12 minute read
The “digital dividend” gives businesses an added value
by medianet
A study by the Federation of Austrian Industries and Accenture clearly shows that digitisation boosts growth, added value, jobs and new investments.
The Federation of Austrian Industries and Accenture already showed with their last study “Raise the Curve – More resilience and growth through digitisation” that Austrian businesses have used digitisation successfully to overcome the Covid pandemic: The more digitised a company is the better it manages the Covid-induced economic crisis. The Federation of Austrian Industries and Accenture have joined forces once more to look at the (medium-term) connection between a company’s digital maturity and its business success. The Economica Institute for Economic Research contributed statistical and econometrical analyses.
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The results are based on a survey of 112 companies of different sizes across different sectors, in particular the metal industry, machine construction, the chemical industry and the construction industry. Austria’s flagship industries outside the automation-oriented electronics and automotive sector are thus represented strongly in order to support general conclusions on a wide range of sectors.
The results
The Federation of Austrian Industries and Accenture prove with their study “The Digital Dividend” that digitisation boosts economic growth, creates and secures jobs, increases the added value and the vertical range of manufacture and investments.
“Digitisation pays off as it leads to a direct, measurable business success. There is a digital dividend,” explains Michael Zettel, Country Managing Director of Accenture Austria: “The higher the digital maturity the better a business performs.” Christian Helmenstein, head economist at the Federation of Austrian Industries, adds: “Speaking in numbers, digitised businesses record a three-fold higher growth in turnover compared to non-digitised companies. The increase in turnover per level of digitisation amounts to 8.3 percent.”
The digital maturity was divided into four categories for the study: Stage 0 is “digitally blind”. The majority of data storage and information transfer is done on paper. Stage 1 means “digital mapping” – IT is used as a tool for work. Stage 2 is called “act digitally’’. These companies use their data, have digital process optimisation, but humans still make the decisions. Stage 3, the final stage, stands for being “digitally autonomous”. Data-based products and services are sold, all processes are automated and based on data, decisions can also be made automatically. Digital business models are found in this stage.
The 112 businesses surveyed in the study were categorised accordingly. The average growth in turnover at stage 0 was at 3.9 percent, 13 percent at stage 1 and 15.3 percent each at stages 2 and 3.
© Daniel Mikkelsen
Stages of the digital transformation
Digital maturity in 4 stages
Digitally “blind“
Information mainly paper-based
Digital mapping
Use of ICT in the area of communication and information provision
Act digitally
Data analysis, use of data for predicting or forecasting, networking, process optimisation
Digitally autonomous
Fully autonomous control and capacity adjustment, digital business models, use of artificial intelligence ▌ Stage 0 (digitally “blind“)
A large proportion of data storage and information transfer is still paper-based or not in a digital format. ▌ Stage 1 (digital mapping)
Mapping of information by using ICT in communication, digital provision of information and using ICT in the area of work and tools. ▌ Stage 2 (act digitally)
Digital process optimisation; analyses and predictions from the collected data are possible; decisions still rest with people. ▌ Stage 3 (digitally autonomous)
Data-based products or services, processes are largely automated and data-supported, decisions are made automatically, capacities are flexibly adjusted in a fully automated manner. The focus is on digital business models.
Greater expectations for digital trailblazers
The expected share in turnover of digital products for the next five years is 12.5 percentage points higher for the trailblazers in digitisation. Among the “digitally blind”, the digital components only lead to an increase in the turnover share of 5.5 percentage points. “Highly digitised companies achieve the highest increase in purely digital products,” Helmenstein underlines. “The higher the digital maturity, the higher their growth in turnover through digitisation can be expected. The highest potential can thus not be found among companies at stage 0 but those that are far ahead in the digital transformation. The benefit of digitisation rises exponentially, new investments continue to pay off.”
Investments are a factor of success, not just a cost factor
“Investments lead to investments. They create an investment merry-go-round. Highly digitised companies invest more and benefit more than the average. The higher the achieved digital maturity the higher the digital dividend,” explains Zettel and underlines that you can tell “positive effects on several levels” that push digitisation with the latest generation of investment goods. “These results show that investments into the digital transformation are not purely a cost factor and that they don’t belong to the domain of the CFO. They clearly address a new dimension and are thus relevant for the CEO. Investments into digitisation do not only increase efficiency but mainly growth in turnover,” says the head of Accenture Austria.
