Digital Transformation in Small- and Medium-Sized Enterprises. Guidelines for the Commercial Dental Laboratory Sector

Bachelor Thesis , 2021 , 92 Pages , Grade: 1,0

Business economics - Miscellaneous

This thesis derives guidelines to path a way for digital transformation using the example of commercial dental laboratories. Therefore, commercial dental laboratories' current approach to managing digital transformation was identified by conducting 12 expert interviews with commercial dental laboratories according to SMEs' underlying size categorisation. Based on the discrepancy between the theory-based procedural stages and the laboratories' holistic assessment, practical and comprehensible guidelines were derived.

It was found that size-specific differences prevail in the way digitalisation measures are managed. Micro-sized and small laboratories suffer from financial and personal constraints and are limited to collaborating with partners. In contrast, medium-sized laboratories are confronted with increased internal complexity and resulting ambiguity within the workforce. This thesis enables managers of different sized laboratories to adapt guidelines tailored to their industry and provides support in implementing new technology.

Digital transformation is the technology-induced change on different organisational levels that includes both the exploitation of digital technologies and the exploration of digital innovation to transform the business model. Even though digital transformation is empirically and conceptually elaborated in theory, existing literature neglects the specifies of Small- and Medium-sized Enterprises (SMEs). Often existing models lack concrete recommendations for action that guide through the digital transformation and offer decision-making assistance.

Table of Content

Preliminary Note

List of Abbreviations

List of Figures

List of Tables

Abstract

1. Introduction
1.1 Initial Situation and Problem Definition
1.2 Research Question and Research Aim
1.3 Structure of the Bachelor Thesis

2. Theoretical Framework
2.1 Definition of Digital Transformation
2.2 Definition of Small- and Medium-sized Enterprises
2.2.1 Definition based on Quantitative Criteria
2.2.2 Definition based on Qualitative Criteria
2.3 Introduction to the German Dental Laboratory Industry
2.4 Procedure Model for Digital Transformation
2.4.1 Inspiration Phase
2.4.2 Orientation Phase
2.4.3 Planning Phase
2.4.4 Implementation Phase
2.4.5 Evaluation and Adaptation Phase
2.5 Maturity Model for Digital Transformation
2.5.1 Strategy as one Dimension of the Hybrid Model
2.5.2 Customers as one Dimension of the Hybrid Model
2.5.3 Products as one Dimension of the Hybrid Model
2.5.4 Processes as one Dimension of the Hybrid Model
2.5.5 Organisation as one Dimension of the Hybrid Model
2.5.6 IT Infrastructure and Technology as one Dimension of the Hybrid Model
2.5.7 Corporate Environment as one Dimension of the Hybrid Model

3. Methodical Procedure
3.1 Basic Design
3.2 Sampling
3.3 Qualitative Data Collection
3.3.1 Type of Interview
3.3.2 Preparation of Guided Interview Questionnaire
3.3.3 Documentation of Interview
3.4 Data Evaluation
3.5 Validation

4. Research Results
4.1 The Work Process of Digital Dental Technology
4.2 Presentation of the Interview Results
4.2.1 Category of Strategy
4.2.2 Category of Customers
4.2.3 Category of Products
4.2.4 Category of Processes
4.2.5 Category of Organisation
4.2.6 Category of IT-Infrastructure and Technology
4.2.7 Category of Corporate environment
4.2.8 Category of Recommendations for Action

5. Research Discussion
5.1 Inspiration Phase
5.2 Orientation Phase
5.3 Planning Phase
5.4 Implementation Phase
5.5 Evaluation and Adaptation Phase

6. Research Conclusion and Recommendations
6.1 Limitations for Research
6.2 Suggestions for Future Research
6.3 Conclusion

List of Appendix

Appendix

List of References

Preliminary Note

In order to keep this work reader-friendly, both genders have not been used throughout. In places where only the masculine or feminine form is mentioned, it can be assumed that both forms are referred to.

List of Abbreviations

BMWi Bundesministerium für Wirtschaft und Energie

B2B Business-to-Business

CAD/CAM Computer-aided design/Computer-aided manufacturing

Cf. conferatur

DMS Data Management System

DSGVO Datenschutz Grundverordnung

ERP Enterprise-Ressource-Planning

GFDI Gesellschaft zur Förderung der Dental-Industrie

ICT Information and Communication Technology

IfM Institut für Mittelstandsforschung

IS Information System

IT Information Technology

l. line

MDR Medical Device Regulation

Mp-dental Metaux Precieux Dental

OECD Organisation for Economic Cooperation and Development

SCS Supply Chain Services des Fraunhofer IIS

SME Small- and Medium-sized Enterprises

SWOT Strength Weakness Opportunities Threats

List of Figures

Figure 1: Visualisation of the structure of the Bachelor Thesis

Figure 2: 2017: Presentation of dental laboratories according to categories of turnover (share of laboratories, the share of turnover)

Figure 3: Phases of the digital transformation process

Figure 4: A hybrid model for digital transformation

Figure 5: Dimensions and categories of the hybrid model

Figure 6: Relation between digital transformation strategy and other corporate strategies.

