Digitization- It is now common knowledge that a digitized world of work provides economic advantages. Small and medium-sized companies. New technologies have fundamentally changed everyday work processes in recent years. And digitization is advancing at a rapid pace. This forces companies to rethink and keep up. Large corporations can do more easily thanks to their greater financial strength, and broad-based specialist departments often cause significant problems for smaller companies. They quickly lose track of where to start in their structures and what needs to be considered.

The advantages of digitization are ultimately the same for all companies: processes are becoming more efficient and flexible, costs can be reduced and competitiveness increases. So it’s no wonder that the elementary measures are the same in many companies and industries. With these starting points, it is possible to create a reasonable basis for more individual digitization:

Digitization- Determination Of The Current Situation

At the beginning of all measures, there is a comprehensive inventory. Every company that wants to focus (even) more on digitization in the future must first analyze existing processes to identify where the introduction of digital technology makes sense. A systematic approach to individual business areas is essential.

The most fundamental field of investigation in most companies is accounting:

• How much effort does it take to handle receipts and documents in paper form, for example?
• How much time does it take to prepare for tax audits and annual financial statements?
• How awkward is it to contact banks or the tax office?

Comprehensive digitization of these processes towards a paperless office can already save high administrative costs in accounting. For example, because fewer staff are required there, and processing processes become significantly faster.

But internal communication is also a first, relatively easy to explore the field of work:

• Which on-site meetings, which devour time and possibly also travel costs for freelancers, can be held digitally in the future?
• Can high phone bills be averted through online conferences?
• How many workstations does a company have to set up and maintain in its own office?
• How much is a home office possible for employees thanks to digital communication and data provided through a cloud?

Data-driven business with software for orders, online tools for booking appointments or a modern ERP system for managing business data can lead to long-term cost reductions in communication.

With the processing and digitization of elementary operational areas such as administration, maintenance, warehouse and human resources management, unexpected costs can be saved every year. For example, around 40 per cent of previous expenditure costs can be held per year with a digitized purchasing process for the procurement process.

Automate Value Chains

Manufacturing companies, in particular, have a grateful starting point for creating more efficiency and further reducing costs: their value chains. Thanks to modern IT infrastructures, it is relatively easy to achieve enormous progress in the company along the entire production process. Every step can be digitized, from the procurement of the necessary material to the actual production, sales and administration to the supply chain. As a rule, a triad of steps helps to transform value creation in the company:

• Establish controllability: To control inventory management and the supply chain digitally, all products and means of production should be precisely identified in the merchandise management system, for example, employing an individual ID.
• Carry out measurements: The current status of the designated resources must be determined and their processes measured. How good are the product qualities? Are the lead times within the production chain too long? Are there unnecessarily high process costs, for example, due to unnecessary steps?
• Creating synergies: Once the processes have been analyzed, they have to be networked in a meaningful way to increase their efficiency at the crucial points and to optimize their quality overall.

The much-touted Internet of Things, IoT, is now the first choice for monitoring and adapting process automation. With measuring sensors, data storage in a cloud and the implementation of processes via connected software, IoT can make a lot of things easier. As a rule, fewer manual interventions by personnel in the value chain are required, agreements are less necessary, and reaction times to changed market conditions are shorter. In addition, smaller quantities of certain products can be manufactured more frequently at lower costs.

Digitization: Outsource Sub-Processes

The automation and networking of company processes make it increasingly possible to outsource some work processes. This makes it easier to integrate external companies and subcontractors, and the contracting company can focus more on its core competencies to become even more effective there. External production, processing or delivery is often significantly cheaper than if a company had to do it. The digitized communication and monitoring processes make it possible to coordinate a more extensive network of suppliers, producers or service providers simultaneously.

Even digitization itself can be outsourced. Small and medium-sized companies in particular, which have little experience and resources, are usually well-advised to hand over responsibility to software and cloud service providers with the appropriate expertise. This also saves personnel costs since IT experts no longer have to be employed in the company itself.

Increase Customer Loyalty

For companies from industries with an intensive exchange with end customers, it is very worthwhile to focus on digitization in customer communication. A call center, for example, can, of course, also be outsourced, but it should usually be even cheaper for companies to rely on self-service portals for customer service. There, customers can take on administrative tasks for which customer advisors would otherwise be needed. Customers can then manage invoices, make payments, initiate complaints or change personal data online.

