In this article:

1. Digitalization: Too many businesses miss the trend
2. Why digitization for businesses is important
3. The advantages of business digitization
4. Advantages for your cients
5. This is how the implementation succeeds
6. Are there any disadvantages and risks of business digitization?
7. Conclusion
   

Digitalization: Too many businesses miss the trend

The digital transformation is advancing, but not all companies are successfully following suit. In a way, that’s understandable, because the switch to digital processes doesn’t happen overnight. Nonetheless, small and medium-sized companies in particular are missing out on opportunities if they sleep through current trends and fail to realign their strategies. 

Before we take a closer look at the benefits of digitization, we examine the current situation and what difficulties exist in the digital restructuring of corporate processes. Finally, we also look at possible disadvantages to give a better overall view of the topic.

First, an important message: Don’t think too complicatedly when it comes to digitization. Every company goes through the journey of expanding digital processes, be it in internal communications or in advertising. It’s not just about the big steps, whereby an analog company suddenly transforms into a tech giant. The following therefore does not resemble a manual in the direction of “How do I use less paper in the company”, but rather relates to the digitization of internal processes (e.g. marketing and recruitment).

Mobility and social media are two main advantages of the digital progress | © NordWood Themes

The advantages of digitization in companies are well known to many. Thanks to technological progress, there are financial savings opportunities, companies generate more sustainably and offer their customers flexible solutions. Difficulties often arise during implementation – that’s why we have prepared the following tips to pave the way for the digitization of your company and to better prepare you for implementation measures.

Why digitization for businesses is important

Even though digitization is making progress in companies, the processes and competences still have room for improvement. A statistic published on February 14, 2022 shows that 35 percent of German companies consider themselves to be digitalization pioneers and, in turn, 44 percent state that they have increased their sales through digital measures.*

Progress is therefore discernible, but there is still a lot of potential to be exploited. Other countries, especially the USA, are much more advanced and are already using digital technologies that are not yet used in the DACH region or are used to a lesser extent.

AI applications are a good example of this, but they are now also becoming more popular in Germany. One example is generative AI applications such as ChatGPT.

Even before the development of AI, German companies recognized the benefits of digitization in the world of work. For example, statistics from May 2022 show that German companies with more than 50 employees have invested approximately €234 billion in service projects for digitization. The willingness to digitize is therefore there, but why does it seem to be progressing so slowly?

The real challenge lies in the lack of a doer mentality. Entrepreneurship already faces various hurdles (e.g., financial or bureaucratic) and processes for digitization do not improve the situation: the first step requires external consultants or the expansion of internal personnel structures. Then comes strategy development, which requires countless consultations within the team. The next step is implementation, which involves a high financial investment.
The thought of this process alone prevents many companies from taking the necessary steps and implementing digital measures.

However, this is no reason to stop or even rethink the change, because digital measures are gradually replacing analog processes. A good example of this is marketing: fewer and fewer companies are relying on print media, but instead on websites, search engine optimization and social media. Online processes are in fact easier to measure and thus enable more efficient use of available resources. However, only a few companies have the ability to implement various online marketing measures at the same time. But there are hardly any disadvantages to this, because even if a company focuses exclusively on search engine optimization, it is already reaping the benefits, even though other measures (e.g., social media) are not yet taking effect.

Therefore, our tip: Digitize your business processes step by step and don’t restructure everything overnight. This minimizes the effort and ensures a proportionate cost structure.

7 underestimated advantages of business digitization

Which advantages do digitized businesses have besides more flexibility, expandation of mobility and a more efficient use of resources? Many businesses ask questions like this and we anticipate it right away: Setting long term goals is the most important factor.

