is communicated or not, this often leads to uncertainty, which can quickly be perceived as rejection. People are creatures of habit - we are attached to our routine and changing it is difficult. Anyone who has ever made New Year's resolutions will be painfully aware of this when trying to eat healthier, exercise more or quit smoking. In addition, many people associate automation and digitalization with the rationalization of jobs. In view of the labor shortage in all areas of the company, this is often not the goal at all, but you should still be careful in your communication.
Involving employees at an early stage when measures are initiated at lower and middle levels increases acceptance. Transparency avoids conflicts and resistance, especially among employees who are not so keen on change. In addition, employees know their work equipment and processes best; it is their day-to-day work. It makes it much easier for those responsible to involve them and let them participate in implementing the changes. The human factor and the processes that form the basis for digitalization already make it clear that digitalization is much more than the introduction of new software.
Before digitalization takes place, processes must be smoothed out so that the measures can take effect - this also applies to automation. Digitalization has the potential to cushion bottlenecks, make day-to-day work easier and ensure future viability
A few final tips:
Involve your employees early on; digitalization cannot be implemented top-down or single-handedly. It is also important to focus on the future, not the past. Digitization measures are not judged on whether and how good past initiatives were, it is only about ensuring that the future is also successful.
Regularly question whether the measures you have taken are sufficient - for example by asking yourself the key questions and looking at your own environment. Despite the importance of digitalization, don't forget that not every company has to be a fully digitalized organization. In an agile context, we talk about agile fluency, the language level at which we operate, so to speak. After all, you don't buy a sports car to drive in 30 km/h zones.
The article is based on a presentation at the Surface Days in Leipzig last September