The return on sales from investments into digitisation amounts to 45 percent among the innovation leaders. The backbenchers only achieve 25 percent by comparison.
Digitisation as a job engine
Digitisation creates jobs: Digitised businesses are more successful, offer more jobs and more interesting careers. Digital trailblazers record a higher growth in staff of up to 7.1 percent. “Using digital technologies and business models generates sustainable growth, which has a positive effect on productivity and also job growth,” says Michaela Zalesak, researcher at the
Digitisation project:
c Introduction of SAP S/4 HANA across the entire group c Harmonising, standardising and decentralising the entire exploration and production c Basis for a company-wide digital platform
Added value for the company:
c Production and financial data for real-time analyses c Modern architecture for cloud access c Increased customer experience through automation and graphical user interfaces c Automated plant administration and predictive maintenance
World Champion Austria
Digitisation Higher productivity growth in digitised companies
Employment growth is the result of technology-induced productivity growth.
▌ Highly digitised companies (Stage 2 and 3) were able to realise average productivity growth of 7.1 percent from 2016 to 2019. ▌ For non-digitised companies (Stage 0), growth was 2.5 percent. ▌ Digitisation therefore does not induce productivity growth based on employee layoffs. ▌ On the contrary: digitisation creates new jobs.
Strengthening international competitiveness
▌ High labour productivity of companies has a demonstrably positive effect on competitiveness and thus on the attractiveness of Austria as a business location.
Economica Institute. “Austria faces international competition: If we have a high number of digitised and thus successful businesses we can bring more jobs to Austria in a global competition,” Zettel adds.
Higher domestic added value
A high digital maturity has a positive effect on the vertical range of manufacture. A company’s own share goes up. “The vertical range of added value and of manufacture in a company increases with its digital maturity. The company has to outsource less or may outsource less,” head economist Helmenstein says. The production in domestic companies rises with a higher level of in-house production.
Increased digitisation (processes and business models) offers additional opportunities for the domestic added value, the study says. There are indications on the additional outsourcing of preceding steps in added value among businesses on a higher digital stage. Therefore, the study’s authors implicate that jobs necessary for in-house production do not have to be outsourced abroad or that a company may choose to not outsource abroad.
Average productivity growth
5,7 %5.7 %
2,5 % 2.5 % 7,1 % 7.1 %
Source: Economica Stufe 0 Stage 0 Stufe 1 Stage 1 Stufen 2 und 3 Stage 2 and 3
c Statistical analyses show that businesses with a higher digital maturity in process control have a significantly higher resilience during crises when it comes to turnover and productivity. c A higher level in digital process control decreased the negative impact of the Covid crisis on turnover and productivity. c Businesses that specialise in data models, data analysis and algorithms in their business models had higher capacity utilisation during the pandemic compared to less digitised companies. c Focusing on analyses over physical production seems to have a positive effect during times of crises.
Rising sales expectationsfor digital components
Up to 12.5 percentage points
is the expected revenue growth of digital products over the next five years along all digital maturity levels. ▌ Highly digitised companies see the highest increase in purely digital products ▌ Companies with a low level of digitisation see more growth in partially digital products
Share of sales and expected sales growth of digital components
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
+11.8 % Points +11.8 % Points
+5.5 % Points 25,0 % 25.0 %
8,0 % 8.0 % 13,5 % 13.5 % 13,2 % 13.2 % 28,6 % 28.6 %
16,8 % 16.8 % +12.5 % Points
63,2 % 63.2 %
50,7 % 50.7 %
0,0%
Source: Economica Stage 0 Stage 1 Stage 2 Stage 3
today in 5 years
Knowledge-intensive development in digitised companies is done increasingly by domestic staff.
Into the digital age with platform economy
A digital platform connects two or more groups of stakeholders on the market – those who offer, and those who demand. This is done in a particularly efficient way that generates added value on all sides. “Businesses that use or operate digital platforms for purchasing record significantly higher turnovers than other companies,” says Philipp Krabb, Manager Research at Accenture. 65 percent of the companies surveyed use or operate digital platforms for sales, 52 percent use them for purchasing. “These figures show that there is a lot of potential as the platform economy will strengthen the path into the digital age over the next years.” In order to close the digitisation gap, companies should bank on platforms. Using them is already having a positive effect on turnovers now, Krabb says.