The advantages of digitalization in businesses are the following:

• Digitalization encourages competition and innovative ways of competing with others
• Better service for customers is provided
• Obtaining new employees easier
• Expanding communication structures
• Creating new jobs
• Easy measurement of processes
• Potential of optimizing processes
• Saving money

Digitalization encourages competition and innovative ways of competing with others

Growing competition requires constant rethinking of one’s own offering and customer communication. Right from the start, companies ask themselves to what extent their products or services set them apart from competitors and position them in relation to their target group. And the digital transformation offers additional opportunities to expand internal processes in order to constantly improve the offering and strengthen the company’s own brand.

Here, competition enables some opportunities; after all, competitors are also recognizing the benefits of digitization and optimizing their processes based on the adapting desires of the target group. But what initially appears to be a disadvantage actually promotes your company, because in a constantly growing market with a lot of competition, you are in a position to stay on the ball and offer something new. And because of the competition, there is no standstill, which constantly creates room for more innovation on the market.

Better service for customers is provided

The centralization of work processes ensures that companies can provide their customers with better service. A good example of this is the area of digital signage – thanks to the centralized, cloud-based solution approach, maintenance work is carried out holistically and not every customer is looked after individually, at least in the case of cloud hosting. This saves personnel and financial resources, and the centralized service guarantees long-term functionality. The latter also has a positive effect on customer satisfaction.

Obtaining new employees easier

Posting a vacancy, waiting for applications, and going through a long selection process – that’s what recruitment looked like for a long time, and it’s still common practice at many companies in 2022. In the course of digitalization, however, this changed and companies are finding it easier to obtain personnel, especially through social media channels such as LinkedIn or Xing.
Especially smaller start-ups and founding teams take advantage of this, because freelancer portals enable uncomplicated as well as flexible placement of orders without permanent personnel commitment. Due to the remote work (home office) of the freelancers, no additional office space is required and this saves costs.

Home Office: Remote work is one of the biggest advantages of digitalization | © Austin Poon

Creating new jobs

With digitization, many companies are pursuing the goal of expanding analog work steps as best they can through the use of modern technologies in order to preserve existing jobs. Since then, however, the digital transformation has also seen the emergence of many new occupational fields, especially in the areas of IT and digital marketing. Existing jobs are gaining additional relevance (e.g., web design) and more analog fields are undergoing a digital transformation (e.g., designers for print who now design digital media)

Easy measurement of processes

This advantage is particularly evident in digital marketing. Key figures such as reach and click-through rate can be easily accessed and provide precise insights into the success of the measures taken. Tools such as Google Analytics or the insights on social media channels such as Facebook or Instagram are particularly helpful here. But it is not only in marketing that companies benefit from better measurability, because every digital process is based on evaluable key figures.
In our blog article “What is monitoring?” we explain the advantages of process monitoring in companies and which software is available to you for this purpose.

Potential of optimizing processes

Every process goes through a test phase and it is initially uncertain whether something works or not. But it is precisely the measurability of digital processes that offers optimization potential, because it is immediately apparent from the figures whether an established measure promises the desired success.

Here again, digital advertising is a suitable example. Facebook ads or Google Ads not only promise a lot of reach and more leads, the evaluation of the data also provides information about which approaches or which type of ads perform best. This in turn enables efficient and targeted use of available resources, resulting in exponential growth.

Saving money

Let’s stay with the example of digital advertising: Optimizing digital advertising, be it in terms of content or strategy, saves resources in the long run and for the future you know which advertising measures to consider and which not. This permanent optimization process provides immense financial savings over the years and also gives you the opportunity to learn more about the interests as well as needs of your target group – a win-in situation, because you save money and at the same time you target your marketing more specifically to potential customers, which increases sales in your company.

Note: Our examples mainly considered marketing, but other business areas also benefit from the advantages mentioned so far. Whether it’s human resources, logistics, marketing or production, the benefits of digitization for companies exist across divisions and industries.

Summary of advantages

The greatest advantage comes from the long-term optimization of internal company processes. Initially, digitization in the company requires financial investments and targeted planning, but this process is worthwhile because you gain better insights into the result structure and recognize potential that is denied you with analog methods.