Figure 7: The work process of digital dental technology in the workflow between dental practice, dental laboratory and external partners

List of Tables

Table 1: SME definition by IfM Bonn

Table 2: Overview of the procedure for data collection and evaluation

Table 3: Illustration of interview partners based on size clustering in micro-sized, small- and medium-sized

Abstract

Author: Maxi Luisa Osterhaus

Title: Digital Transformation in Small- and Medium-sized Enterprises – Guidelines using the Example of the Commercial Dental Laboratory Sector (WS 2020/2021)

Study Course: International Business Studies (IBS)

Digital transformation is the technology-induced change on different organisational levels that includes both the exploitation of digital technologies and the exploration of digital innovation to transform the business model. Even though digital transformation is empirically and conceptually elaborated in theory, existing literature neglects the specifies of Small- and Medium-sized Enterprises (SMEs). Often existing models lack concrete recommendations for action that guide through the digital transformation and offer decision-making assistance. This thesis derives guidelines to path a way for digital transformation using the example of commercial dental laboratories. Therefore, commercial dental laboratories' current approach to managing digital transformation was identified by conducting 12 expert interviews with commercial dental laboratories according to SMEs' underlying size categorisation. Based on the discrepancy between the theory-based procedural stages and the laboratories' holistic assessment, practical and comprehensible guidelines were derived. It was found that size-specific differences prevail in the way digitalisation measures are managed. Micro-sized and small laboratories suffer from financial and personal constraints and are limited to collaborating with partners. In contrast, medium-sized laboratories are confronted with increased internal complexity and resulting ambiguity within the workforce. This thesis enables managers of different sized laboratories to adapt guidelines tailored to their industry and provides support in implementing new technology.

1. Introduction

The initial situation and the definition of the problem revealed in this Bachelor thesis are explained in the following. This thesis aims to develop guidelines for implementing digital transformation processes in small- and medium-sized enterprises (SMEs). German commercial dental laboratory sector serves as the object of investigation.

1.1 Initial Situation and Problem Definition

In the following, the initial situation is defined from which a concrete problem arises. Therefore, a holistic view of the topic is provided.

Scientists identified technological change as one of the key drivers of economic growth.¹ It causes enormous upheavals in many areas such as the economy and society, at work, consumption, cooperation, and communication. More than ever before, digitalisation is becoming a decisive competitive factor. The companies competitively into the future will be those who create new markets early and set their standards immediately.² Companies are involved in digital transformation in the "process that aims to improve an entity by triggering significant changes to their properties through combinations of information, computing, communication, and connectivity technologies"³. Therefore, it is the managed adaptation of digitalisation, emphasising the change aspect when introducing technology into a company environment. "Across Europe, SMEs are considered to be one of the most important sources of success for the economic development"⁴. More than 99% of all companies in Germany are medium-sized businesses. They generate more than half of the net product, provide almost 60% of all jobs, and 82% of all in-company training positions.⁵ Mostly owner-managed, on the one hand, they combine innovativeness with a national or international perspective on markets.⁶ On the other hand, SMEs are lagging behind large companies in terms of digital transformation. There is a danger regarding their future viability, as innovation in business and operating models is a key factor to stay competitive.⁷ This successful model's future depends on recognising global trends early on and establishing solution approaches in the company's strategic orientation.⁸ This is also the case for the dental laboratory industry. Here, digital processes create new possibilities for dental technicians in many areas including: accounting, laboratory management, acquisition, and communication with customers. New technologies simplify processes, accelerate previous work, and enable additional services.⁹

1.2 Research Question and Research Aim

The research question and the research objective are derived from the problem arising from the initial situation. Therefore, the research gap from which the research objective results is prepared in the following.

The introduction of digital technologies opens new ways of creating value in companies. At the same time, digital transformation confronts companies with organisational problems in implementing them. "The challenge isn't just to recognise innovative technology but also to apply it to your existing business model. ¹⁰. The essential topics of digital transformation can be found empirically and conceptually processed in the literature. However, existing literature neglects the specifics of SMEs.¹¹ Often they are more flexible and adaptable, yet they have limited financial resources and a knowledge gap, which hinders these companies from evaluating and implementing digitalisation opportunities.¹² However, as SMEs' current digital transformation engagement indicates, the instruments and concepts are too complicated and academic for SMEs to be adopted.¹³ They lack concrete recommendations for action that guide through the digital transformation and offer decision-making assistance.¹⁴ This is also evident in dental laboratories.¹⁵ According to a recent study, only just under 50% of employed dental technicians are familiar with digital technology.¹⁶ Commercial dental laboratories are still one of the less researched sectors, reflected in the small number of related papers examining digital maturity in dental laboratories. The following research question for this thesis results from the research gap presented:

What guidelines on how to proceed with digital transformation can be derived from the example of commercial dental laboratories in Germany?

Identified fields of action and guidelines, taking the laboratories size into account, provide laboratory managers with different measures to make informed decisions.¹⁷

1.3 Structure of the Bachelor Thesis

As already described, the research gap arises from the absence of practice-oriented and intuitive procedures for managing digital transformation. In the following, this thesis's structure is explained, which serves to answer the research question. The structure is visualised in figure 1 to provide comprehensibility.

