“Digitalization: companies have to make the first step”

Bernd Appel is Managing Director of Lufthansa Industry Solutions. For him, digitalization begins in top management. In an interview, he explains why this is so, what role demographic change plays and why there is still a lack of implementation.

Mr. Appel, nearly all companies have recognized that digitalization is a necessity. Yet some of them are still a long way from actively getting started with it. Why is that?

Even though this has already been said so often, I cannot but emphasize that digitalization is still a matter of key priority for executives – this is true regardless of the size of the company or its line of business. Good progress is being made by those companies whose top-level managers are convinced of the benefits of digitalization and know that they have to invest money in it without yet being able to know exactly what the return on this investment is going to be. Companies have to make the first step. Once top management has understood this, appropriate resources are often freed up right away – whether in the form of money or personnel. When companies then put their trust in agility – both in their organizational structure as well as in the projects themselves – they can respond quickly to new challenges and implement projects accordingly. This creates the basic conditions necessary to make the change. The technology is already set to go.

Why then are both small and large companies so hesitant to get on with the implementation of digitalization projects?

For one thing, this is due to the wide variety of different possibilities. There are roughly a hundred IoT products on the market, to take but one example. They are so diverse that many companies first need help exploring all their possibilities before actually using them in projects. Especially because the investments needed in this area are not exactly trivial.

For another, IT investments, particularly in digitalization, always depend on the current mood. If it is good, companies will spend money on ideas and projects without knowing when and just how they will get a return on their investment. If we look at the current and sometimes difficult geopolitical situation or the trade conflicts, this all deepens companies’ uncertainty. Even though I consider the situation in Europe to be stable, many companies are preferring to take a wait-and-see attitude rather than euphorically making investments. 

Bernd Appel - Managing Director bei LHIND

Good progress is being made by those companies whose top-level managers are convinced of the benefits of digitalization.

Bernd Appel, Managing Director of Lufthansa Industry Solutions

The most popular IT service among those that do make investments is primarily the automation of processes. What are the reasons behind this?

Especially in logistics and industry, automating processes offers particularly great potential for improvement. This explains the high demand. For instance, companies can be much more efficient if they equip an entire warehouse or production line with sensor systems. This simplifies production processes, reduces the use of parts or improves quality. This is possible today due to the advances made in recent years by both sensor technology as well as battery capacity. Another step forward in this area will be accomplished as soon as the new 5G mobile communication generation supplants LTE. Then, for instance, latency periods will be even shorter.

There are as yet no tangible application scenarios for blockchain or robotics. When we can show concrete examples and when companies realize the benefits, demand for these technologies of the future will rise.

Bernd Appel - Managing Director bei LHIND
Bernd Appel
Managing Director of Lufthansa Industry Solutions

Blockchain and robotics are currently being touted as the technologies of the future. How do you explain the low level of interest companies are currently showing in them? What is still needed for them to come into their own?

That the boom in these areas is not yet very impressive is probably related to the fact that companies are encountering new technologies at every turn. For instance, hardly have they begun to understand and use Big Data when artificial intelligence starts knocking at the door. Hardly have companies set up a tool set or written an app, and already the next innovations are coming along and changing everything. This makes it hard to keep up. Besides, there are as yet no tangible application scenarios for blockchain or robotics. For instance, how can robotics really improve everyday work and processes in the long term? When we can show concrete examples and when companies realize the benefits, demand for these technologies of the future will rise.

What are the challenges of daily work that IT departments face when more and more new technologies are constantly being used?

In the future, companies will still need employees to take care of the older applications they already have, in the sense of “keeping the system running”. At the same time, however, IT specialists have to keep up with what is new, and this is becoming more and more varied. Covering a range this broad could cause problems for SMEs in particular. IT security departments alone will need a great deal of staff and expertise. Since the IT branch is not immune to the widespread shortage of skilled workers, these companies will always have to rely on IT service providers. My theory therefore, is that digitalization will not be a question of age in the future – both young newcomers to the profession as well as older employees - will be needed. In our line of business, we have to keep all resources active or reactivate them.

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