Advantages for your clients

• Shorter delivery times
• Faster communication
• Better information exchange (e.g. through a FAQ section)
• Lower product costs
• Targeted interaction (e.g. through gamification)
• Improved user experience

This is how the implementation succeeds

The good news is that establishing digital work processes does not require any serious structural changes in the company. Instead, you analyze existing processes and define measures for digitization. We recommend selecting individual areas and developing a strategy for each subarea.
Example: As a team, you decide to optimize your company’s website for search engines and, at the same time, you commission the development of an app. Here, it is less important which step you focus on first, but rather which strategy you define for the individual steps, i.e. search engine optimization and app development.

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Are there any disadvantages and risks of business digitization?

Digital transformation promises a wide range of benefits, but some are still skeptical. Many criticize, for example, that jobs are at risk as a result of digitization. Others, in turn, see the financial outlay as a major hurdle.

It is a misconception to claim that digitized work processes will lead to job losses, because some professions downright require retraining to learn new skills. A good example is the profession of architect – ten to 20 years ago, houses were created on paper, now they are created with digital programs. And thanks to continuing education, even architects trained in the 1990s know how to use modern software.

The objection that digitization requires high investments is also not entirely correct. It is true that in marketing, for example, many test phases are required to assess the success of an advertising measure, and content marketing in particular is known to involve a high investment of time as well as money. However, it should not go unmentioned that such investments are worthwhile in most cases and the average return on investment in content marketing is four percent*. This means that the supposed disadvantage turns into an advantage in the long term.

Conclusion: Advantages of business digitization outdo the disadvantages

Digital business processes will be indispensable in 2023. The advantages of digitization range from increased flexibility to expansion of competition. Many see the digital transformation as a threat to jobs, but it is precisely the basic innovative idea that will create further opportunities in the future to combine analog workforce with modern technology. Business areas such as marketing are already showing the added value that the implementation of digital strategies offers companies, not to mention the opportunities to use resources more efficiently and evaluate results more accurately.

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In this article:

1. Digital competence definition
2. How important is digital competence?
3. The 10 most important digital skills
4. Build up digital competence: Our 5 step guide
5. Possible hurdles and challenges
6. Will analogue processes soon be replaced completely? 
7. Conclusion

The most important in a summary

• Digital competence has become increasingly important in the world of work.
• Ideally, businesses aim for a step-by-step execution in which all employees are equally involved.
• Analogue processes become less important but a complete digitization of existing structures will take time.

Digital competence definition

The term “digital competence” describes all required skills to use computers and other devices as well as to manage and process information through these devices. That includes the successful usage of specific applications to edit, save and publish content.

For a long time digital competence was limited to answer mails and to use office applications such as Word or Excel. But in 2023 the requirements are much higher. Cloud applications, online meetings and digital administration determine the daily life of office employees.

The expansion of digital competence requires a holistic approach which doesn’t only consider the skills of your employees but improving existing business structures too. Keyword: Digitization.

Ideally, businesses aim for the goal to encourage the knowledge of their employees as well as the renewal of existing structures. Without expanding existing structures, digital competence has no value. On the other hand employees don’t know how to use digital ways if they don’t acquire relevant know-how.

How important is digital competence?

More and more employees work from home and use the possibilities of digital communication on a daily basis. That is one of many reasons why the expansion of digital competence becomes more relevant. Businesses are responsible to encourage their employees to work more efficiently and to establish smooth working processes.

The right handling of digital applications has not only gained in importance in recent years. Already in a survey of 2018, 71 percent of managers said they want to open up new ways of income by using digital ways. The covid pandemic has further spurred this trend, as online retailers in particular have increased their sales.

→ Competence expansion goes hand in hand with the expansion of business structures. Every expansion or adjustment of processes requires adequate know-how.

