HomeBlogFrom IT Factories to Digital Ecosystems - Transforming The German Enterprise

From IT Factories to Digital Ecosystems – Transforming The German Enterprise

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The Global Digital Factory (GDF) can help Allianz companies to digitize their operations and increase customer relationships. GDF has worked together with Futurice Digital Transformation at an early stage to assist in setting up and develop to improve the Digital Factory structures.

The trade surplus of Germany in 2016 was record-breaking at EUR252.9 billion ($270 billion) which is the biggest gap between imports and exports since the country’s statistics agency began recording data. The German exporter’s motor is roaring unlike ever before. However, the export-oriented “factory culture” responsible for this success could be a hindrance to the digital transformation of the country. It places IT at the heart of a value chain that is based on push system, which hinders the implementation of the pull strategy that is necessary for the successful implementation of digital services and products.

THE DEUTSCHLAND FACTORY

The manufacturing sector has formed the core of German manufacturing industry ever since WWII and even before. The word “Factory” is probably one of the first images that pops into minds when people from all over the globe talk about German economy. A massive, technologically advanced and well-organized factory that produces products of the highest quality.

The picture extends beyond factories and factories for manufacturing factories: Tesla’s search for a partner who could create “high-volume factories [that] allow us to manufacture high-quality products with economies of scale, making them more affordable and accessible to the world” led to the announcement in November of 2016 “Tesla Grohmann Automation”. It is obvious that the newly acquired “machine that builds the machine” according to Tesla’s official statement states is an German engineering firm .

The factory has not just been at the center of the economy of Germany for a long time and also has been a culture centerpiece in the majority of massive and global German companies. The entire process of these businesses begins with “The Factory” where incredible research is conducted on the way to make an exceptional product which is distributed to the other departments of the company and the distribution system to the end user.

This manufacturing centricity is applicable to a number of non-manufacturing firms in Germany. Insurance companies, for instance, are using a similar strategy. Insurance and financial products and services are designed in the central area, then moved out onto the operational belt where it is locally standardized and then pushed out into an (rather cashed) distribution network, then to the end user. The company behaves as if it were an actual physical manufacturing facility with the responsibility of creating “German quality” products.

HOLES IN THE WALLS?

As the development of technology, non-technology companies began creating digital services as well as digital complement products. They generally employed the same method of manufacturing core products to develop and launch new services and products. The same way that insurance companies utilized the concept of an “imaginary” factory to manufacture their financial products, real manufacturing firms established online “IT factories” that created top-quality digital products.

The factory-centered model was created to help create the needs of a scale economy and it was a great success at this. However , it’s today one of the biggest challenges facing companies today as they attempt to overcome economies of speed and withstand disruptions to their model of business. Making a few holes in the walls to allow “direct sales” for example is not enough to solve the structural issues related to the factory approach that include alienation, inflexibility and long life-cycles of products.

There’s much more involved in this factory method beyond the intermediation between the business and its customers. These intermediaries are actually swathed across the entire enterprise before leaving it. A typical German business has made significant efforts over the past couple of years in order in order to “centralize” and “standardize” IT for enterprise and bring it to the forefront of the organization, in hopes of enabling the development of low-cost digital services and products.

IT has been designed to be optimized to be able to “pushing” out products and services and has become an obstacle to digital transformation efforts which are typically based on pulling strategies. The image below will be familiar to those working in German multinational companies: central IT department serves some business departments within an organization or is responsible for the headquarter. The business departments are accountable for using the latest technologies to develop new services and digital products and then distribute them to semi-independent sales and operation entities across the globe. They will then distribute the new products and services to their distribution channels (brokers dealers, agents,) to allow them to utilize them to service their customers.

FROM IT FACTORIES TO DIGITAL ECOSYSTEMS

Gartner defines the term “digital ecosystem” by defining it as “interdependent group of actors sharing standardized digital platforms to achieve a mutually beneficial purpose.” In this sense we can see ecosystems as autonomous societies that are governed and managed by the stakeholders of all levels of the manufacturing industry. These communities operate in the global ecosystem world, share the same language and use different approaches/tools/platforms to identify, develop, test / pilot new solutions. They are built on co-creation, collaboration and collaboration and focus on human needs and the added value within a particular area of solution. Intermediaries and customers (dealers agents, brokers, dealers) are integral components the ecosystems. This innovative approach has contributed to the growth of invigorating companies such as Netflix (highly aligned, loosely connected) and Etsy and is the foundation of all larger open source foundation or project (e. for example, g. Cloud Foundry) addressed the most significant internal barriers to digital innovation within multinational corporations:

  • “Not invented Here “not invented here”
  • “Not Incentivized “not incentivized”
  • “No technical standard yet “no technical standard yet”
  • “Rom “no cross-financing between entities”
  • The “not my KPI”

 Digital ecosystems within the global business

TIME TO TEAR DOWN THE WALLS

Digital transformation isn’t about modernization or technology advancements of the “heart” of the factory and the destruction of the entire factory-based business beginning with the removal of the walls between silos. Technology (mobile cloud big data VR, blockchains, AI, IoT , etc.) isn’t it’s “new motor” of digital production, nor can it be considered an “new assembly line” for producing high-quality digital products. Technology is only one element of a bigger collection of equipment (including people as well as culture, organizational expertise, etc.

which allow the creation of a new kind of product that is driven by the new values. These new values (customer satisfaction, user-friendliness continuous improvements) which drive the growth of the services and products of today and products. If they’re built, supported, or enabled through the mentioned technologies may be an problem, but it’s not the primary factor.

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