But digitisation pays off for all businesses: “The study proves that companies that have invested more into digitisation have benefited more through growth in turnover and productivity,” Krabb says. ◆
Siemens: First digital factory in Germany with a digital twin
Digitisation project:
c Implementing a complete digital twin of the Electronics
Works Amberg c First digital factory in Germany
Added value for Siemens:
c Individual production despite physical distance c Targeted and customer-specific solutions c Reduction of travel costs thanks to virtual reality presentations c 300 percent increase in the use of the digital twin due to the Covid crisis
IV-Chefökonom Christian Helmenstein und Economica-Researcherin Michaela Zalesak präsentierten mit Michael Zettel und Philipp Krabb von Accenture die Studie. Christian Helmenstein, head economist at the Federation of Austrian Industries and Economica researcher Michaela Zalesak presented the study along Philipp Krabb of Accenture.
Mondi: Switching to SAP HANA in all factories across 22 countries
Digitisation project:
c Switching to SAP S/4 HANA across the entire Mondi Group c The system change included r 22 countries r 46 factories r About 1,500 users
Added value for Mondi:
c Future-proof system with a high number of new possibilities c Better, faster and more accurate service for customers c Strengthening the operative system
Volkswagen: Developing new applications in an industrial cloud
Digitisation project:
c Establishing an industrial cloud c Platform for Volkswagen and partner companies exchange and common development of apps c Production data of 120 production sites with 14 partners
Added value for Volkswagen:
c Developing new applications directly in the cloud c Partners are able to develop their solutions and offer them,
Volkswagen can develop them further c Projected increase of productivity by 30 percent and cost reduction of 1 billion euros per year
Sustainable success with wood
Austria has one of the best-performing wood industries in Europe. Its innovations and know-how are in international demand.
Sustainable growth and fewer carbon emissions – Austria’s wood industry offers both. Almost 1,300 companies are operating in wood construction, furniture and board manufacturing, the sawmill industry, ski production and further wood-processing fields.
The wood industry combines climate protection with business
Wood is a resource that is ideal to protect the climate: It grows back, takes carbon dioxide out of the atmosphere and stores carbon. The high-quality products of the wood industry create a “second forest”, bind carbon and prevent carbon dioxide emissions. Wood is also becoming more and more of an alternative to carbon-dioxide-intensive and energy-intensive products and materials.
The wood industry represents tradition and internationality The businesses within the wood industry have been traditionally strong exporters, and their successes on the international markets secure industrial jobs and spending power in Austria’s rural regions. Despite the Covid pandemic, the Austrian wood
Facts & figures
Companies: Number of employees: Production:
about 1,300 28,000 8.03 bln euros
Export:
5.64 bln euros Import: 4.66 bln euros A large number of companies in the wood industry have been family businesses for generations and are deeply rooted in their native region. The wood industry is internationally competitive and successful thanks to efficient production processes and continuous innovation. The companies have created diverse value chains, developed high-level specialisations and established varied sales opportunities.
Association of the Austrian wood industries
Schwarzenbergplatz 4, 1030 Vienna Tel. +43 1 712 26 01-0 www.holzindustrie.at
© Pfeifer Group/Uwe Mühlhäuser
The wood industry combines the natural resource wood with high technology.
industry managed to record a trade surplus of almost one billion euros. That proves the quality of the products and the expertise of the companies. The main export markets are the EU with 77 percent, followed by the rest of Europe with 12 percent.
The wood industry represents innovation and know-how
The Austrian wood industry is regarded highly for its innovative solutions globally. Our companies are constructing trailblazing buildings from wood with leading architects all around the world. Austria is not only exporting products but also engineering, valuable know-how and standards. Innovative capacity leads to international competitiveness.
Companies from the Austrian wood industry have revolutionised timber construction all around the world by co-developing and establishing Cross Laminated Timber (CLT). Today, this wooden building material is the basis for a high number of applications in the construction trade, especially in multi-storey timber construction. Wood is the material of the future for urban development not only because it is a resource that grows back but also because it is a prefabricated, light-weight construction component.
