What is Digitalisation?

Digital transformation is well underway worldwide. By now, advancing technological developments have changed the way we communicate, work, learn and live. It is not for nothing, that many speak about a “Digital Revolution“ analogous to the “Industrial Revolution“.

Similar anxieties have accompanied these two revolutions. The fear of job loss is not a new phenomenon when one looks back to the Industrial Revolution, which took place at the end of the 19th century. As today we recognise that in the long-term the Industrial Revolution created millions of new jobs, prospects are not to be rated quite so bleak.

Apart from the fear of losing their jobs, people are concerned about the security of their personal data and miss transparency regarding the truthfulness of news and information – cue: Fake News. We all know a medal has two sides. Apart from the above-mentioned insecurities, the digital revolution offers many opportunities, such as better quality of life, more efficient management and innovative, new business models. According to the European Commission, a digital single market could contribute 415 billion euros per year to the economic performance of the European Union and create hundreds of thousands of new jobs. If one believes the current survey of the European Commission, the market volume of the ‘Internet of Things‘ is estimated to be around 1.9 trillion Euros for the year 2020.

Digitalisation: Germany’s Medium Sized Businesses must act

The advent of digital technologies in medium-sized businesses can no longer be stopped. According to auditors Ernst & Young (EY) a recent survey of 3,000 German medium-sized businesses, digital technologies already play a large to medium role in the business model of every second medium-sized business (54 percent). Despite that, in 2016 every fifth German medium-sized enterprise stated that digital technologies do not yet play any role. This means that smaller medium-sized businesses in particular do not exploit the potential of digitalisation. And it is here especially, that businesses can benefit from flexible production or networking of their products. But they leave the field to the global players: digital technologies only play a large or medium role for 43 percent of organisations with a turnover of up to €30 million.

“Germany is a high-tech location, which relies on innovation. German medium-sized businesses have always been characterised by their quick and flexible response to changes and that they were able to adjust. The great significance, which digital technologies already have in many businesses, shows how far ahead many medium-sized businesses are with regard to technological innovation. However, there is a threat that some may fall behind. Lack of money and personnel should not become the excuse for not getting ready for the switch. Companies have to think of solutions quickly to ensure that they remain viable“, warns EY partner Peter Englisch.

Possible Applications of Digital Technologies

According to Ernst & Young, companies currently use digital technologies in particular for customer relations. “39 percent maintain their customer relations completely or in part in a digital way. 33 percent have integrated mobile devices, such as smart phones or tablets into their daily work routine, and 23 percent handle sales and payment online.“ During the survey, no direct correlation could be made between digitalisation and current business success. Of those businesses, which were in a positive economic position, more than 20 percent did state that digital technologies played a large role. However, with the economy currently being overall quite good, this may cover some shortcomings. “Companies should get ready for digitalisation in the good times. When times get worse, it will sort the wheat from the chaff and businesses with a consistent digitalisation strategy will have a competitive advantage“, concludes business consult Peter Englisch from the established results. “In many markets, digitalisation leads to fundamental changes of the competitive conditions. Here, digital platforms play a central role“, says Bitkom managing director Dr. Bernhard Rohleder.

The Digital Single Market

The Committees of the European Union have taken the tremendous relevance of digitalisation into account. Therefore, at the very beginning of his term in office in 2014, the President of the European Commission Jean-Claude Juncker made the creation of a digital single market one of his primary objectives. In this digital single market, the free movement of goods, people, services and capital is to be guaranteed. Private individuals as well as businesses are to be able to pursue seamless online activities and use internet applications under fair competitive conditions, based on strict consumer and data protection standards, irrespective of their nationality, residence or business location.

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