In addition, higher-quality company websites with more interactive information for customers and direct contact via social media channels are desirable. The costs for a company homepage can even be written off under certain conditions. This includes expenses for a domain and those for design and programming, as well as for maintenance.

A company presence in various social networks is also a direct means of communication. Both ensure faster service and thus more satisfaction among the people for whom a company ultimately works.

Digitization: Take Employees With You

To maintain the often familiar working atmosphere in small and medium-sized companies, all employees must be actively involved on the way to digitization. On the one hand, this means setting up training courses and advanced training courses for the theory that are specifically tailored to the new processes. On the other hand, what has been learned must be effectively implemented in practice.

First test workplaces are recommended here, which are already tailored to the digitized processes and enable the staff to learn step by step before a complete changeover occurs. This minimizes the risk of a chaotic and jerky rollout, which would lead to additional costs. Well-trained and motivated employees usually pay off more than poorly communicated and hasty digitization.

Note Additional Costs And Environmental Aspects

Even external costs that are not directly related to the actual work processes can be cleverly reduced by a company through more digitization. It is easy to forget that, for example, energy costs can be reduced with modern technologies. Electricity consumption or heating costs in the office can be controlled more easily with smart meters, just like in private homes.

In the meantime, installing such intelligent measuring systems is even legally mandatory for companies with an annual consumption of more than 100,000 kWh. But even with lower consumption, they can already be profitable. Here companies should seek expert advice from energy consultants. In addition, the Federal Environment Agency has developed concepts for companies with which digital environmental management can be promoted in several business areas.

Apply For Government Support

The Federal Ministry for Economic Affairs and Energy (BMW) offers a corresponding funding program to support small and medium-sized companies financially in digitization and promote it. Under the title “Digital now”, companies from all sectors can receive grants and investments for digital technologies and the qualification of their workforce on digital topics if certain conditions are met. The companies are not allowed to have more than 499 employees, and they have to implement the planned measures within twelve months after the grant has been approved.

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Digitization: Due to the Covid-19 pandemic and its consequences, many trends, such as measures in the course of the advancing. Due to the Covid-19 pandemic and its consequences, many trends, such as measures in advancing digitization, have been accelerated in numerous business areas. Some of these developments will also trigger changes in our working world in the long term. It wasn’t just about absorbing economic losses. For many industries and business areas, the partly enforced measures were also a kind of food for thought, which opened up sustainable, positive prospects for the companies and employees. Sum Total has identified five important developments in digitization.

Digitization: The Triumphant Advance Of Virtual Sales Platforms

The trend towards online shopping has preoccupied retailers and brands for years. The temporary closings of stores to contain the current pandemic have supported this trend and spawned new concepts. In many places, smaller local businesses have joined forces and set up common online platforms. Consumers can continue to use local providers as an alternative to the extensive online media in the future.

But the unplanned break was also food for thought for industries that traditionally rely heavily on an on-site sales experience. The automotive industry, for example, continues to rely on car dealerships with showrooms. Up to now, many dealers had hardly any online resources for selling, and even the automobile manufacturers themselves had very different levels of online offerings. Although the virtual offer will not replace a test drive in the future, a large part of the research for car purchases could shift permanently to the online area. Comparison platforms on which vehicle features and prices can be compared are already the starting point for many buyers when buying a car.

Providers who also offer a virtual brand experience, where buyers understand the driving experience and the equipment in advance, realize a clear sales advantage. Tesla, Hyundai, Audi, and VW are among the pioneers where you can not only wholly configure your dream model online. In the first virtual showrooms, interested parties can take a seat from the couch at home in the driver’s seat or on the back seat, look around the interior, and even receive advice in real-time. Such a virtual brand experience also conquers other industries – from digital kitchen planning and the furniture industry to sports and fashion brands.

Digitization: New Requirements For Customer Service

While sales staff from shops and direct sales had to go on short-time work in many places in recent weeks, inquiries in call and contact centers exploded simultaneously. This affected not only the trade but also service providers. Many industries reacted to the shift in customer inquiries with new digitalization concepts. Financial and insurance service providers, for example, are expanding their virtual advisory services. Instead of a combination of on-site advisory meetings and telephone advice, future-oriented service providers opt for video conferencing options, for example. This means that the customer does not have to forego more personal visual contact with his advisor. This concept could also prevail for many users and consultants in the future.

