The three dimensions of digital transformation

For the purpose of digital transformation, organizations must be set up in a process-oriented manner, sometimes existing structures should be softened or even broken down. Cross-functional and networked working should be integral parts of company DNA. The older part of the workforce must acquire digital understanding and acquire the necessary know-how without experiencing negative appreciation. And digital natives should also be able to experience the company as an attractive workplace.

A review and adaptation of the organizational structures, a qualification campaign and an early change management form the basis for successful digitization.

Digital transformation requires a high degree of maturity in business processes, machinery and equipment as well as IT.

• Lean and robust processes: Lean management is not a discontinued model – on the contrary! Lean management is a prerequisite for fast and sustainable digitization of the processes, promises the agility that is necessary in a digital environment and enables rapid adaptation to changing conditions.
• Data (extraction, processing): Networking and data analysis (data analytics) offer enormous potential. High quality and consistency of existing information are required.
• Technologies/IT solutions: Hybrid infrastructures, SaaS, mobility and security systems support the individual departments in their digital projects. The role of IT in the company also changes with the further development of IT systems.

The term Smart Applications encompasses the software and the hardware of digitization.

On one hand, all software solutions/SaaS, software-based systems and application systems are concerned; on the other hand, it is about the active components of the electronics ("embedded devices"), electronic components and modules (e.g. NFC modules) for realizing CPPS.

Only the reasonable selection and configuration of such smart applications leads to the solution of an operational problem, represents a useful support of the business processes and deserves the designation Smart Solution in the context of Industry 4.0.

Smart Digital Operations also means that business processes supported by Smart Solutions also have a decisive impact on the business model.

New technology developments and digital trends force every company to deal sooner or later with their own business model:

• How can you integrate your core competencies with existing IT solutions into new business models?
• How would disruptors attack your business?
• Does it need an evolution or a disruption?

Evolutive business models expand existing structures with digital possibilities. In essence, three different approaches are used:

• Business ecosystems: Platform solutions combining various value chain actors or performance-enhancing partners to provide customers with enhanced performance.
• Mass customization: An approach that results from the value-added processes themselves and is in trend. This involves the realization of lot size 1 – i.e. the distribution of customer-specific products – at the cost of serial production.
• The intensified cooperation between industry and IT companies which can be expected to provide digital added value. For example, supporting software solutions are offered  in addition to the actual product.

Disruptive business models, however, break the existing business model. A prime example is the transition from product business to service business (also known as operator model in some industries). The purpose the customer asks for is satisfied. The possibilities to develop new business models on the basis of benefits instead of products are almost unlimited. In the hybrid service bundle, for example, accompanying services which can continuously increase the customer's benefit over the entire life cycle are already taken into account during product development.

The industry will deal with digital transformation at least for the next 15 years. Digital transformation is both a challenge and an opportunity.

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