Digitalization is the creative application of digital information and communication technology to maximize the benefit for people and – as a result – companies.
Digitalization comprises four levels:
- The conversion and making available of analog data such as e.g. Music recordings as MP3 files or the digital recording of sales and production data in ERP systems form the basis for digitalization.
- Efficiency enhancement can be based on these digital data through digital mapping, control, and optimization of processes. The much-touted Industry 4.0 falls into this category. However, the resulting added value scales only to a limited extent (see e.g. McKinsey Quarterly 2/2017).
- Genuinely digital business models as the next level solve user problems in a new way and create quantum leaps in benefits for customers and providers – occasionally in personal union. GAFA (Google, Apple, Facebook, Amazon), BAT (Baidu, Alibaba, Tencent) and other fast-growing players in the West and the East show us how to do it.
- At the last stage of digitalization, benefits for individual users (and providers) are autonomously anticipated through digital systems. Artificial intelligence independently creates offers, models, or processes. Spotify’s individualized playlist suggestions, AI-based tomography diagnostics from Siemens Healthineers, or Celonis‘ AI-controlled process optimization are simple examples.
Successful digitalization requires adapted strategies, organizations, and working models.