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Figure 1: Visualisation of the structure of the Bachelor Thesis (own illustration).

The thesis is divided into several chapters. The theoretical framework serves to define digital transformation in distinction to digitalisation and digitisation. Subsequently, the context of research is presented based on the definition of SMEs. Furthermore, the background knowledge of Germany's commercial dental laboratory sector is given. Maturity models are utilised to assess how laboratories approach transformation.¹⁸ The field of digital transformation is too broad to use digital maturity models to prospectively derive evolution paths in digitisation.¹⁹ Therefore, a procedure model is used to derive guidelines for the digital transformation process based on the discrepancy between the status quo, determined with the maturity models' help, and the theoretically identified development path to the target state. For this purpose, interviews are conducted with experts in commercial dental laboratories. The interview questions are derived from the maturity model's dimensions and are based on a validated questionnaire. Even though maturity models are initially designed to quantify a state of digitalisation²⁰, this thesis investigates procedural stages focussing the organisation, which is why a qualitative content analysis, according to Mayring (2015:17), is carried out.²¹ To increase the interview results' validity, the degree of digitalisation in the individual laboratories is related to the implementation activities resulting from the answers. In the end, the identified guidelines are validated with the assistance of communicative validity. The tables and figures initially published in German are translated into English.

2. Theoretical Framework

The theoretical framework serves to define concepts that are relevant to this thesis. Furthermore, small- and medium-sized enterprises' role in the context of the problem is specified and an overview of the German dental laboratory sector is given.

2.1 Definition of Digital Transformation

In the following, digital transformation is introduced by giving a definition. To increase the understanding of the phenomenon, the terms digitalisation and digitisation are distinguished from digital transformation.

Technology, by itself, does not provide a complete solution to a problem. It is always only an element to be designed in the context of continuous organisational development.²² Digital transformation addresses changes at the industry and organisational level.²³ In this thesis, the author refers to the organisational level only. Digital transformation is often subsumed under digitalisation, but the terms cannot be put on the same level.²⁴ Digitalisation is contemplated from a technical perspective and is unable to occur without digitisation. Digitisation is the conversion from an analogue to a digital world. Digitalisation means using digital technologies and digitised data to effect work processes and shift task processing from humans to computer-based solutions.²⁵ The current understanding extends the technical perspective to include digital conversion and presentation of information and communication.²⁶ In contrast, digital transformation focuses on leveraging disruptive change in the organisational sphere. According to Berghaus and Back (2016b:2), digital transformation is a "[…] technology-induced change on many levels in the organisation that includes both the exploitation of digital technologies to improve existing processes and the exploration of digital innovation which can potentially transform the business model."²⁷ Due to digital innovation novelties, digital products are built and digital technologies and physical components are recombined. It requires to rethink organisational logic while involving transformational changes in strategy, processes, and products.²⁸ Digital transformation includes digitising business and value-added processes and organisational structures that provide new interaction and customer approaches. In a way, it is a process of continuous change to create a structural change in the company through organisations' digitisation processes.²⁹ Nevertheless, there is uncertainty in the terminology of the concept of digital transformation.³⁰ This is demonstrated by a large number of definitions to be found in the literature. Therefore, it can be concluded that it is a matter of combining different aspects in an overall context to create a multi-dimensional picture.³¹ In fact, it is an ongoing conscious process whose object is allocated in the guiding principle consisting of mainly three aspects. It means to leverage internal efficiency through the improved way of working due to digital means and rethink internal processes. External opportunities include value creation through improved response time, client service, and better work satisfaction. The third aspect encompasses disruptive³² changes that involve the identification of new business models or a disruptive change in the current business model. As a result, a companies' turnover through innovations increases.³³ The three aspects culminate in fostering the company's digital maturity to remain competitive in the long term.³⁴

2.2 Definition of Small- and Medium-sized Enterprises

Digital transformation encompasses the holistic process of change in digitalisation at all levels of a company. To concretise the SMEs' approach to digitalisation projects, in the following, the importance of German SMEs is elaborated based on quantitative and qualitative characteristics.

2.2.1 Definition based on Quantitative Criteria

Compared to large enterprises, SMEs have a much smaller market penetration.³⁵ Nevertheless, SMEs are considered to be one of the most critical drivers of economic development success.³⁶ In most cases, they are owner-managed, combine innovative strength with a national or international market approach, and have a high degree of social responsibility.³⁷ However, there is no commonly accepted definition for SMEs.³⁸ The classification is mostly based on quantitative and qualitative criteria. The quantitative delimitation criteria are derived from the staff headcount, the annual turnover, and the balance sheet total. The qualitative criteria comprise economic, social, and psychological factors, which are presented in chapter ‎0.³⁹ Institut für Mittelstandsforschung (IfM) Bonn⁴⁰ defines SMEs, as shown in table 2, which has become accepted for the German SME sector.⁴¹

Abbildung in dieser Leseprobe nicht enthalten

Table 1 : SME definition by IfM Bonn (IfM Bonn, 2020).

