Pressure for companies to digitalize continues
Munich, November 26, 2020: How fit for the future and competitive are German companies? In their exclusive study, valantic and Lünendonk evaluated the technological status quo of companies in Germany – with some alarming results.
Many companies have done their homework with regard to IT security. In other areas, however, in-house expertise is severely lacking. Knowledge of artificial intelligence, process mining, data analytics, CRM, supply chain management, and robotic process automation is scant. The five propositions of the digitalization experts valantic can also be regarded as an appeal to successful German companies: Don’t lose sight of your digital future in the course of daily business.
1. Ticking time-bomb: AI, process mining, and MES expertise is only in the single-digit range
Just four percent of German companies are very familiar with (AI) artificial intelligence and know how to take advantage of business opportunities. In process mining, a preparatory stage for business process optimization, the figure is five percent; for manufacturing execution systems (MES), six percent. The majority of companies are just winging it or have come to a complete standstill. Efficiency gains, greater customer satisfaction, and cost reductions that can be achieved with these technologies are lost and cannot be exploited due to the companies’ lack of expertise. 73% have little or no in-house AI expertise and they cannot manage pilot projects by themselves.
German companies are therefore gambling with their futures. Machine learning and artificial intelligence (AI) are already being used to generate specific added value in customer relationship management, data analytics, and in the SAP Sales Cloud; an example is AI-controlled next-best-action for individual customers. AI used intelligently results in more satisfied customers, it increases customer loyalty, secures supply chains, and helps with new customer acquisition.
Things look a little better with regard to robotic process automation (RPA). One practical example is chatbots, which make the lives of personnel in sales, the call center, and service easier and spare customers long wait times. When it comes to RPA, however, 51% of the IT decision-makers surveyed by valantic and Lünendonk said they have almost no or no in-house expertise.
2. User Experience (UX) crucial for the success of digitalization projects
In conjunction with Lünendonk, valantic explored which factors determine the success or failure of digitalization strategies and the introduction of new technologies. The result: 42% of those surveyed said that the user experience is very important; 36% said it is important. This means that customers and employees are increasingly the focus of digital transformation projects. You could also call it the happiness factor: without satisfied customers and happy employees who are enthusiastic about what they’re doing, digitalization projects will be less successful.
Instructive is which are German companies’ focal points when improving user experience for customers and employees. 77% concentrate on processes close to the customer. These include the automation of customer communication, CRM, end-to-end customer processes, multi-channel strategies, data analytics and customer insight solutions, e-commerce portals, and digital marketing initiatives. The goal is to provide customers with quick, comprehensive, expert information.
76% want to improve the user experience of their operative core processes, for example in ERP, the supply chain and logistics, in production and purchasing. Rightly so, for intuitive user guidance and lean, fast business processes directly influence customer satisfaction. 66% want to equip their employees’ workplaces with unified communication solutions and collaboration tools.
3. With remote work, IT security is a greater concern
Collaboration and remote work were on many companies’ agendas even before COVID-19. With the lockdowns due to the pandemic, however, these topics suddenly became red hot. Anyone who was not prepared for mobile work and home office had to learn a painful lesson about how quickly productivity can drop or collapse entirely without flexible tools.
Thus, it is no surprise that the demand for collaboration tools is enormous. Crucial is not to lose sight of security when introducing new tools and platforms. US providers do not always fulfill the strict data privacy regulations in Germany. Videoconferencing systems were criticized frequently due to security issues. German companies know these things well: according to Lünendonk, 42% want to invest more in IT security in 2021; 56% intend to maintain their current budget. Nearly two-thirds have extensive or very extensive expertise in-house. By contrast, 12% have little or no experience with IT security and require consulting assistance.
4. The cloud migration marches on
Migration to the cloud increased significantly once again from 2019 to 2020, and Lünendonk predicts that this trend will continue in 2021. In the top market segment, demand for cloud transformation projects increased from 50% (2019) to 80% (2020-21). Medium-sized companies recorded similar growth rates, just not quite so high. Here, demand increased from 35% (2019) to 50% (2020-21).
The cloud procurement model provides a lot of added value, starting with “pay based on actual use” on through to short update and innovation cycles that provide cloud customers with competitive advantages. However, there are a lot of cloud variants: private cloud, hybrid cloud, public cloud, and multi-cloud. Meanwhile, the cloud migration has become a topic for most medium-sized companies, but the answers to questions about “how” and “where are we going” are not yet clear. This is where digital specialists’ expertise is required; they help companies select, implement, and integrate custom cloud solutions. For only 37% of the companies’ IT professionals feel they are up to this complex and demanding task.
5. Pressure to modernize corporate applications
Many companies also need advice when modernizing their enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM) systems. 64% of the IT specialists surveyed by Lünendonk want to invest more in the enhancement, maintenance, and modernization of their IT systems in 2020 and 2021; 45% in the development and implementation of applications. In the CRM sector, only about 36% of companies have sufficient specialized knowledge; with regard to SCM, the figure is 39%.
Rüdiger Hoffmann: “The focus isn’t just on remote work and collaboration tools”
Rüdiger Hoffmann, Managing Director of the valantic Competence Centers LINKIT Consulting, emphasizes: “We are worried about German companies’ lacking expertise in future-oriented topics such as AI, process mining, and robotic process automation. valantic’s survey conducted jointly with Lünendonk has revealed huge deficits in many sectors of the German economy. We can advise companies on how to establish expertise in future technologies, also with the assistance of technology-agnostic external service providers.”