Digital change transforms the entire enterprise

IN General Predictive Analytics — 09 October, 2014

Neuland, a German strategy consultancy, has issued its "Digital Transformation Report" together with the German news weekly Wirtschaftswoche (Business Week). In it, best practices for the use of new technologies, among others the use of big data analytics at German retail company OTTO are described. Study author Bernhard Steimel describes what this digital change entails.  Cover-Digital  (2)

"Digital transformation can be evaluated," says business journalist Roland Tichy in the foreword to our Digital Transformation Award 2014. And we did exactly that: From over 100 evaluations, we selected about 50 enterprises and examined them closely. We did this because technology is only one side of digital change. At least as important is what happens in peoples' minds. Change is the key concept. Digital change is thus less a question of enterprise size and more a question of enterprise culture.

 Enterprises that want to meet the challenge of big data and other phenomenon of the digital era such as Industry 4.0 must be ready to have their business strategy closely examined. Is it suitable for the market of tomorrow? What opportunities does digitalization offer? How does it effect the self-image of the company and also the perception of the customers? OTTO, for example, changed early on from a classical multi-channel retailer to a technology-driven company.

 Increased efficiency and new business models

We also recognized that new technologies like big data analytics not only have an impact in terms of increased efficiency, but also create enormous customer advantages through a transformation of the business model. New business fields develop. At OTTO, this effects the entire enterprise, because the company does 80 percent of its sales through online shopping. OTTO also shows how digitalization changes the entire organization: Hierarchies are broken and collaboration across enterprise borders is made necessary.

 We only included those enterprises in our Digital Transformation Report, in which innovation moulds the identity of the organization. For OTTO for example, that means company-internal events being shown as lifestreams on the internet and permanently encouraging employees not to be content with what is, but to be open for new things. Along with building up know-how, last but not least, the implementation of new technologies plays a decisive role in digital change. It is exactly in this point that OTTO is very far along the way.

 The company is thus in a position to analyze data from the most diverse sources. An individual view of customers in real time is already a reality for the enterprise. With predictive analytics, various decisions are automated — from materials planning to dynamic pricing. OTTO is one good example of enterprises that use digital change to redefine themselves for the future. As the author of Digital Transformation, we are happy that companies of very differing sizes and from differing industry sectors are making new technologies and business models their own.

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