Important key performance indicators, which highlight SMEs' relevance for the German economy, are presented abbreviately in the following: From a total of 3,466,583 companies registered in Germany in 2018, 3,467,000 (99.5%) are SMEs. Together they generate about 2,397 Euro bn in annual turnover, representing a 34.4% share of all companies' net product. They provide jobs to 52.0% of the German nation's employed population, accounting for more than 17.77 million people.⁴² Due to the number of employees, most companies (88%) are classified as micro-enterprises. Small enterprises have a share of 9.6% and medium-sized account for 2.3%.⁴³

2.2.2 Definition based on Qualitative Criteria

In addition to the quantitative characteristics to define SMEs, there are also qualitative characteristics to identify SMEs' specificity. According to a literature review by Pfohl (1997:8), there are ten unique SME characteristics. These are leadership, organisational structure, production processes, sales, research and development, funding, human resources, logistics, procurement, and waste disposal.⁴⁴ These aspects were supplemented with suitable content from other sources to provide a comprehensive view.

SMEs leadership is characterised by a low level of management know-how and little participatory decision-making and strategic corporate planning. As mentioned initially, the owner is often the entrepreneur. Strategic planning is rarely designed for the long term, and there are few opportunities to compensate for mistakes.⁴⁵ The organisational structure is traditionally hierarchical, aligned to the managing director, who accumulates several roles. Furthermore, the degree of formality is low, and the communication channels are highly flexible. Often there is no professional project management and no clear demarcation between the departments in the company.⁴⁶ The production processes are characterised by small degrees of a division of labour. Moreover, the machinery is heavily dependent on a low number of innovations, but product development cycles are short.⁴⁷ Another aspect is that SME sales serve to meet demand and consist of small dimensions with a high degree of customisation in a limited regional and/or highly specialised segment. They often address niche markets and maintain a close relationship with the customer.⁴⁸ Research and development activities are usually not integrated into a department structure. In terms of funding, most SMEs do not have access to the capital market. Consequently, their financial background is limited, paired with an affinity for financial self-determination.⁴⁹ Furthermore, the specialisation within the workforce is also low as well as the number of employees. This leads to a bare level of human resources. Generally, there is a close relationship with employees.⁵⁰ The areas of logistics, procurement, and waste disposal, which Pfohl (1997:8) mentioned, are not specified here as they contribute less to SMEs' classification than the first-mentioned characteristics.⁵¹

2.3 Introduction to the German Dental Laboratory Industry

In the previous paragraph, the characteristics of SMEs were identified. In the following, these characteristics are applied to the German commercial dental laboratory industry. Furthermore, the market environment is presented based on current trends in the dental laboratory industry.

Germany is the leading industry in the dental laboratory sector in Europe. Both on the demand side and the supplier side, the highest turnover is achieved throughout Europe. This is indicated by a total market volume growth for dental care in Germany of 2.5.% in 2018. In contrast, overall economic growth in Germany had been just 1.2% in the same year.⁵² Regarding IfMs' categorisation of SMEs, it can be stated that all dental laboratories in Germany are small and micro-sized enterprises due to the turnover.⁵³ A distinction is made between practice and commercial laboratories, of which 19,500 were active in 2018. In contrast to commercial laboratories, practise laboratories are directly attached to dental practises but are not considered in this paper. A commercial dental laboratory is a registered craft business organised via the responsible chamber of crafts or trade guild.⁵⁴ Depending on its size, at least one laboratory manager must be employed. Out of all employed technicians in 2017, more than 85% of dental technicians work in commercial dental laboratories.⁵⁵ With the roots in the craft segment, dental technology deals with dental prosthetics production, including bridges, crowns, and dentures.⁵⁶ Conclusively dental laboratories have a prevailing business-to-business (B2B) focus, with dentists as customers. Nevertheless, the laboratories are also directly exchanged with patients, but only in an advisory capacity. In figure 2, the fragmentation of the German market for dental laboratories becomes evident. 7,211 commercial dental laboratories are joined by 11,290 practise laboratories. 70.1% of all commercial laboratories have a turnover of less than 500,000 Euro, wherefore their total industry turnovers' share had been 26.0% in 2006. Medium-sized laboratories account for 29.4% and are associated with a turnover category between 500,000 Euro and 5,000,000 Euro. Only 0.53% achieved a higher turnover, which corresponds to several 38 laboratories. However, these have a share of 21.4% of the total turnover.⁵⁷

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Figure 2 : 2017: Presentation of dental laboratories according to categories of turnover (share of laboratories, the share of turnover) (according to Statistisches Bundesamt, 2017 published in Sparkasse Finanzgruppe Branchenreport 2019 Dentallabore, 2019:11).

2.4 Procedure Model for Digital Transformation

In order to derive guidelines from leading and managing organisational change, an attainable vision of the desired future has to be defined.⁵⁸ From a business-centric perspective, the process model describes typical stages in the digital transformation process, representing a possibility to implement a digital transformation strategy. Procedural aspects govern the development, implementation, and evaluation of digitisation strategies described in this chapter.

