What is digitalisation? Opportunities and challenges for companies

Digitalisation has had a decisive impact on our lives in recent years and is now an indispensable part of the modern world. Nevertheless, attitudes are still very different. Around half of companies are struggling with digitalisation, while one in three see themselves in a strong position. These companies rely on digital solutions to optimise processes and remain competitive.

At the same time, digital transformation is also influencing how we communicate, work and exchange information. While the benefits of digitalisation – such as increased efficiency, improved accessibility and new business opportunities – are clear to see, there are also challenges that need to be considered. In this article, we look at the basics of digitalisation and answer the question: ‘What is digitalisation?’

What is digitalisation?

The term ‘digitalisation’ is not clearly defined. Depending on the context, it can take on several meanings.

Originally, digitalisation refers to the conversion of analogue information into digital formats. The principle of converting analogue values into digital ones is by no means new. The introduction of Morse code in 1837 already falls into this category. Examples that are still relevant today are the telephone and e-mail as a replacement for personal or postal communication.

The meaning of the term has changed over the years. Away from a rather neutral, technical process, towards a positively associated and future-oriented collective term that signifies modernisation in various areas of everyday life.

Digitalisation and companies

Digitalisation has far-reaching effects on companies of all sizes. It makes it possible to optimise and innovate business processes by using digital technologies. Management approaches such as quality management in accordance with ISO 9001:2015, process management and technology management are closely linked to digitalisation projects. Companies are also developing digital service innovations and new business models. These changes are being driven both by the digital transformation within companies and by start-ups. A key challenge is to recognise new customer needs arising from the increasing spread of digital services and apps.

Digitalisation affects several areas that are often associated with the term digital transformation. These include:

1. Processes
   Companies are digitising and automating previously paper-based processes with the help of document management or contract management and digital mail delivery.
2. Forms of work
   Replace traditional meetings with online meetings and introduce mobile access to company data and processes and make data-driven decisions.
3. Customer interaction
   Digital channels such as social media and messenger services are used to improve communication with customers.
4. Products and services
   Companies offer digital add-ons to existing products, such as digital signature software.
5. Business models
   New solutions based on digital technologies are developed to expand the product portfolio and increase customer benefits.

Overall, digitalisation aims to increase efficiency and optimise interaction with customers and partners. It is fundamentally changing how companies work and communicate with their customers.

Digitalisation vs. digital transformation

Digital transformation is often equated with the term digitalisation, but it is not the same thing. Rather, digital transformation is a direct consequence of digitalisation.

For companies, digitalisation is about optimising a process. For example, using document management systems to create added value and respond quickly to new customer requirements.

Digital transformation renews the company

Digital transformation is about using digital technologies to change processes, culture and the user experience in order to introduce new business models. If a company digitalises several aspects of its business activities, the result is a new company. In addition to greater cost efficiency, the company can offer a better user experience and faster services.

Digital transformation aligns companies with the market and business requirements of the digital age.

Advantages of digitalisation

Digitalisation not only offers companies numerous advantages. Private individuals also benefit from well digitalised companies and societies. It ensures

• leaner processes
• lower costs
• greater transparency
• more flexibility

These aspects improve the competitiveness of companies in global markets. This also results in added value for employees. When analogue processes become digital, automation relieves the burden of tedious routine tasks. The time gained as a result can be used for more highly qualified, creative and value-adding tasks, which in turn increases employee motivation.

Digitalisation is also accompanied by location independence and flexibility. In many areas, the digital transformation will lead to employees gaining flexibility in the future. Last but not least, customers also benefit from simplified company processes and motivated employees. This leads to greater customer loyalty and more sales.

Digitalisation and artificial intelligence

Artificial intelligence (AI) plays a crucial role in digitalisation. It helps companies to analyse data and make decisions more efficiently. By using AI technologies, companies can automate processes, create personalised customer experiences and develop innovative products. AI makes it possible to process large amounts of data in real time, which leads to faster reactions to market changes. It also helps to identify new business opportunities and optimise existing processes. In the digital transformation, AI is thus becoming a key tool that can help companies remain competitive and adapt to the constantly changing demands of the market.

Criticism of digitalisation

There are currently several critical points regarding digitalisation, particularly in the corporate context:

1. High investment costs: Getting started with digitalisation often requires considerable initial investment in software and hardware. These costs must first be borne before the benefits can be realised.
2. Data security and data protection: Digitalisation increases the risk of cyberattacks and data loss. Companies must ensure that their systems are protected against unauthorised access and that data protection regulations, such as the GDPR, are complied with.
3. Resistance from staff: The changes associated with digitalisation can be met with resistance from employees. Some feel superfluous due to new technologies or have difficulty adapting to the new ways of working
4. Less personal contact: Increasing automation and the use of digital communication tools can reduce personal contact with customers. This can lead to challenges, especially when issues arise that require human interaction.
5. Technological dependency: Companies are becoming increasingly dependent on stable internet connections and electricity. Outages in these areas can lead to significant business disruption.
6. Lack of qualified personnel: There is often a shortage of skilled labour in the field of digital technologies. Companies struggle to find suitable employees who can use the new systems effectively.

These challenges require careful planning and implementation of digitalisation strategies in order to make the most of the benefits of digitalisation while minimising the risks.

And the result?

Digitalisation is an important topic and, if approached correctly, it can not only help companies to reduce costs. It can also help to open up new markets or, in the worst case, simply survive against the competition. However, it is important to have a holistic and sensible concept.

Processes need to be rethought and optimised before they can be digitalised. If the various areas of a company are then digitalised, the digital transformation will also succeed.

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Frequently asked questions and answers about digitalisation