Tuesday, 01. August 2017

The Long Road to Digitalization

Professor Dr. Jürgen Weber (left) and Professor Dr. Utz Schäffer of the IMC at WHU

Everyone is talking about digitalization. There are great opportunities and comparatively high risks. Many companies worry they may lose their hard-won competitive edge. They face high uncertainty and a considerable need for change. These matters are of concern to management, too. There is no clear picture of how to deal with this.

In a phase like this, it makes sense to share experiences. Helping companies was the goal of the Digitalization Pulse Checks sponsored by the Institute of Management Accounting and Control (IMC) at WHU – Otto Beisheim School of Management. Conducted by two professors, Dr. Utz Schäffer and Dr. Jürgen Weber, the survey delivered a picture of the ways in which German businesses have currently aligned their management and controlling around digitalization. The study surveyed some of the large listed companies that, given the pressure of the capital market, would have to rank among those spearheading the drive to digitalize. Of the total 143 companies approached, just under half, or 68, took part in the survey.

According to Professor Dr. Schäffer, the results paint a clear picture: “Companies have taken the first steps on the path toward digitalization, but they haven’t advanced beyond the initial phase.” This can be seen, among other things, in the fact that only one-fifth of the companies responding reported having a clear and coherent, enterprise-wide digitalization strategy in place. But just such a strategy is the indispensable basis for making consistent use of the opportunities of digitalization. Just a little more than one company in three is also convinced that the current level of investment in digitalization is sufficient. This means that the precondition to moving forward fast enough is missing. There are significant weaknesses in the data base as well: Only less than 30 percent of the companies reported having data of high quality, and just 17 percent have harmonized IT systems in place. “So the road to digitalization is still a long one,” Professor Dr. Weber points out.

But there is a ray of hope in the finding that nearly half of the companies have created a position of a Chief Digital Officer tasked with coordinating and bundling digitalization efforts. Things look worse on the side of instrumental skills. Only around one company in seven has implemented a centralized organizational approach to the issue of data science.

The study revealed a considerable need for action in the area of controlling as well. There are weaknesses in devising a digitalization strategy for one’s own function, and in cooperation with data scientists, to mention just two concrete examples.

The Digitalization Pulse Check is designed as a longitudinal study, with two survey phases per year, and will monitor digitalization in companies and controlling over time. 

More information about digitalization at WHU