According to Matt et al. (2015:3), four elements should be addressed by the procedure: the use of technologies, changes in value creation, structural changes, and financial aspects.⁵⁹ As initially described, digital transformation is less a question of technical requirements and more of the company's conditions based on which a value can be generated through the technology. Therefore, the successful transformation process is an intricate design process that is nearly discussed on three levels. The three levels interact with each other in the accomplishment of specific tasks. In a technological sphere, this means adopting new technologies and streamline processes by reducing manual steps. In an organisational sphere, however, this encompasses changing roles and value chains in ecosystems. The social sphere focuses on social structure in an enterprise and includes work and the decision making process.⁶⁰

In order to create a valuable transformation improvement instrument, it is necessary to offer systematic guidance that defines a progression path.⁶¹ According to the definition, process models are structured in phases and used to plan and control projects by prescribing the process.⁶² In digital transformation, they serve the realisation of digital transformation by creating a systematic approach through successive steps utilising which progress can be recorded and digitalisation potentials identified. Since digital transformation is an iterative process, a certain degree of genericity is required.⁶³ According to the literature, there are several different models to offer different possible courses of action. However, only limited research present procedures suited explicitly for SMEs, as described in chapter 2.2.2 Definition based on Qualitative Criteria.⁶⁴ A comparative study of different procedure models demonstrated that the various phases in the models examined were almost identical.⁶⁵ Under investigation of different models, one focusing on SMEs is chosen, which provides a holistic approach and a practical orientation. Roland Berger (2015:34), for example, establishes only three phases in its model, which in the author's view does not consider the process granularly.⁶⁶ In contrast, Affenseller and Feldmann's (2016:57f.) model is too complex to be feasible for SMEs and fails to meet the SMEs' requirements described in Fehler! Verweisquelle konnte nicht gefunden werden..⁶⁷

Hellge et al. (2017:199) developed a five-step transformation process described in figure 3, which focuses on SMEs.⁶⁸ In contrast to other models, it does not offer a sector-specific orientation and was used as a part of the study Readiness-Check Digitalisierung by Mittelstand 4.0 Kompetenzzentrum Kaiserslautern⁶⁹ (2018).⁷⁰ Each phase is presented with typical characteristics followed by the goals. It is recommended to proceed to the next phase only after one phase has been completed.⁷¹

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Figure 3 : Phases of the digital transformation process (according to Hellge et al., 2019:199).

2.4.1 Inspiration Phase

In the first phase, companies and management learn about existing technologies and solutions. Practical examples are used, and demonstration apparatus are visited. Moreover, solutions from beyond the industry level are also adapted.⁷² This phase's goal comprises the concept of a realisable vision of the desired future of their enterprise.⁷³ Opportunities and challenges underlying the new technology should be taken into consideration. The vision is the guiding principle through which the company communicates changes to employees, customers, and partner companies.⁷⁴

2.4.2 Orientation Phase

In this phase, the status quo of digitisation in the company is determined.⁷⁵ Therefore, a maturity model is utilised. A comparison with other companies within the industry is considered useful. The maturity model serves to identify fields of action for which guidelines are derived.⁷⁶ A detailed description follows this chapter in 2.5.1 Strategy as one Dimension of the Hybrid Model. The goal of this phase is to develop a digital transformation strategy, which is increasingly emphasised in the literature as elementary in digital transformation.⁷⁷ A digital transformation strategy serves to identify strengths and weaknesses. Explementary, a Strength Weakness Opportunities Threats (SWOT) analysis based on which long-term corporate objectives are defined can be mentioned.⁷⁸ Based on this review, an aggregated overview of current digitalisation trends, value drivers, scenario impacts, and benchmarks are created. Alternatively, other analysis constructs are conceivable, such as Balanced Scorecard, lifecycle- or GAP-analysis, and potential analysis.⁷⁹ Moreover, various alternative scenarios can be derived for which risks and benefits, as well as implementation costs of the deployment, are collected.⁸⁰

2.4.3 Planning Phase

During this phase, the detailed plan for implementing the strategy is defined, and pilot projects are utilised to provide a time frame.⁸¹ The gap between the digitalisation goal, and the current state is determined in detail and closed in this phase. In consequence, SMEs identify the requirements for new technologies. For this purpose, they form planning teams to specify implementation goals and define roles. Subsequently, liability is created, although adjustments cannot be avoided entirely.⁸² The goals are operationalised through performance indicators, which allow for comprehension in ongoing planning, management, and control.⁸³ When actions are identified, the feasibility of these steps is analysed and prioritised.⁸⁴ Enterprises choose projects based on which they can present rapid successes. This enables managers to motivate employees, customers, and partners throughout the transformation. Besides, SMEs initiate pilot projects during this phase.⁸⁵

2.4.4 Implementation Phase

In the third phase, the intended steps are implemented gradually. As initially described, considering all three levels is essential, which includes participation in particular.⁸⁶ Participating employees in change processes reduce resistance to new processes and therefore enhance goal achievement and commitment throughout the whole organisation.⁸⁷ The employees appraise their purview and the corresponding tasks, thus making an essential contribution to evaluating new technologies. Moreover, preparatory qualification initiatives are necessary to actively involve all employees.⁸⁸ Besides, internal knowledge is essential to help employees leverage new technologies. To emphasise roles and to ensure that technology reaches employees, a project structure is established.⁸⁹ Thus, the previously defined indicators serve to monitor the success of the project.⁹⁰

