Now is the time to invest in digital transformation

When talking about the issue of investing in the future, it is simple to point a finger at politicians, but that is also too simplistic. After all, the mechanical and plant engineering industry has a considerable investment backlog itself, and that could impede the future growth of the sector. The current period of economic cooling is just the right time to push ahead with digital transformation. External consultants in particular can play a central role in this - provided they have a broad foundation to work from.

The term "investment backlog" is primarily associated with shortcomings of the state. For example, industry associations such as the Mechanical Engineering Industry Association (VDMA) complain about inadequate broadband coverage, insufficient education in the digital  field and the lack of support for businesses in the areas of research and digital transformation. The investment gap in companies is much less frequently made an issue. Given the good state of the economy, medium-sized companies in particular have preferred short-term sales rather than long-term investments in the future. "This can be dangerous, because today's investments are the foundation for future growth," says Uwe Bergmann, CEO of the COSMO CONSULT Group. Because in many sectors growth is increasingly being achieved through digital products, it is important to already start thinking about which digital services and products will be tomorrow’s money makers. "For many companies, digital transformation is still a technical problem. But that is too simplistic. It is more about focusing on customers. What added value that comes from digital technologies would justify a higher price? Can established products be made to meet new market requirements? Does the business model have to change in the long term? These are the crucial questions," explains CEO Bergmann.

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The reasons that are often cited for the sluggish pace of digital transformation - a lack of time, money, or adequate expertise in the field - cannot be taken at face value. After all, many sectors such as mechanical engineering and plant construction have seen good profits in recent years. The period of economic cooling is now freeing up capacities need to cover the personnel costs of digital transformation projects. If necessary know-how and skills are lacking, they can be purchased at least for a time in the form of external consultants, who can then launch initial digital transformation projects and organize the transfer of knowledge.

A pivotal point in this regard is the business software used. According to a study by the market research institute Trovarit, ERP systems in mechanical and plant engineering companies are on average more than eleven years old. "They are from the time when the iPhone first saw the light of day and are incompatible with the requirements of today's digital workplace," says Bergmann. However, having a modern IT infrastructure is a prerequisite for having a sustainable business model in the future. There are now many ideas for digital transformation projects, especially in the mechanical and plant engineering field - including growing bills of materials, predictive maintenance and the integration of cloud technologies and external data sources into existing business processes.

It is important for companies to understand digital transformation as a continuous process which has to be thought through afresh again and again given the course of rapid technical progress. Modern technologies such as machine learning, the Internet of things, data analytics and intelligent ERP play a central role. Selecting and combining the optimal solution for each situation requires a broad knowledge of the various disciplines. Here, too, external consultants can help if they are carefully selected, explains Bergmann: "Digital transformation often means connecting different technologies along the process chain. Partners that have a multidisciplinary foundation clearly have the better cards." Because of the variety of aspects to these challenges, the COSMO CONSULT Group has recently greatly expanded its own product and consulting range. As an end-to-end solution provider, the software and consulting company not only covers the technical aspects of digital transformation, but also supports small, medium-sized and large companies with comprehensive consulting services. These include initiatives such as its digital maturity check and the joint development of a digital vision and roadmap.

Are you thinking about how to more forward with digital transformation in your company? Then our digital maturity check is the right place for you to start. It will show you where you currently stand in terms of digital transformation and in which areas you can expect rapid success.