A digitalization strategy – in three steps

A company needs its own digitalization strategy to advance its digital transformation. This strategy is the foundation and shows a company the business models that could spell success in the future.

From industry to logistics and energy, the digital transformation is a reality in every sector. The new technologies mean new challenges for every company. Customer and supplier relationships are also increasingly changing.

Until now, only 40 percent of companies from the leading industries – mechanical and process plant engineering, automotive (original equipment manufacturers [OEM] and suppliers), logistics and transport – have been systematically working to advance digital innovations, according to a 2016 study (“Digitalisieren Sie schon?”) by the market research and consulting firm Lünendonk in cooperation with Lufthansa Industry Solutions.

To identify the key areas of action for a company as part of the digital transformation, organizations first need to create the right foundation by coming up with a digitalization strategy. Lufthansa Industry Solutions has developed its own approach that takes into account the three main pillars of the digitalization process: innovation, processes and technologies.

1. Strategic analysis and setting targets

First, senior management should collaborate with middle management to come up with a digital vision and agenda. This includes taking a look at things such as new technologies and digital development patterns to explore their potential for the company. Digital development patterns indicate ways to advance business models through digitalization. They can range from the use of digital data to create real-time forecasts to entering completely new fields of business.

This step also includes an analysis of the company that takes into account the sector and the competition. After that, companies should develop a target vision of the digital business model and prioritize digital issues based on their own business and IT strategy. Determining the level of digital maturity is an important part of this.

Digital maturity

Digital maturity shows companies how advanced they are in handling the topic of digitalization and the categories in which they may need to make improvements, as measured in terms of the latest technology. To this end, Lufthansa Industry Solutions brings representatives of a company’s departments together with IT. They then take a look at individual factors and evaluate their level of digital maturity. These factors pertain to IT architecture, automation and process optimization and cover the entire company, including customer and supplier relationships.

Five categories are analyzed, with assessments ranging from “non-digital” to “digital leader.” Once a company has determined its level of digital maturity, it can use this information to set its targets. The opportunities and targets should first and foremost be a good match for the company’s future business model. Accordingly, the top priority is not to become a digital leader in every category.

2. Operationalizing the digitalization strategy

Once a company has developed its digital vision, set an agenda and analyzed its digital maturity, it can move on to identifying the know-how and expertise it may need and use the findings to identify innovations in the form of new services, for example. Here, it is important to bring IT, specialist departments and middle management together so as to take into account the needs of all of a company’s divisions and departments.

3. Implementing the digitalization strategy

Based on this information, the third step is to implement the strategy that has been developed. The company can now develop its own digital roadmap and a portfolio and set priorities. This step in the process involves communication with senior management to coordinate specific digital projects with the development of the company as a whole. Once this step has been completed, the company is in the middle of digital transformation.

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