IT and business: dual rethink needed

Moving away from money pit and into business development.

Especially in times of crisis, companies work to cut costs in order to stay competitive. These streamlining programs have meant that IT is now pushing the limits of its efficiency. However, IT should no longer be viewed as merely a money pit. It is needed to support new business models.

Many companies have forged ahead with the digital transformation in recent years, but the digital mindset has not yet taken hold to a sufficient degree within specific departments and C-suites. This is further widening the digital gap at German organizations. For example, a BITKOM study shows that 60 percent of German companies currently believe that competitors that started digitalizing early on have an advantage, up from 52 percent a year ago and 37 percent five years ago. And although 87 percent believe the use of digital technologies plays a crucial role in the competitiveness of the German economy, 76 percent say German companies do not use them enough. And this contradiction is growing. Some 72 percent believe AI is very important, for example, but just 15 percent actually use it. And a whopping 70 percent have no plans to use AI in the next ten years.

Only partial digitalization

There are many reasons for this. Major concerns reported by companies include the shortage of skilled workers (32.8%), security, data protection, and privacy (31.8%), lack of agility of IT processes (27.9%), cost optimization (25.4%), and the great complexity of innovative technologies (22.9%). Those are the findings of a survey of 201 decision makers at German firms on cost and/or process optimizations in IT that was conducted by techconsult in September 2023 and commissioned by Campana & Schott. The survey results make one thing clear: So far, it is often the case that only certain areas are digitalized, but this is not implemented across the board.

Rethink needed in both IT and business

Instead of working together to develop new business models and innovations, IT is reduced to efficiency enhancement and demand management – which in turn means it is viewed mainly as a cost factor. And yet, IT is specifically positioned to drive innovation to a crucial degree. A dual change of perspective is needed to make this a reality. On the one hand, the business side needs to view IT as a transformation partner, since the right platforms and tools make it possible to explore new business models and generate additional sales. On the other hand, IT should do more than just create working bases and eliminate issues, even when resources are limited. Instead, it should stand by the business side as a helper, offering keys to innovation.

That has essentially been the case since the start of the digital transformation, but with the rise of AI, the pace will only increase, widening the digital gap within and between companies. The top management needs to chart the course for this dual change of perspective promptly. Those who do not build bridges now simply will not survive.

For a look at how to bring about this mindset shift within an organization and what to bear in mind during implementation, please see our white paper titled “IT: from cost factor to turbocharging innovation” and follow-up articles on this topic.


Sven Kreimendahl

Associate Partner | IT Strategy & IT Transformation