Today, globalization and digitization are more than just buzzwords – they have a decisive influence on the business success of German companies and are mutually dependent. Process digitalization, for example, makes the logistics of globally operating corporations profitable in the first place. At the same time, it also entails risks for many a time-honored business model. How German companies are dealing with these changes is the subject of a recent study by BITKOM and IW Consult Cologne.
Digital strategies of German companies
A first result shows the importance of digital technology for the German economy: Companies for whose business model the Internet plays a central or at least important role represent 46% of the sales and employees of all German companies. It is striking that these companies generate a larger part of their sales with new products and at the same time invest larger shares in research and development than others. Likewise, their business is already more internationally oriented and they also expect the export share to increase more often. Digitization thus seems to accelerate innovation cycles and simplify the development of international markets – two elementary success factors for Germany as a business location in global competition.
Odds
In the companies surveyed, digitization has the greatest influence on the areas of cost structure, cooperation with partner companies as well as customer care, customer approach and procurement. In terms of the economy as a whole, direct value creation – e.g. through online sales – makes a smaller contribution than the effects of internal process digitization and the associated rationalization opportunities. Opportunities arise in particular when developing standards – using Apple as an example: Easy-to-understand platforms such as iTunes or the AppStore stimulate a wide range of third-party business activities, from which the standard-setter benefits via commission models. Another example is the significant upheaval in the advertising market – here, digitization enables greater equality of opportunity between large and small players: A clever viral marketing strategy may have more effect than an expensive TV or billboard campaign, even internationally distant B2C or B2B markets can be opened up cost-effectively with clever online communication.
Risks and prejudices
However, in addition to massive changes to previously advertising-dependent media business models, this also carries the risk of being squeezed out of international markets by competitors. In addition, the new technology causes considerable costs. These are only partly due to IT expenditure – a key factor is personnel: The study shows that companies whose business model is heavily dependent on the Internet employ an above-average number of highly qualified employees. This is reflected in the salary structure and indicates the comparatively greater complexity of these business models, which can also be a cost factor. The lack of cost transparency and a lack of technological affinity of decision-makers are an obstacle here. However, with current developments in the outsourcing of IT costs (cloud-based services, SaaS), these costs should become easier to plan than before.
Conclusion and recommendations
The study makes it clear that digitization has a cross-sectional function. Similar to harnessing steam or electricity, the new technology does not simply create a separate new industry. The economy as a whole is massively and multidimensionally influenced. Technological know-how is therefore becoming indispensable for modern German companies. At the same time, politicians are called upon to set the right course in terms of broadband expansion, talent and research promotion as well as with regard to the legal framework.
What will the working world of the future look like? How much digitization is good? We look forward to your comments!
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