2.4.5 Evaluation and Adaptation Phase

The transformation process is not finalised until this phase has been completed.⁹¹ Digital transformation is an iterative process,⁹² wherefore the knowledge gained for subsequent projects is focused on in this phase. In a review of the planning phase, the current maturity level is compared with the initial level to assess its success. Concerning project planning, strengths, and weaknesses in the procedure, are identified and recorded for further planning. It is also determined whether this phase's results have implications for the digital transformation strategy to be adapted. Here, success indicators are used. Further projects are already discussed in this phase.⁹³

2.5 Maturity Model for Digital Transformation

The previous chapter defines courses of action and capabilities required to proceed with digital transformation in its prescriptive approach. This chapter reveals a digital maturity model's descriptive functionality by offering different dimensions to provide a company with its status.⁹⁴ For this purpose, how digital transformation affects the organisation is presented in a digital maturity model, and the dimensions are explained based on a specific model presented in this thesis.

A suitable method that identifies a momentary record is a maturity model.⁹⁵ Maturity means "the state or quality of full development"⁹⁶. Maturity models have been proven as instruments, especially in computer and information science.⁹⁷ Their descriptive functionality provides decision-making support in the company's situational context through the intensive examination of the various areas (dimensions),⁹⁸ identifying those in need to be designed.⁹⁹ Typically, maturity levels are identified as development stages to assess and evaluate the specific company's maturity.¹⁰⁰ Since this thesis focuses on the transformation process, maturity levels are not surveyed in successive stages. In contrast, the maturity model enables determining which dimensions are used to put the digital transformation into effect. Additionally, an explanation of the maturity level's quantitative determination can be found in appendix 3 and 4.

With the variety of existing maturity models, there are several constraints. Most of the existing digital maturity models address large companies, providing only an incomplete picture when adapted to SMEs.¹⁰¹ They often focus only on selected business divisions and, therefore, do not offer a holistic approach to cover the transformation process. In particular, they neglect the aspect of the corporate environment and organisational structure.¹⁰² According to the current literature research, a sector-specific approach cannot be chosen because no maturity model has been proven in the dental laboratory sector. Therefore, a non-industry-specific model is required. Another constraint of existing models is the missing practical approach, resulting in an authentical portrayal of SMEs' current state.¹⁰³

In consideration of the difficulties presented before, a model (hereinafter referred to as hybrid model) has been elaborated by the Chair of Innovation Management and Entrepreneurship at the University of Potsdam (2019:14), which takes SMEs' characteristics into account.¹⁰⁴ According to Alter, it is a hybrid of the St. Gallen Model's holistic approach and the systematic approach of the Work System Framework, as presented in figure 4.¹⁰⁵ Alter's approach includes the transformational processes at the organisational level and takes the corporate environment into account.¹⁰⁶ The St. Gallen Digital Maturity Model neglects on considering the environment of SMEs.¹⁰⁷ The combination of the two models reveals the dimensions that are essential for digital transformation. To adapt the model to SMEs' specifics, the seven dimensions selected meet the characteristics described in chapter ‎0.¹⁰⁸ An illustration can be found in appendix 1 and 2. The hybrid model's dimensions were validated by a systematic literature review and a computer-assisted qualitative data analysis.¹⁰⁹ Moreover, the model was tested in a preliminary study in 2017 with ten companies from the Berlin/Brandenburg region, supplemented and evaluated positively. Since 2019 it is commonly accessible for SMEs¹¹⁰ Therefore, it is a case-based empirical foundation.¹¹¹

As figure 5 indicates, the model is based on seven dimensions described in detail by 19 categories.¹¹² These categories indicate fields of action¹¹³, resulting from activities through which added value is created.¹¹⁴

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Figure 4 : A hybrid model for digital transformation (according to Alter, 2008:461; Berghaus, Back; Kaltenrieder, 2016:104).

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Figure 5 : Dimensions and categories of the hybrid model (according to Hölze; Gerhardt; Petzolt, 2019:19).

2.5.1 Strategy as one Dimension of the Hybrid Model

The alignment between technology and business reflects the growing importance of digital technology. Digitalisation is not only establishing new technologies but also new business models. It enables to provide customers with scalable products worldwide at high speed. Agility addresses this dynamic that encapsulates the ability to recognise the innovation potential and react to changing conditions to maintain competition.¹¹⁵ Therefore, integrating a common digital strategy, consolidating a digitisation and business strategy is elementary.¹¹⁶ In contrast, a digital transformation strategy contains the vision, planning, and implementation of the organisational change process explicitly.¹¹⁷ This approach is represented in the digital transformation procedure by the process model. A delineation of the strategies mentioned is shown in figure 6.

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Figure 6: Relation between digital transformation strategy and other corporate strategies (Matt; Hess; Benlian, 2015:2).

