How are companies, especially key industries in Germany, positioned in terms of their data strategy and the concrete implementation of data analytics and AI? What are the biggest challenges, and what solutions strategies are they adopting?
Everyone’s aspiring to be one, but few already are: a true data-driven enterprise. In other words, a company that uses its data across all organizational areas strategically to make business decisions, optimize processes, and develop new digital services and products.
But where do German companies stand on their path toward becoming data-driven enterprises?
According to a Computerwoche study (April 2023), 9 out of 10 companies consider themselves “data-oriented,” and 66% claim to pursue a general digitalization strategy. The survey indicates that more than four out of five companies engage in data-based value creation. However, while 82% of C-level executives confirm this, only 74% in specialized departments agree. Mainly, data is used for these purposes:
The report from Databricks and MIT Technology Review (June 2023) confirms the trend towards the data-driven enterprise: Each of the 600 companies surveyed will increase its spending on modernizing data infrastructure and implementing AI in the coming year. Nearly half (46%) will see an increase in data strategy investments of more than 25%. With a future-proof data strategy, they aim to meet the following challenges:
However, a closer look at the companies’ statements reveals a contradictory picture: Although the vast majority of companies in the DACH region describe themselves as data-oriented, only 36% of respondents confirm that their company has a data strategy. A mere 29% use a dedicated data management approach. A contradiction in itself.
The need for companies to refine their data strategy is indirectly confirmed by an ifo economic survey (August 2023) focused on basic technologies: Even established technologies like cloud computing are only used by 46% of respondents. Technologies such as AI lag far behind at 13%. A silver lining: In the industry comparison, the industrial sector leads the way in the use of cloud computing and AI as part of a data strategy.
The Databricks report paints a similar picture: Half of the respondents from industry stated they are deploying AI applications for data analysis quickly or even very quickly. This shows that German companies have the will and the power for innovation – it’s just the implementation that is complex.
The core of any data strategy is the consistent use of company data – an area with much potential. Companies are far from collecting all available data. Currently, their focus is mainly on product data (60%), personal data (54%), and research data (48%). Machine data, sensor data, or log data, however, are considered by only a third of companies.
According to the authors of the Computerwoche survey, large companies, especially those in the automotive, chemical, or machinery industries, evidently have a need for catching up in this regard. It fits with the fact that only 26% of companies with more than 1,000 employees are pursuing a data analytics strategy. The larger the company, the greater the volume of data and the corresponding challenge to fully utilize it.
According to an Ionos survey among SMEs (2022), only 56% analyze their corporate data. 47% of respondents collect data but do not analyze it. These results demonstrate that valuable data potential is not being utilized. The situation is similar with log data, production data, or supply chain data. Here, advanced analytics offer enormous potential.
What exactly are the stumbling blocks in terms of data strategy and the use of data analytics?
Establishing a company-wide data strategy aligned with the corporate vision is crucial for success. It’s not just about implementing the right technology, but about a genuine shift in the entire corporate culture. The recent findings from the Computerwoche study suggest that there’s still much work to be done. One in three (34%) respondents laments a lack of data-oriented mindset among employees. Over one in five (22%) complains about an unsuitable corporate culture regarding data strategy.
Another challenge is the quality and management of the data itself. 51% rate their data management as poor (equivalent to grades 5 or 6 in the German school system), and similar concerns arise regarding data transparency, consistency, and completeness. So, companies lack the basics, namely the necessary expertise and the right tools to consolidate and make their data usable. Similarly, 28% of the respondents consider the numerous complex software applications as obstacles, and an additional 20% complain about too many data silos
How can progress be made towards becoming a data-driven enterprise despite these challenges?
Primarily, a suitable technological foundation for data analytics must be established. Many companies are questioning the optimal approach to data processing, as indicated by the Databricks and MIT Technology survey. The respondents stated that they aim to consolidate their data and AI systems to overcome existing silos. For this purpose, nearly three-quarters of the respondents are opting for a Data Lakehouse architecture.
Moreover, there’s a consensus that the future inevitably involves cloud computing. 75% of respondents in the Computerwoche study view cloud tools as an effective means to simplify data management. Data strategy and cloud strategy must go hand in hand, especially regarding data governance and privacy. Additionally, companies are focusing on a streamlined application architecture.
Lastly, many companies also lack the necessary expertise. As a result, companies are trying to poach data specialists from their competitors or attract them with high salaries. However, external consultants and service providers are indispensable in developing and implementing data-based strategies: 68% of companies rely on external consultation for data projects.
In summary, many companies, particularly in the industrial sector, are willing to utilize their data. Yet, to establish a comprehensive data strategy, they still have some groundwork to do. Alongside a data-oriented corporate culture, effective use of data is key. The right tools and technologies pave the way forward.
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