The 10 most important digital skills

Digitization affects almost all company departments and they all require different skills. Therefore, there is no such thing as the “one” skill but rather a variety of many competences. Including the following:

Search engine optimization: Essential to improve the positioning of a website. Without SEO a website will disappear in the “google nirvana” and possible competition advantages remain unused.

Social media marketing: Platforms such as instagram, pinterest or linkedin have developed to profitable sales channels for businesses in the past years. That is even confirmed by statistics: In 2021 businesses earned more than 150 billion euros through social media.

Web hosting: That includes management of a website, blog or online shop. Web hosting is not only about uploading new content or creating new sub pages for a website, it’s also about evaluating statistics to improve performance.

Content production: Social media won’t ensure growth if businesses post low quality content. Possibilities in content marketing reach from picture design to video production.

Digital communication: The usage of applications such as zoom or google meet belongs to the basic knowledge of all employees.

Product management: Develop, manage and market digital products. Hereby many businesses focus on lead generation by offering digital products for free, so called “freebies”.

User experience: It takes 50 milliseconds until website visitors get a first impression. Many businesses ignore user experience because they primarily focus on technical requirements (e. g. SEO). However, the target group should always be the number one priority.

Cloud solutions: Using applications such as google docs makes it easy to share data and saves time as you don’t have to send mails with attachments.

Service and customer management: Data banks and customer relationship management systems simplify the management of customer data and reveal more about the wishes and desires of your target group.

Programming: The king discipline among digital skills. There are thousands of programming languages but the most known ones are PHP, java and python.

Build up digital competence: Our 5 step guide

To successfully promote the digital skills of your employees, you need to take measures but also consider hurdles and possible challenges. We have prepared the following guide for you so that the implementation is successful. It will help you to encourage the digital competence of your employees in just five steps.

Know the needs of your team and your business

The expansion of skills costs resources, especially time and money. That’s why the first step requires a plan and a goal oriented needs assessment.

Let’s come back to the ten digital skills: Almost every business takes advantage when it schools its staff in the area of digital communication or service. However, it doesn’t make sense for businesses to invest in programming knowledge. There are only a few businesses which take advantage of this kind of internal know-how.

The following questions will help you to purposely determine your businesses needs:

• In which industry is our company active?
• What goals are we pursuing?
• What is the current level of knowledge of our employees?
• To what extent do we benefit from the development of digital competence?
• What knowledge and skills do we source externally?
• What are the costs associated with expanding digital skills?
• Are employees we train for specific areas likely to stay with the company longer?

Recognize the value of further education

Sure, further education is a purposeful way to expand the competence of employees. But it’s even more important to invest in the right measures. Online platforms such as Udemy can indeed provide valuable knowledge but on such websites are also course suppliers who don’t even understand their own profession properly. Hereby it’s better to consider other sources, even when they are more expensive. Get back to expert knowledge to school your employees as well as possible. Sure, that costs more at the beginning but ensures a purposeful investment in the long term.

Sure, there are also ways to get free access to know how. Platforms such as LinkedIn or YouTube provide a variety of possibilities for further education. Especially in the field of digital communication, cloud usage and user experience it’s not necessary to invest in expensive education measures to school employees properly.

Obtain external knowledge

In many cases it’s much cheaper and more sustainable to get back to external knowledge. One example is building and maintaining the business website or programming an app.

Businesses also have the possibility to combine internal and external knowledge. Here, the business website is again a great example: External web designers or programmers promise a purposeful investment because their expertise, including the areas of social media and SEO, requires years of project experience. In turn, employees can manage and maintain the website. But also other tasks such as entering new products in an online shop don’t require external knowledge for execution.

Through a cost-benefit analysis businesses determine the goal oriented usage of their budget and such a consideration is to be used for each investment. But as a rule of thumb we recommend the following: Big projects, for example building the business website, are better given into the hands of external experts. It requires too many resources to properly teach employees how to do it. In turn, it is cost wise more reasonable to, for example, build social media channels with an internal team.

