Digital Summit - Launching Germany’s Technological Comeback

The digitalisation of the German economy is starting to gather speed. On average, German companies are currently reaching a digitalisation level of 54 points. This is the finding of the “Monitoring Report DIGITAL Economy 2017 – Compact” produced by the Centre for European Economic Research (ZEW) in Mannheim together with the market research institute Kantar TNS. Professor Irene Bertschek, head of the ZEW Research Department “Information and Communication Technologies” presented the report together with Dr. Sabine Graumann at Kantar TNS at this year’s Digital Summit held by the Federal Ministry for Economic Affairs and Energy in Ludwigshafen.

The buzzword “digital transformation” doesn’t just involve digitalising individual work and production processes, but rather connecting all these individual digital stages with one another. “Companies are first and foremost digitally connected to their suppliers and corporate clients. Only 34 per cent are actually digitally connected with their private customers. But these agents are actually a particularly important source of ideas for companies,” explained ZEW economist Irene Bertschek at the opening of the eleventh summit held by the German IT sector on 12 and 13 June 2017 in the Rhine-Neckar region. This was the first summit to be held under the new name “Digital Summit”. According to Bertschek, digital connectivity also needs to take place on an organisational level in the form of cooperation between different sectors of the economy. “Companies are more likely to cooperate with other companies within their own sector, so cross-sector cooperation is going to have to intensify considerably,” said Bertschek. According to the monitoring report, however, three quarters of companies do not see any need for this yet. “We have to do more to promote digitalisation within companies,” demanded Bertschek, who also called for a general change in thinking regarding digital transformation in the German economy. Currently a third of firms do not consider digitalisation necessary. For many firms, the processes necessary for digitalisation are too expensive, too time-consuming and pose too many potential legal uncertainties.

“The level of digitalisation in firms is constantly rising”

Germany is not a complete wasteland in terms of technological change, however. “The level of digitalisation in German firms is constantly on the rise and will have reached 58 points by 2022. Up to this point, large firms and micro-companies have displayed the same level of digitalisation, while small and medium-sized enterprises are slightly lagging behind,” said Sabine Graumann. The level of digitalisation also varies considerably from sector to sector. The most highly digitalised is the ICT sector, with comparatively mediocre performances from the likes of the chemical and pharmaceuticals industries as well as the auto industry – some of which are more than nine points below the average digitalisation level. “In these sectors in particular, we have to learn from proven examples and make greater use of innovative fields of application,” said Graumann.

“We need to press ahead with broadband expansion”

Based on the results of the Monitoring Report DIGITAL Economy 2017, the German economy is in dire need of government action. 81 per cent of the companies surveyed wanted to see a more digitalisation-friendly legal framework, while 86 per cent attached great importance to funding for broadband expansion. This latter plea from German companies gained the attention of Federal Minister for Economic Affairs and Energy Brigitte Zypries, who was officially presented with a copy of the report during the kick-off event and commented, “We need to press ahead with broadband expansion.” She also stated that the government would do more to keep up with the demand for a greater variety of professional qualifications in an attempt to tackle the skills shortage in Germany. The government believes it has a political obligation to small and medium-sized enterprises in particular. According to Zypries, SMEs are so overstretched that they hardly have any time to “think outside the box”. “We need to motivate our SMEs to engage more with digitalisation.”