A digital strategy is crucial for micro-sized and small enterprises to use limited resources and prioritise actions effectively. Responsibilities should be clear to adhere to the implementation plan resulting from the strategy.¹¹⁸ The intensity of investment is increasing, and cooperation is being accelerated. These processes require a strategic approach to systematically promote business model innovations and finance digital transformation investments. Furthermore, the market and competitors must be considered anew. Therefore, the strategy dimension includes the categories: Digital solutions strategy, business model, investment, market, and competition.¹¹⁹

2.5.2 Customers as one Dimension of the Hybrid Model

Business activities should be increasingly focused on the customer. New technologies are changing the way to interact with customers. The digital customer experience enables to collect and systematically evaluate a wide range of data in real-time. Furthermore, a customer loyalty strategy is a vital component of the overall corporate strategy. It is based on personalised customer experience as well as an emotional commitment. The goal is to elaborate on new ways of interacting with the customer to serve his expectations.¹²⁰ Digital technologies can be utilised to create customer profiles based on customer data and to address customers individually. Therefore, the customer dimension contains the following categories: Customer data, customer experience, customer relationship.¹²¹

2.5.3 Products as one Dimension of the Hybrid Model

Not only the customer but also product data in real-time are obtainable. This data enables one to decide on activities to improve products and services, such as mobile applications, cloud services, self-service, digital support options, social media, webshops, or online configurators. Another approach is rapid prototyping, which is utilised to place new products on the market quickly. Through timely customer feedback, direct alignment with customers' needs takes place. For new products to emerge, it is recommended to promote ideas through the company. Subsequently, enablers are employees' continuous involvement in the innovation process and constant exchange with external market participants and institutions. Product dimension contains the categories: Digital service offering, product innovation.¹²²

2.5.4 Processes as one Dimension of the Hybrid Model

Digital transformation requires processes to be simplified, unified, and integrated smoothly to ensure agility. Almost every process can be digitised, so consistent quality management and continuous evaluation contribute to process optimisation. The same applies to the harmonisation of digital and analogues steps. Therefore, digital interfaces created within a partner network are essential. The processes dimension includes the categories: Digital (business-)processes, (digital) interfaces.¹²³

2.5.5 Organisation as one Dimension of the Hybrid Model

A manager's approachability is a prerequisite for digital transformation, indicating a willingness to initiate a change process. As a driver of digital transformation, he shares goals, successes, and challenges with employees to foster transparent communication. Moreover, corporate culture is shaped toward openness to new technologies and the courage to act on its responsibility.¹²⁴ The role of leadership is changing as new technology must be reconciled with traditional technology as an integral part of the organisation.¹²⁵ This concept of ambidexterity describes the initially mentioned idea of exploratory and exploitative activities. Deploying teams enables the organisation to achieve ambidexterity through innovation.¹²⁶ Moreover, it is crucial to provide employees with centralised, accessible knowledge, innovative working conditions, and mobile teamwork. Furthermore, the ongoing qualification of employees is crucial to success. Another challenging aspect is data and IT security, which is becoming more critical due to the increasing pool of sensitive data. The organisation dimension contains the categories: Leadership, data protection, culture, internal collaboration and networking, human resources.¹²⁷

2.5.6 IT Infrastructure and Technology as one Dimension of the Hybrid Model

As initially highlighted, information and communication technologies (ICT) are crucial to digitalisation. These technologies enhance the scalability and flexibility of Information Technology (IT) systems, which leads to the generation of new, extensive data that engender new added value for the customer when systematically combined. The IT infrastructure and technology dimensions are divided into the following categories: Technology, IT Security, IoT Capability.¹²⁸

2.5.7 Corporate Environment as one Dimension of the Hybrid Model

It is essential for SMEs to know the market environment's development to derive strategic goals and prioritise activities.¹²⁹ Various factors influence the environment of a company. To be specific, the legal framework is mentionable. Since SMEs have limited access to financial resources, external funding opportunities from networking or government funding improves SMEs financial condition. The analysis of regional demographic factors is also fundamental, as they are associated with risks such as labour shortages and changing demand.¹³⁰

[...]

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¹ Cf. Galenson 2010, p.352.

² Cf. BMWi 2016, p.8.

³ Vial 2019, p.118.

⁴ Trenkle 2020, p.23.

⁵ Cf. BMWi 2020.

⁶ Cf. Astor et al. 2016, p.1.

⁷ Cf. BMWi, 2020; Nambisan et al. 2017, p.234.

⁸ Cf. Astor et al. 2016, p.1.

⁹ Cf. Metaux Precieux Dental (Mp-dental) GmbH 2019.

¹⁰ Cf. Earley 2014, p.58.

¹¹ Cf. Trenkle 2020, p.20.

¹² Cf. Heikkilä et al. 2016, p.2.

¹³ Cf. Heikkilä et al. 2016, p.5.

¹⁴ Cf. Trenkle 2020, p.20.;Hess et al. 2016, p.4.

¹⁵ Cf. Sparkassen Finanzgruppe Branchendienst 2019, p.27.

¹⁶ Cf. Sparkassen Finanzgruppe Branchendienst 2019, p.27.

¹⁷ Cf. Berghaus & Back 2016b, p.2.

¹⁸ Cf. Becker et al. 2009, p.213.

¹⁹ Cf. Mullaly 2014, p181.

²⁰ Cf. Hölzle et al. 2019, p.123.

²¹ Cf. Mayring 2015, p.17.

²² Cf. Mayring 2015, p.17.

²³ Cf. Berghaus & Back 2016b, p.3.