Again, for example, from the automotive industry: Hyundai had already launched its online showroom before the Corona crisis and combined it with personal advice. In a studio in Aschaffenburg, there are four vehicle models and specially trained sales advisors. They can guide interested parties around the vehicles via video chat and answer questions. Due to the general shift in the direction of online consulting, companies need to rethink their online concepts and technologies used and a change in human resources. Instead of losing experienced specialists, further training could qualify them for a transition to virtual counseling if necessary.

Digitization Optimizes Interaction With Partners And Suppliers

What applies to customer contact also applies to interaction with partners and suppliers. In this regard, too, many industries have so far been rather conservative and have mainly relied on a fleet of employees who carried out negotiations and training on-site. Here the enforced contact restrictions had at least a positive effect. In the medium-sized business sector, in particular, some suppliers or service partners have so far been somewhat skeptical of virtual channels. 

The enforced contact restrictions had at least one positive effect in this regard: some skeptics found that virtual sales processes, meetings, or training courses also work better than expected. Personal contact will remain important in the future. Still, the number of conferences and the many kilometers that the “Road Warriors” cover in sales far from their families on the streets could be significantly reduced. From webinars with technical instructions for installers to onboarding new suppliers via virtual platforms and with the help of collaboration tools and video conferences, many digitalization technologies have been able to demonstrate their practical benefits in recent weeks. In addition, there are cost advantages and faster implementation of many work processes.

Use Of Technology And Digital Tools

Digital tools and platforms form an essential basis for implementing work processes without personal contact. A necessary step in this is integrating business systems and their opening beyond company boundaries to enable smoother cooperation with partners and suppliers. But solutions such as webinars, online training, collaboration platforms, and other digital offerings can be used for numerous business areas and processes. The use of video conferencing solutions has exploded in the last few weeks. The possibility of virtually face-to-face communication makes it possible to establish a personal connection despite the physical distance. This is just as important when onboarding employees, partners, or suppliers to maintain a sense of community when working remotely.

The trend towards increased mobile and decentralized work had already established itself in recent years. Since the current crisis has forced many companies to grow their equipment for digital systems and remote workplaces faster than perhaps planned, industry associations assume that this trend will continue, at least in some areas, even if workplaces can be fully occupied again. According to a survey by the digital association Bytom, one in two (49 percent) currently works entirely or at least partially in the home office and can imagine working remotely in some cases in the future.

Employees As A Critical Factor In Digital Transformation

The implementation of digital technology is an essential basis for the performance of a transformation. However, it is at least as important to develop the necessary skills and qualifications among employees. Dealing with new technologies and tools is just one area where employees have to be trained more and more frequently.

However, a flexible and quickly applicable system for employee training is one of the critical factors for almost all work areas to react to new situations and requirements. This affects employees in direct contact with customers who, for example, have to comply with hygiene regulations, deal with a seasonal rush in shops, or the current restrictions and distance rules. The same applies to the many employees who work in virtual teams or contact customers, colleagues, or partners increasingly shifting to virtual channels.

Thanks to digital HR, HCM, and learning platforms, employee training courses are becoming much more flexible and can be implemented ad-hoc and from any location, as required. In addition, such systems help recognize which employees would be offered further training or retraining if changes in the company – for example, a shift of advice to online channels – lose some tasks or roles and new jobs arise elsewhere. In this way, qualified employees can be retained and qualified for future digitization requirements.

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Digitization – How quickly and consistently medium-sized companies digitize depends above all on their size. Are you still lagging? Or are you already at the forefront? Studies on digitization in medium-sized companies like to sketch either only one picture or the other. As is so often, the reality is not black and white, but colorful, with many nuances – and must be viewed in a differentiated manner. While some companies are already using robots, virtual reality or artificial intelligence, others are busy faxing.