Don’t get lost into details

Expert knowledge ensures advantages in competition and more growth possibilities but in many cases the basics are completely enough. Your business doesn’t need professionals who know every single detail function of Google Docs or Google Meet. Knowing the basic requirements is enough. Therefore, don’t only consider which measures are purposeful but also to which extent.

Consider current trends

The term “digital transformation” describes the current situation perfectly: We are in a constant transformation which doesn’t allow standstill. That also means that our level of knowledge is constantly sinking. Who would’ve thought that we would use social media channels such as TikTok only a few years ago or that the stationary trade will focus more on e-commerce. But it is exactly these unpredicted changes which bring businesses into the position to find ways to expand their employees’ knowledge. The expansion of digital knowledge is not a one time project but a long term process. Therefore, initiate steps to ensure a long term expansion of knowledge.

Possible hurdles and challenges

Executing a plan is not a one-way street. When expanding the digital competence of your company, some hurdles and challenges might be in your way. Including the following:

• No unified level of knowledge
• Personnel fluctuation
• Growing requirements

No unified level of knowledge

Further education, as purposeful as it is, comes with a major weakness: The educational content is aimed at several people at once. As a result, some employees have too low or too high a level of knowledge. Beginner oriented training provides no value for advanced employees, on the other hand, programs for the advanced are no good approach to introduce newcomers to a topic.

Solution approach: Don’t only consider training programs for all employees. Instead, help your staff to find suitable mentors to expand strengths individually.

Personnel fluctuation

Qualified employees can choose between many employers on the market. This also increasingly reduces operational loyalty. This is a big challenge for companies as they lose internal knowledge when employees leave. As purposeful the investment in the knowledge of employees is, it might not have any long term advantages because other companies appear more attractive.

Solution approach: Don’t forget to prioritize the expansion of a positive working climate. Employees aren’t just human resources, they are human beings who belong to your business. You can’t avoid job changes completely but you can initiate measures to make your business more attractive to employees to make them stay.

Growing requirements

Digital progress promises solutions and makes business processes easier. However, requirements regarding operation, administration and editing grow too. That on the other hand requires higher investments in training and the expansion of competences. There is no doubt that the expansion of digital competence is worth it but you shouldn’t underestimate the volume of investment.

Solution approach: The already mentioned cost-benefit-analysis helps to determine goal oriented measures. Know your team’s level of education and focus holistic as well as individual approaches equally.

Will analogue processes soon be replaced completely?

Prognosis regarding the future influences of digitization suspect a successive omission of analogue applications. But this process will take time. There are still too many businesses which primarily rely on analogue processes and although many of them pursue the goal of digitization, they often don’t have a concrete plan.

The development of start-ups and new founded businesses suggests that young businesses rely on digital structures from the very beginning. Business size and smaller structures play a role here too. The digital construction of a small business is done less complicated than restructuring analogue processes of bigger businesses with more than 100 employees.

But big businesses digitize their processes successfully too. German statistics actually confirm that especially businesses with more than 250 employees use the strengths of social media. Furthermore, there are barely big businesses without their own website or a digital marketing strategy.

In some areas it is to expect that analogue processes will be replaced completely, especially in marketing. Reasons are measurability and that businesses reach out to a broader audience. But digital marketing strategies require deep knowledge in social media and SEO. Therefore, businesses are responsible to school their employees to not only expand digital structures but to ensure long term results as well.

Conclusion: Build on progress

Digitization is advancing and so is the expansion of internal competencies. New trends, especially in marketing, put companies under pressure to pull. Digital change may progress faster than the level of knowledge in the company is growing.

It is necessary to weigh up which trends and competencies offer added value. In addition, it is purposeful to build on existing strengths in order to ensure specialist knowledge. As already mentioned, it therefore makes little sense to get lost unnecessarily in details. On the other hand, it has disadvantages in competition if companies do not offer further training in certain areas.

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