The Digitalization Paradox

It might sound contradictory at first. But when we discuss digitalization today, the focus isn’t on the use of different technologies anymore, but rather strategies for the entire organization. Gone are the days when IT was just a tool managed as a cost center. IT should be the driver and catalyst of innovation that is developed holistically—in other words, for the whole organization.

There are hardly any new products or services that can survive without modern technology. And no business can forego the use of modern technology. This has most recently been illustrated by the corona pandemic. Digital technologies—primarily software solutions—have kept companies and entire sectors afloat. They have revealed their potential for greater efficiency; and, in a rather discrete way, have shown us what we can do with them as opposed to without. 

The Digitalization Paradox

Although digital technology continues gaining relevance, it is ever more seldom the key factor. You could safely call this a paradox. It is getting increasingly easy to interchange hardware (commodity) because performance is no longer tied to an individual device or component. And when it comes to the cloud, companies hardly have any influence over the servers, network components or databases that are used anyway. Furthermore, it is difficult to find clear answers to the question of the right application for data-driven business and profit models. Even AI-based algorithms lack differentiating features that fundamentally set them apart from others. What it really comes down to is merging and integrating hybrid and heterogeneous IT systems and linking legacy IT with modern cloud technologies. So, as the role of digital technologies grows, that of singular solutions shrinks. This paradox cannot be solved with technology, but with strategy—across the whole organization and with a focus on superior and frictionless customer experience.

A strategy is what can turn a piece of technology—a sensor, a network component, a database, or even an algorithm—into a business model. Only the strategy answers the question as to business model and suitable technology.

Truly Connected Means Truly Aligned

But, for this strategy to work (and here we come back to technology), an organization must prepare itself for implementation. In my opinion, that has to include end-to-end digitalization and connectivity—across the organization’s whole value chain and all processes. Only then will an enterprise be capable of producing the necessary quality of data to utilize for new business models and to glean deeper insight of its own processes. Most companies are already in possession of the most important system for collecting, storing and analyzing data: the ERP system. What many lack is end-to-end connectivity of their assets, machines and products with traditional IT, which only becomes completely scalable, highly available and secure in the cloud. Only then is it possible to glean data from production and plant operation or from actual use of the products.

Digital Twins, Edge Computing, IoT: Options for Connected Companies

The digital twin is one of the most obvious examples of a totally new technology that will only work in a digitized organization. A digital twin is a digital replica of an asset that functions exactly like its real-life entity. A digital twin’s data can be used, for example, to simulate operation of the real asset, determine predictive maintenance cycles and test functionality and functional enhancements under realistic operating conditions. It helps companies save time and money on operating existing machinery and plants as well develop new market-ready products faster and more cost-effectively.

Data in the Cloud and on the Edge

Digital twins, connected production facilities and ERP systems along the value chain generate huge amounts of data. The cloud offers the scalability, performance and security to store and process this data. But such complicated storage and processing aren’t always possible, worthwhile or necessary, for example, for remote production plants and power generators or sensors located in inaccessible buildings, which nevertheless produce valuable data.

Edge computing via sensors, actuators and gateways allows organizations to work independently of a cloud or large computing center to process data onsite. But to be able to analyze and utilize large amounts of data, temporary connections to the cloud are essential. Edge and cloud computing thus do not contradict each other. They are two sides of the same coin, both facilitating the option of leveraging data for operational and strategic decisions.

Both concepts have a clear loser, incidentally. Over time, purely on-premise applications and internal computing centers, which may have been justified in the short term by growing infrastructure and legacy or niche applications, will lose their reason for existing. And even if their justification weakens with each new level of modernization, organizations will hold on to them for some time to come. For this reason, integrators that link traditional and cutting-edge IT are also key in the age of cloud and edge.

Connected to Business for superior frictionless customer experience

All these technological—as well as operational—questions stem from the business strategy. This is changing our business as a provider of integration and cloud solutions in a fundamental way as well. We continue to offer traditional IT solutions and middleware, but work increasingly with business experts who have little or no interest in technology but all the more for the business case. They don’t expect complicated data sheets but rather answers to their questions about fast availability, intuitive user interfaces and superior and frictionless customer experience.

This is the new, truly digital generation that will not only change companies in the years to come, but our world as well. Vendors as well as customers should embrace this new reality and, working in collaboration with business and IT, advance to the next level of digitalization. If we don’t, we will be history.