Why is digitalisation so slow in Germany?

Digitalisierung in Deutschland
Germany is having a hard time with digitalisation. What are the causes for this? The reasons that companies give for not starting or failing with digitisalisation projects are manifold. Important issues are a lack of know-how in the companies and too high costs.

Background, causes and solutions

Corona has provided a digitalisation boost in some areas, but overall Germany continues to lag behind in digitalisation. In a study by the Berlin-based European Center for Digital Competitiveness (ECDC), Germany only ranked 17th among the digital upstarts of the G20 countries. Why is Germany having such a hard time with digitalisation?

What does digitalisation mean: a clarification of terms

First of all, a clarification of terms: what exactly is meant by digitalisation? Digitalisation affects everyone in society, but especially the economy. Here we speak of digital transformation or digital change. It refers to changes in processes, forms of work, customer interactions, products, services and complete business models. For example, during the Corona crisis, communication was moved to online platforms or companies are developing apps to offer their services there as well.

Front-runner and tail-runner in digitalisation

Looking at these examples, it is not surprising that there are large fluctuations in the state of digitalisation in Germany, both among the sectors and among the company sizes. Overall, however, an upward trend can be seen in most sectors and company types. The frontrunners in terms of sectors are the information and communications industry, followed by the automotive and mechanical engineering industries and business-related service providers. In terms of company size, companies with more than 250 employees are ahead with a digitisation index of 205.2. The value for medium-sized companies declined (125.4 to 119.4), and companies with 1 – 49 employees were able to increase their degree of digitalisation, but still only have a value of 93.9. The digitalisation index is based on 50 indicators such as the digitalisation of processes or human capital.

Ziele der digitalen Transformation

Klar ist jedoch, dass die Notwendigkeit des digitalen Wandels in den Köpfen angekommen ist und dass Unternehmen begonnen haben, an ihrer Transformation zu arbeiten. So verfügen inzwischen insgesamt 83% der Unternehmen über eine Digitalisierungsstrategie. Allerdings gibt ein Drittel der Befragten immer noch an, keine zentrale Strategie für die Digitalisierung zu haben, was sich langfristig auf die Erfolgschancen der Unternehmen auswirken kann. Hauptmotive für die Digitalisierung sind laut einer Studie der DIHK unter etwa 3500 Unternehmen vor allem die strategische Unternehmensentwicklung und Effizienzsteigerungen durch Kostensenkung (jeweils 57 Prozent). Auf Platz zwei liegt die Erhöhung der Kundenbindung (53 Prozent), gefolgt von der Flexibilisierung der Unternehmensprozesse bzw. Workflows (52 Prozent).

Goals of the digital transformation

What is clear, however, is that the need for digital transformation has entered people’s minds and that companies have begun to work on their transformation. Thus, a total of 83% of companies now have a digitalisation strategy. However, one third of respondents still say they do not have a central strategy for digitalisation, which can have an impact on companies’ chances of success in the long term. The main motives for digitalisation, according to a study of around 3,500 companies by the DIHK, are above all strategic corporate development and efficiency increases through cost reduction (57 percent each). In second place is increasing customer loyalty (53 percent), followed by making company processes or workflows more flexible (52 percent).

Main reasons for problems with digitalisation

There are many reasons why digitalisation projects fail or are not tackled at all. According to a survey by the DIHK, small and medium-sized enterprises in particular shy away from the high investment costs. In the first place, however, is the complexity that companies see in the implementation inot existing systems and processes. Of course, human capital also plays a role here. As in the case of the digitalisation index, it can be seen here again that the know-how for the conversion of processes or business models is lacking in the companies and must be purchased or created through further training measures. A study by the d.velop blog looks at other reasons for the failure of many a digitalisation project. The respondents see a major issue in the fact that digitalisation affects every company differently and a clear definition of requirements across all departments and areas of the company is difficult. A good third also stated that they have methodological implementation problems because they are not familiar with the agile way of working, which is important for change, and therefore do not succeed in the transition.

Possible solutions: Use of consultants and nearshoring

As is so often the case, it is difficult to change and make a transition on your own. Especially in the area of digitalisation and agility, it therefore makes sense to hire external consultants and thus buy in the missing know-how. With expert eyes and the necessary distance, they can achieve what internal employees can almost only fail at: a precise analysis of the current situation with a roadmap on how companies can use digitalisation for themselves and gradually adapt their processes. In training and coaching sessions, employees can learn new agile ways of working and adjust their mindset, which is necessary for this new form of collaboration. In order to avoid a cost explosion when adapting processes that require a new technological solution, outsourcing IT projects to nearshoring partners is a good alternative, as communication is guaranteed here due to a common working language and similar mentality . We offer a full service solution in this area. Do you have any questions? Contact us!