The management consultancy Ernst & Young sees a ” digitization of the two speeds in medium-sized companies “. How quickly, consistently and successfully medium-sized companies digitize in this country depends on size, industry and location. There are very different framework conditions for digital progress between east and west, north and south. Nevertheless, there is common sense: there is no getting around more investments, know-how, and courageous projects. Above all, the hidden champions, the secret world market leaders, must finally become digital champions.

Digitization In Medium-Sized Businesses: Recognizing The Value Of Data

The reason – developing new business models, winning new customers, keeping up with the global competition, creating efficiency, saving time and costs – is clear to everyone. The show is sometimes a challenge. But not every company has to and cannot become a digital champion overnight. Digital transformation doesn’t happen overnight. We have to start with small – well thought out, strategic – steps to make giant leaps.

The first step, which is more accessible than many think, is: to make better use of the opportunities offered by data analysis. Medium-sized entrepreneurs are still too seldom aware of the value of their data treasures. A significant mistake when you consider that most companies now have petabytes of them: machine data, sensor data, customer data, material lists, inventory levels, financial data, social media, to name just a few. To make sense of them, they have to be filtered out, connections identified, and fields of application used.

Learn From The Success Of Big Companies

There are enough of them, too: If, for example, Siemens Healthiness successfully maintains medical technology devices with data, detects anomalies and thus prevents expensive failures, why shouldn’t a mechanical engineering company in the Swabian Alb do the same? After all, predictive maintenance saves a lot of time and money.

If Maersk, the world’s largest shipping company for container ships, can use data to whip up its logistics chain, why not an auto supplier from Saxony-Anhalt too? If large retail chains evaluate their data to optimize the customer experience, calculate prices better, and make stores more attractive, why not a retailer in Westphalia too? Those who know their data also understand their company and their customers better.

Digitization In Medium-Sized Businesses: Vision, Action And Speed

So why not? While Bytom studies show that big data, cloud and artificial intelligence are of central importance for most medium-sized companies, a large-scale Commerzbank study in 2018 only sees data analyzes in use by around every tenth medium-sized company.

Many companies don’t know where to start at first. The image still prevails that data analysis requires exceptionally complex technology. And to make sense of it, you have to be an IT professional yourself who can program in your sleep. In the meantime, however, there have long been low-cost platforms for data analysis from the cloud, which any manager, no matter how non-IT, can easily use in the office or the bakery. To break the discrepancy between thinking and acting, you need vision, action and speed – as Bytom President Achim Berg correctly recognized

Digitization In Medium-Sized Businesses: Inventors In The Fast Lane

So what is to be done? Digitization and especially data analysis are not just a matter of IT. This must come from the management level, and all employees from all departments must be brought on board. That’s the vision. IT then implements the initiative with the right technology, starts pilot projects, tolerates mistakes, learns from them, and does better next time. The users in the departments must also be trained on how to use the software and how to get the most out of the project. That’s the action. In no other country in the world are there as many world market leaders as, around 1,500. They are so successful because they are committed to tinkering, combined with long-term planning, specialization and perfection. That’s the speed – more of it, please. 

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Data Integration- Many manufacturing companies are in the process of digitizing manufacturing processes and entire value chains. They all need a workable concept. Some are still at the beginning, and others are already in the middle of it: Many manufacturing companies have successfully launched their Industry 4.0 initiative. Without data integration, however, Industry 4.0 is inconceivable. But what is essential in terms of data integration on the way to the intelligent factory and what is not?

Successful integration of all data streams is the foundation for essential adjustments to production, for example, to increase the overall system effectiveness or production effectiveness. Companies need to work in three areas: data, data integration, and data analysis to take advantage of the possibilities and numerous advantages of the digitized output. Because the core of Industry 4.0 initiatives consists of information, its integration and its evaluation.

Data Integration: Raw Material For The Value Chain

Classic Industry 3.0 has an excellent need for optimization in terms of using data to generate knowledge. Production systems of this generation show a high degree of fragmentation in data silos. They are hardly networked so that a holistic view of processes is not possible. It is estimated that less than one percent of a company’s unstructured data is currently being analyzed. This is why internal and external data are often not considered and linked – although the share of unstructured data is up to 80 per cent!

What Is Unstructured Data?

