Part 2: What Is A Digital Enterprise?
The transformatory power of digitalisation revolutionizes the way, how business is executed. A large variety of new business models appear. In addition to the opportunities arising for individual enterprises, new ecosystems of businesses are evolving as well.
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Everybody seems to be using the term ‘digital’ today. Politicians are laying the foundations for the
‘digital revolution’, product companies have off-the-shelf-solutions for being a ‘digital leader’, and
consulting firms can help you with the ‘digital transformation’. However, you hardly ever find
anybody who can tell you exactly what ‘digital’ is; in fact, the term means different things to different
people. At one end of the spectrum are the rather simple features, such as replacing paper. At the
other end, ‘digital’ is a synonym for the transcendence of the industrial era.
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Digitalisation aims to optimise communication patterns between humans and their relationship with each other. This goal is realised via digital media, for instance in retrieving and processing information or accessing services. The digital medium takes on the function of overcoming the limitations of natural communication within our private, social and corporate structures. Several means of digital communication have existed for many decades but were often isolated from each other.
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This section defines what we mean by ‘digital products’. The digital product strategy of an enterprise defines the degree of digitalisation a product is subject to, i.e., the extent to which digital features are incorporated into the product. Based on the degree to which digital features have been incorporated into them, products are divided into three principal categories. Generally speaking, intangible products (e.g., a bank account) lend themselves to complete digitalisation, while tangible products (e.g., hardware produced in a manufacturing facility) cannot be virtualised but instead augmented with digital features.
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Service orientation is about serving customers better by breaking down their needs into a hierarchy of services and reflecting this in the organisation and information technology (IT) systems of the enterprise. In the wave of digitalisation, many companies are shifting their attention towards services; they are increasingly utilising services, amending their products to become a hybrid offering, or even transforming their products into services. For example, Deutsche Bahn successfully offers the Call-a-Bike or Flinkster sharing schemes – services that extend Deutsche Bahn’s portfolio as a mobility provider.
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Maturity models have been of interest in organisational development for many years. They accompany the development of complex organisations and maintain the capabilities necessary to fulfil an organisation’s envisaged purpose. But why exactly do enterprises need maturity models in the context of digital transformation? Most importantly, organisational maturity serves as an indicator of the probability of the transformation’s success. It allows management to decide on a transformation strategy, including preliminary activities to strengthen the organisation prior to digitalisation, or starting with a transformation nucleus within the company as opposed to acquiring another company that already provides the desired capabilities.
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As described in the previous chapter, a digital enterprise is defined by its more intimate methods of communicating with customers, employees and business partners through the use of digital media and especially the use of data. This approach needs, as well as allows, new processes and business models. Therefore, the main differentiating factors between classical and digital enterprises are their access to and systematic application of new information and communication technologies throughout the entire value chain. Hence IT becomes the core of the value chain.
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Howden is an engineering company with a long history of innovation, providing high-quality air and gas handling products and services to a wide range of customers and industries. Among other things, Howden builds compressors to power gas pipelines and fans to ventilate tunnels. Howden employs more than 5.000 people worldwide with customers all over the globe. Howden operates within a fast-changing environment where innovation and growth through acquisition is the norm. In the last three years alone, the group acquired three companies per year – a rapid pace in any industry.
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This section is based upon an interview with Ramin Niroumand, Co-Founder and CEO Managing director of finleap. finleap is a group of entrepreneurial investors that built Europe’s leading financial technology ecosystem with the goal to reshape the financial services landscape in cooperation with partners, investors and top talent. finleap’s ecosystem consists of a variety of category leaders across the financial services value chain, and includes companies both built by finleap and companies who joined via acquisition. With its headquarters in the vibrant center of Berlin, finleap and the members of its ecosystem are now all over both Germany and Europe.
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Few sectors are as challenged by as many changes in market conditions as the utility sector. With a heritage of being very traditional and inflexible, companies in this sector need to try new things to survive. The following case study gives an example of a successful next step that a service provider in the utility sector took in its strategy work, ushering in an agile future. In our work we realised that traditional strategy efforts are outdated. The pace of change is accelerating more rapidly than ever. Successful companies need to be flexible and agile, and to understand trends.
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Swedavia is a publicly traded company that owns and operates 10 airports in Sweden, including the international hub airport Arlanda. Even though one company owns all these airports, they operated independently in the past and therefore have multiple different ways of working and also multiple different IT systems to support them. Operating airports is a complex business that Swedavia has divided into three different business areas – Aviation Business, Commercial Services and Real Estate. Aviation Business revolves around managing air traffic.
