Situation of the German Mittelstand

Situation:

When asked about their plans in the age of digital transformation, most German SMEs do not know how to deal with digitisation or how to apply it to their business situation. In addition, obstacles such as data protection and data security, high operating costs and a lack of IT competence among employees are repeatedly mentioned. Processes and distribution are still covered by traditional systems. For the majority of SMEs, sales are still handled by representatives who travel from customer to customer and bring along a 300-page print order catalogue. The development of new business fields and models as well as the recognition of the chances of the “digital” globalization fall by the wayside.

One success factor for SMEs in the course of digitization is that the management level of the companies is not afraid to test out and develop new business fields. In the course of digital development, however, it is essential that company representatives and decision-makers take calculated risks and are open to new ideas and challenges.

It is essential that small and medium-sized businesses develop far-reaching internal IT competence at management and employee level, even if the topic of “digital” is not currently part of their core business. No matter whether it is a B2B or B2C medium-sized company, in order to meet the challenges of our time and the future in a meaningful way, this topic must be dealt with. In addition, there is the need to find and retain suitable specialists who can advance the business. In an ever faster world, where buyer behavior can change at lightning speed and megatrends can sweep across business segments in just a few days and weeks, there is a need for an agile, customer-oriented and innovation-promoting corporate culture and environment,

More and more German medium-sized companies are venturing out into unknown territory and are willing to take risks with their current business in order to search for new, groundbreaking technologies or business areas in the future.

Digitisation is not an end in itself, but always a means to an end – for example for the innovative ability of small and medium-sized enterprises. And there will be no digitisation without people.

Framework conditions for successful digitisation

Digitisation not only involves technological innovation, but must also be accompanied by organisational innovation. These include, for example, more flexible organizational structures with clear roles and a high degree of self-responsibility based on transparent goals.

Digitization is an important factor in developing new business models.

Currently, small and medium-sized enterprises in Germany – in contrast to companies in the US Silicon Valley and in other EU countries, for example – make far less economic profit from digital opportunities: Only five percent of them systematically evaluate the collected customer data – on average ten percent use this data in the EU. For comparison: 17 percent of large companies in Germany analyze Big Data. The hesitant behaviour of small and medium-sized enterprises with regard to Internet-enabled – “smart” – products also fits in well with this. And smart products are increasingly becoming part of our everyday lives (Handelsblatt, 8/19). Digital helps you to collect the right data – without asking the customer. Customer data helps you to permanently improve processes, products and services and to align them to the customer. It creates a bi-directional communication with the customer that lets you learn and creates a close and learning customer relationship. The right data makes you “smarter faster” – a source of innovation and growth that you should take advantage of.

What is the reason for your hesitation?

Misjudgements and misinvestments could quickly lead SMEs to financial ruin. While many of them are watching their competitors’ activities, they are underutilizing the opportunities that digitization can offer. One of our recent studies (Handelsblatt 8/19) has shown that only about one in five small and medium-sized enterprises observes current technological developments and estimates the impact on its own business model. Such an approach can turn out to be dangerous!