In Times of Change – Digital Business Transformation

Written by julia | 4 min read
Published on: May 5th 2017 - Last modified: March 21st, 2022
Digital transformation retail sector - Robot with a tool in his hand

Whether we’re watching movies, listening to music, or booking a trip, digitalization is an integral part of our daily life. It has also reached working life. It changes the organizational structures as well as IT systems of companies and, in the long term, the overall markets. How do all these changes impact companies? This blog post looks at the digital transformation in businesses and its consequences.

The digitalization of our everyday lives: streaming, television series, and smartphones

How streaming changed the film business

A few weeks ago, video-streaming providers Netflix and Amazon were awarded for the first time with Oscars for their original productions in several categories:

  • "The White Helmets" (Netflix): best documentary film
  • "Manchester by the Sea" (Amazon): best script, best main character
  • "The Salesman" (Amazon): best foreign film

The fact that these streaming providers are not only eligible, but competitive for these awards shows that streaming providers have established themselves as independent producers in the film sector. Their business models confirm successes such as "House of Cards" (Netflix) weren’t flukes. Instead, they are now serious competition for the traditional film and television industry—and an expression of digital change. After all, video and music streaming via smartphones and tablets have become anchored in our modern life. This is also shown by two polls from the Bitkom branch:

  • In 2014, one-third of all interviewees replaced traditional television viewing by video streaming in whole or in part (Bitkom 2014)
  • One of four internet users used a music streaming service in Germany in 2015 (Bitkom 2015)

The issue of "streaming" illustrates the extent to which digital change influences daily life: rapid technological advances are reaching us at even shorter intervals and affecting different facets of our lives—from news consumption to communication habits to the modern working world.


Digitization in working life – companies in flux

How digital technologies change companies

Rapid developments in the digital world are forcing businesses to change constantly. Employees in all departments are learning to work with many different software programs that are continually being updated, re-evaluated, or replaced by even more modern solutions.

In addition to digital data processing, networked information and social communication channels are becoming more and more important. This applies, for example, to social media channels, which are now an integral part of company marketing and communications, or web-based cloud computing, which has established itself as a counter-model to classic on premise solutions.

The digital transformation affects almost every company

All of these changes are transforming companies permanently. Not only do they affect individual IT systems, but entire processes across every industry. Even employees feel this change daily in their working environment.

These complex changes in processes have been discussed under the term “digital business transformation” for some time. The increasing digitalization of all business sectors is the core of this digital transformation. It is an important part of the so-called "business transformation" - the profound transformation of a company in its relationship to individuals and its economic and social environment.

This change affects almost every company, according to a survey conducted by Forbes Insights / KPMG: 93% of over 900 respondents said they were planning, implementing, or successfully tracking "business transformation".

This shows that digital change affects not only every individual, but also almost every company. Transformation captures and connects every single step of the industry value chain – whether in logistics or services. Thus, change has become a constant in a company's daily business. The consequence: constant reevaluating.


What digital transformation means to businesses

From disruptive technologies to new business models

Reevaluation of the business model of video streaming providers led to companies such as Netflix and Amazon. It shows the speed with which innovative digital technologies reach and transform a market. On the basis of complex algorithms, the users are given individual film recommendations, which match their demonstrated viewing preferences. As a result, video streaming providers are improving the user experience of their customers compared to the classic TV and video industry. This in turn leads to higher customer loyalty: since they do not depend on the inclusion of advertising blocks, streaming providers are increasingly developing their own unconventional content formats. Yet, they can still compete with the productions of the classic film industry, as the Oscar award confirmed.

This development illustrates an important characteristic of digital transformation: new disruptive technologies lead to innovative business models. In turn, they also change the customer needs and, in the long term, the markets. At a fast pace, new disruptors with innovative solutions are entering the market and competing with established companies. In this highly dynamic environment, companies are faced with the challenge of proving themselves in the market. This is also an important opportunity.

The opportunities and challenges of digitization

A study by Roland Berger Strategy Consultants on behalf of the BDI (2015) shows what digitalization means for European industrial companies. As levers of digital transformation, the authors see:

  • Digital data: Through the collection and processing of mass data, better predictions and decisions are made possible
  • Increasing networking: The value chain is networked and leads to synchronized supply chains and thus shorter production times
  • Automation: autonomous systems are created by the connection of classical technologies and artificial intelligence
  • Digital customer recruitment: the interaction with the customer extends over more and more touch points

These developments could help companies save time and money, or show them new business models and revenue potentials. As the authors of the study argue, a large profit is conceivable throughout Europe in the coming years. Provided that companies are constantly questioning their products and become more digital. This means that companies are forced to react to the fast-moving changes and move in the right direction.

In the case of digitization projects, efficient processes are decisive for success

Digital transformation has a direct impact on the employees, IT systems and processes of companies. Therefore, efficient processes are among the most important prerequisites for successful transformation projects; whether it is a new software or the institutional knowledge of the employees. More and more companies are using innovative technologies to model and optimize their processes. This makes it possible to react more quickly and flexibly to various changes with success; in current surveys such as the Manager Barometer 2016-17, executives see the greatest advantage of digitization in the simplification of their processes.

This is a great opportunity for digitization for companies. When it comes to digital technologies, simplifying everyday life is also an important argument - whether we watch movies, listen to music, or book a trip.

Would you like to learn more about how companies are constantly transforming? See our Whitepaper for more information about digital transformation!

Published on: May 5th 2017 - Last modified: March 21st, 2022