Why digitization is so important
Estimated reading time: 5 minutes
Why is digitization so important for companies? We will answer this question for you now.
Everything important at a glance
The digital revolution is increasingly influencing our society and our everyday lives, as well as the development of the economy.
Technological developments and innovations are constantly creating new potential. This requires companies to consciously address these opportunities to survive on the market in the long term.
Even if the basic steps of digitization are the same in companies, the digitization strategy should be individually adapted to the company's own orientation and vision.
Successful digital transformation in companies requires the willingness of employees to work in an interdisciplinary manner and to deal with the requirements and opportunities.
Digitization is changing the entire customer journey, creating new sales channels and service opportunities. Interactivity and personalized offers in particular are becoming increasingly important.
Companies can seek support from a specialized consulting firm to meet the challenges of digitization and successfully make the transition.
Digitization explained simply: definition & meaning
Our digital age with the Internet as a global "networking tool" is characterized by ever new technologies and innovations. These affect not only our everyday lives, but also politics and business. Digital developments have a direct impact on our society and the way we live. The change we have been experiencing since around the turn of the millennium is also known as the digital revolution. We are constantly accessible via various channels, shop online or increasingly work in a home office.
But what exactly does digitization actually mean at its core?
In a narrower sense, digitization is the transformation of all analog processes, data and content into a digital form.
This transformation affects a wide variety of areas and often brings with it a number of challenges, but in most cases these are outweighed by the enormous potential and benefits. For example, an immense amount of data is available, the analysis of which can be used for new approaches and added value. But what exactly is digitization, and what does it mean for companies? In the following guide, we explain the significance of digitization in a simple and understandable way.
Today, there is no company or industry in the Western world for which digitization does not play a role. More than two-thirds of CIOs assume that business models will change significantly as a result of digitization within their respective industry.
In essence, digitization means that analog content and processes are transformed into a digital form and corresponding ways of working. In a digital company, all components - data, processes, departments and employees - are networked and all information is collected and analyzed centrally. This data then serves as the basis for new services and business models. The frequently used term "Industrial Internet of Things (IIoT)" describes the networking of machines in production, where data is collected and analyzed thanks to sensors. This allows maintenance and operation to be optimized and further services to be created.
Importance of digitization for companies
For traditional companies, it is more important than ever to understand how they can reorganize themselves to take advantage of the enormous opportunities of digitization. They need to overcome habits and comfort, rethink their business models, and find new ways to create value for their customers. Those companies that stubbornly resist the changes and want to protect the status quo will, sooner or later, be left behind by their competitors.
We divide digitization activities - depending on the digital maturity of the companies - into three categories, each of which forms the basis for the next higher level.
Entry: Converting analog content and processes into a digital form and ways of working.
Based on this networking of processes, departments and employees and bundling of company data into a uniform source.
Royal discipline: Leverage data using new technologies (such as data analytics or AI) and develop new data-driven business models and smart products.
CRM systems such as Salesforce represent an important component of companies' digitization strategies. As a practical tool for networking and automating corporate processes and as a unified source of data, CRM systems not only increase the efficiency and productivity of companies, but also form the basic framework for the development of new digital business models and products together with other sources.
Why is digitization so important?
Digitization is important for companies and customers alike. Learn more about it below.
In the world of work, digitization enables the uncomplicated creation, retrieval, processing or exchange of data - completely independent of the place of work. This makes workplaces fundamentally more flexible and enables global collaboration across different continents. Through the use of digital technologies, individual processes or even entire business areas - from production to finance and sales - are networked and optimized. Companies can address their customers via various digital online marketing channels, optimize their production processes or offers, provide comprehensive services or even develop their own digital products. Once the initial hurdles to implementing a suitable digitization strategy have been overcome, companies benefit from better workflows, accelerated work processes, higher productivity and efficiency, and greater customer satisfaction. In addition, their employees can also improve their technical and communication skills in the process.
Digitization strategies play an important role in a wide range of industries and sectors. In mechanical engineering, for example, productivity in manufacturing can be increased through the use of innovations in robotics and artificial intelligence or the low-risk rental of important machines. Retailers can use a wide variety of marketplaces on the web and address customers via numerous channels. The advertising industry in particular also benefits from extensive data, the analysis of which can help to tailor campaigns to the target group. But the ability to sign contracts electronically also saves companies a great deal of time - to name just a few examples.
New digitization strategies focus more on customers so that their needs and wishes can be optimally fulfilled. By using different channels or platforms and new ways of interaction, the target groups are reached with tailored offers. In addition, independence of place and time creates versatile opportunities for all-round customer service. Aspects such as flexibility, choice, and individuality are playing an increasingly important role for customers, alongside quality, and are increasingly influencing their purchasing decisions. All in all, the digitization of companies ultimately contributes to the modernization of everyday life for customers.
Digitization in the midmarket
A few years ago, a large proportion of medium-sized companies were still in the first stage of digitization - i.e., the transfer of analog systems and processes into digital successors. It is worthwhile to also tackle the further steps and centrally network the data, processes and teams. Depending on the industry and orientation of the company, new data-based business models or smart products may also be important in a final step of digitization. In all these steps, a CRM system such as Salesforce serves as a useful tool for central collection and control and thus forms an important part of companies' digitization strategies.
German SMEs have now also recognized the necessity and potential of digitization. A large proportion of companies are already in the process of digital transformation. In a 2019 study commissioned by German Telecom, Techconsult surveyed more than 2,000 small and medium-sized enterprises from various industries on the current status of digitization and was able to gain some interesting insights. The companies surveyed cited the greatest challenges in implementing digitization projects:
Amount of investment costs (36 %)
Ensuring data protection (31 %)
Ensuring IT security (31 %)
Lack of time (29 %)
Technical integration into the existing IT system (28 %)
In addition, only one third of the companies surveyed consider their employees to be sufficiently qualified for the digital transformation. In contrast, 30% consider the qualifications of their workforce to be inadequate. However, the willingness of employees to embrace the digital transformation, which has steadily improved recently, is seen as positive. Many companies are now investing in digital training for their employees to drive the transformation forward.
Overall, it has now been correctly recognized in the SME sector that digitization is not only a threat, but above all, also provides great opportunities. CRM systems such as Salesforce form an important part of companies' digitization strategies. As a practical tool for networking and automating corporate processes and as a uniform source of data, CRM systems not only increase the efficiency and productivity of companies immensely, but also form the basic framework for the development of new digital business models and products together with other data sources.
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