A typical example of semi- and unstructured data are logs, sensor and video data. On the other hand, structured data includes SAP data, among other things. At the moment, only a tiny part of unstructured data is evaluated because

• They are available in very different formats, such as images, texts, machine and sensor data. This makes it challenging to find a suitable tool to access all of them and read and process the respective data format.
• the data volume is exceptionally high
• they must be extracted in an appropriate form
• often specific (manual) solutions have to be developed so that the data can be connected at all
• a large number of data updates and the lack of comparability of their sources complicate the processes
• there is often a lack of specialist knowledge about data integration and the use of data sources

Great Potential: Data In Production

There is enormous potential in the data of manufacturing companies. However, its use is challenging for many organizations. The difficulties can be solved with suitable applications:

• Volume – The Amount Of Data: Production systems are being equipped with more and more sensors that deliver data on a wide variety of production parameters permanently and in real-time. Big data technologies support the storage, processing and analysis of this data and provide valuable insights.
• Velocity – The Transmission Speed: If, for example, an application is used for predictive maintenance, i.e. for predicting and avoiding system failures, the information must be promptly transmitted to the maintenance staff. Modern streaming analytics technologies enable such alerting and proactivity in the operational processes of a production facility.
• Variety – The Variety Of Data: Probably the most significant challenge in analytical Industry 4.0 applications lies in the array of data. Before the data is brought together centrally, countless proprietary data sources must first be tapped. There is no standard in sensors, and information is delivered using a variety of formats and protocols. There is, therefore, a need for robust and flexible data integration tools to overcome these challenges.

Data Integration In Individual Expansion Stages

A significant challenge for the systematic use of data in production is to merge the scattered data sources so that, in the end, an optimal data flow is created that supplies all-important systems with the correct data at the right time. The following levels can be identified for this:

1. Data Warehouse: Classic data warehouse implementations automatically merge data from the different systems, aggregate them and provide critical figures.
2. Data Lake: The next stage of development is to integrate more data and make it available as information in the processes. Semi-structured and unstructured data must be linked and used. In addition to equipping old machines with appropriate sensors, the retrofitting, and the data connection of various sensors, new systems must also be created to store and process this information. Data lakes and big data technologies are the basis for all advanced analytics and data science applications.
3. Near Real Time: The next level relies on the processing of data in almost real-time. The data streams are persisted in the data warehouse or data lake and are evaluated directly where they arise: close to the sensor. Analytics “on edge” enables problems to be averted in advance by triggering an alarm or automatic machine shutdown when certain thresholds are reached.
4. Data Blending: This is the process of combining data from multiple sources to have an analytical data set for decisions. Data blending is necessary when a company’s data integration processes and infrastructure are insufficient to bring together specific data sets required by each business unit.

Data Evaluation: From Analysis To Recommendations For Action

The various levels of integration for data from digital products are also reflected in the characteristics of the evaluation processes for this information: the journey begins with the classic evaluation of historical data. It ends with advanced analytics with forecasts for future developments, including recommendations for action or orders to processes or other participants in the value chain. After overcoming the world of data silos, it is time to generate knowledge through analysis and distribute it to the right people in the company. So-called advanced analytics, therefore, form the heart of many Industry 4.0 applications.

1. Business Intelligence: BI applications provide business users with information in the form of reports, dashboards or self-service evaluations. This provides, for example, insights into the performance of the systems or maintenance activities. In this way, comparisons of set-up times between machines or plants can be quickly discovered, such as deficits in individual teams or locations.
2. Predictive Analyzes: It is less about looking backwards and more about future prognoses and discovering hidden connections in the data. Predictive analysis predicts what can happen next and opens up the possibility of proactively countering problems.
3. Prescriptive Analyzes: They provide information on how companies should deal with future challenges and provide specific recommendations for action for upcoming tasks in production.

Realize Competitive Advantages With Data Integration

As part of a booming Industry 4.0 initiative, powerful modern technologies ensure that competitive advantages are realized, and new perspectives for future production scenarios are possible. McKinsey assumes that Industry 4.0 applications can reach a value of 3.7 trillion US dollars per year by 2025. Manufacturing companies benefit from the following advantages when implementing Industry 4.0 projects:

• Increase in productivity and reduce costs
• Greater accuracy of planning and forecasts
• Shorten the go-to-market time
• Increase in competitiveness

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