- German companies are dissatisfied with their own degree of digitalization.
- The importance and urgency of digital processes has been recognized.
- Experience Management has not been acknowledged yet: Skepticism and lack of competence are obstructing the process.
- A better understanding of changes on the market with a 360° view is the next big issue for companies
Almost 60% of companies in Germany are dissatisfied with their own degree of digitalization. Even though most managers are aware that the digitalization of business processes plays an important role in ensuring the company remains viable in the future, decision-makers are still making too little of the opportunities digitalization offers for the creation of new business models. For example experience management (XM), where experience data (X data) from all stakeholders such as customers, employees, and suppliers in B2C and B2B are collected and correlated with operational data from ERP systems (O data) on sales, lead times, etc. These are the key results of a study on the degree of digitalization and use of experience management in German companies. In July 2019, EASY SOFTWARE AG has conducted a survey among 401 companies on this topic, in cooperation with the auditing company KPMG AG. The results of this survey have been summarized in the comprehensive study available for download for free at the end of this article.
are dissatisfied with their own degree of digitalization.
have only digitalized up to 20 per cent of their business processes so far.
expect that the future viability of companies is at risk should they fail to keep up with digitalization.
The question here is whether digitalization is likely to mainly remain a risk for the companies. Or if companies also see the opportunities and possibilities offered by digitalization. While the willingness to digitalize business processes is there, digitalization is not implemented comprehensively and quickly enough. In this regard, the size of the company and the segment (B2B or B2C) play hardly any role at all. However, there seems to be a slight tendency for larger companies with a higher turnover to underestimate the significance of the shift to digital space.
The digital transformation has yet to happen
The digitalization of business processes and the collection, analysis, and use of conventional inventory data (operational or O data) is an established process by now. Over the next two years, German companies, irrespective of their industry, will mainly be focusing on the digital optimization of existing structures. Externally, however, a company is only considered digitalized if and when all processes the stakeholders can experience have been digitalized. Looking at end-to-end processes, the digitalization of conventional business processes is merely scratching the surface so far. The surveyed companies cite increasing customer satisfaction as the most important advantage they are expecting from digitalization. But what does the customer expect to see tomorrow, and in a year?
Experience management is still in its infant stages in Germany
In the previous article “What is Experience Management? Ideas for Practical Realization of XM”, Head of Sales and digital Evangelist of EASY APIOMAT GmbH Michael Reiserer assumes that successful companies are “experience companies”, since customers, employees, and suppliers no longer buy products, but experiences. Companies such as Amazon and Apple are already collecting experience data (X data) and are linking these with inventory date (O data). To do so, experience companies request feedback from their stakeholders such as customers, employees, applicants, and suppliers; the feedback is used to optimize processes and products, meaning they can continuously improve the experience for all stakeholders.
That’s all good in theory. Even though barely 40% of the survey participants in Germany collect X data, more than half of these do not use them and if they do, only to improve customer satisfaction. This means that 96% treat experience data like they treat customer experience data. Even though customer satisfaction is important, an increasingly networked society means that we are simultaneously customers, employees, and suppliers and have sheer innumerable options for obtaining information and for comparing suppliers, employers, and products. This means that it has become vital for companies to change the way they think and to include a 360° overview over all stakeholders such as customers, employees, applicants, business partners, and suppliers.
- 40% collect X data, but hardly use these. Those who do use them, however, were able to reach their goals (79%)
- 60% of all interviewed managers have never heard of experience management.
- 85% hope that X/O data will improve customer satisfaction: The 360° experience idea has not made it to the companies yet.
Experience management is very slow to reach German companies: While 40% are considering a collection of X data for customers within the next two years, hardly anyone considers doing so for employees, business partners, and suppliers. The 360° approach is met with skepticism: If experience data were also to be collected from the other stakeholders, almost half of all decision-makers (48%) are expecting a negative response to this plan from colleagues and employees. There is still a lot of catching up to do.
Why is experience management important?
The concept of “experience economy” has been around since 1998. That year, Joseph Pine II and his co-author James H. Gilmore wrote “Welcome to the Experience Economy”. The idea received a certain boost in the USA from the SAP subsidiary Qualtrics, who provides survey tools for collecting and analyzing X data, and the release of the Adobe Experience Cloud. Another interesting aspect in this regard is the currently heralded shift in paradigm from shareholder to stakeholder value – also at the forefront here: Amazon and Apple. At the heart of the concept is understanding the company as a whole and discovering the connections between customers, employees, business partners, and suppliers, embedded in the global society. This is the starting point of experience management with its 360° idea. It helps companies to better understand developments, to react faster, and to create stable business models in a digital world.
Experience management study result: Opportunities and outlook
Because German companies still fail to fully recognize the benefits of XO data, they are wasting two major opportunities. First, to consistently align value creation with customer expectations and to thus distinguish themselves from the competition. Secondly, the opportunity to include the transfer of knowledge or suppliers and partners in the end-to-end value creation chain processes in a manner that enables them to contribute their abilities, knowledge, and commitment and to jointly work towards providing the best possible customer experience. XM can be used to validate business decisions and investments based on data. On the other hand, the value of XO data is located in the operative area, as this is where the experience takes place. XO data allow companies to define, for example, what needs to be changed in the communication and interaction with customers, employees, and business partners. This means that X data analysis is the basis for a continuous optimization of service.
Companies of all sizes keep their O data in different systems such as CRM (Customer Relationship Management), ERP (Enterprise Resource Management), and SCM (Supply Chain Management). End-to-end processes, however, exceed the limits of individual IT systems. Experience management allows users to overcome these limits. German companies should catch up soon in order to not jeopardize their future. When asked about the greatest hurdles for using experience management in their business, most participants name regulatory problems, complex data infrastructures, and a lack of competence. The challenges for the next few years will be to develop competence and to sound out the possibilities of experience management step by step.
All results and interpretations can be found in the study of EASY SOFTWARE AG and KPMG AG “When Data Drives Experience”. You will also learn more about the background of experience management and will be given a guideline for a step by step introduction of experience management into your company.