²⁴ Cf. Chapco-Wade 2018.

²⁵ Cf. Hess 2016, p.2; Chapco-Wade 2018.

²⁶ Cf. Bendel 2020.

²⁷ Cf. Berghaus & Back 2016b, p.2.

²⁸ Cf. Yoo et al. 2010, p.2f.

²⁹ Cf. Bharadwaj et al. 2013, p.472; Cronenberg 2020, p.6f.

³⁰ Cf. Haffke et al. 2016, p.2.

³¹ Cf. Cronenberg 2020, p.7.

³² Disruptive: Changing the traditional way that an industry operates to a new and effective way. (Cf. Cambridge Dictionary 2020).

³³ Cf. Parviainen 2017, p.66; Cf. Ruoss 2015.

³⁴ Cf. Azhari et al. 2013, p.16; Cronenberg 2020, p.16.

³⁵ Cf. Hamel 1997, p.227 in Pfohl 1997, p.227.

³⁶ Cf. Organisation for Economic Co-operation and Development (OECD) 2017, p.5.

³⁷ Cf. Astor et al. 2016, p.1.

³⁸ Cf. Immerschitt, Wolfgang & Stumpf 2019, p.18.

³⁹ Cf. Reinemann 2019, p.2f.

⁴⁰ Foundation whose mission is to research the situation, development and problems of the SME sector.(Cf. IfM Bonn 2021).

⁴¹ Cf. ibid., p.3.

⁴² Cf. IfM, 2020.

⁴³ Cf. Trenkle 2020, p.25.

⁴⁴ Cf. Pfohl 1997, p.8.

⁴⁵ Cf. ibid., p.19.

⁴⁶ Cf. Immerschitt & Stumpf 2019, p.21.

⁴⁷ Cf. Immerschitt & Stumpf 2019, p.149; Pfohl 1997, p.20.

⁴⁸ Cf. Craig et al. 2008, p.21; Pfohl 1997, p.21.

⁴⁹ Cf. Immerschitt & Stumpf 2019, p.23.

⁵⁰ Cf. Gude et al. 2010, p.134; Immerschitt & Stumpf 2019, p.20.

⁵¹ Cf. Pfohl 1997, p.19-22.

⁵² Cf. Statistisches Bundesamt 2018.

⁵³ Cf. IfM 2020; European Commission 2018.

⁵⁴ Cf. AS Dental Technik 2017.

⁵⁵ Cf. Gesellschaft zur Förderung der Dentalindustrie (GFDI) 2019, p.14.

⁵⁶ Cf. McKay 2020.

⁵⁷ Cf. Sparkassen Finanzgruppe 2019, p.11.

⁵⁸ Cf. Jahani et al. 2010, p.177.

⁵⁹ Cf. Matt; Hess; Benlian 2015, p.2f.

⁶⁰ Cf. Bosse 2019, p.16; Parviainen et al. 2017, p.64.

⁶¹ Cf. Bosse 2019, p.16.

⁶² Cf. Hofmann 2020.

⁶³ Cf. Harwardt 2019, p.145.

⁶⁴ Cf. Terstegen et al. 2019, p.4.

⁶⁵ Cf. ibid., p.5.

⁶⁶ Cf. Roland Berger Strategy Consultants 2015, p.34.

⁶⁷ Cf. Affenseller et al. 2016, p.57f.

⁶⁸ Cf. Bosse et al.2019, p.15 ; Hellge et al. 2017, p.199.

⁶⁹ Competence centre that supports SMEs with expert knowledge, participates in training and further education, makes practical suggestions and offers concepts as well as help with implementation. (Cf. Mittelstand 4.0-Kompetenzzentrum Kaiserslautern 2018).

⁷⁰ Cf. Bosse et al., 2019, p.1+17.

⁷¹ Cf. Terstegen et al. 2019, p.3.

⁷² Cf. Bosse et al. 2019, p.18.

⁷³ Cf. Jahani et al. 2010, p.177.

⁷⁴ Cf. Bosse et al. 2019, p.18.

⁷⁵ Cf. ibid., p.19.

⁷⁶ Cf. Berghaus & Back 2016a, p.99.

⁷⁷ Cf. Saam et al. 2016, p.20.

⁷⁸ Cf. Bosse et al. 2019, p.19.

⁷⁹ Cf. Ludwig; Ludwig; Slavicek 2018, p.40.

⁸⁰ Cf. Parviainen 2017, p.71f.

⁸¹ Cf. Merz 2016, p.116f. in Roth 2016.

⁸² Cf. Bosse et al. 2019, p.19.

⁸³ Cf. Schönbohm & Egle 2017, p.227.

⁸⁴ Cf. Parviainen 2017, p.73.

⁸⁵ Cf. Bosse et al. 2019, p.19.

⁸⁶ Cf. ibid., p.20.

⁸⁷ Cf. Vial 2019 2017, p.27f.

⁸⁸ Cf. Bosse et al. 2019, p.20.

⁸⁹ Cf. Osmundsen 2018, p.6f.

⁹⁰ Cf. Bosse et al. 2019, p.20.

⁹¹ Cf. Bosse et al. 2019, p.21.

⁹² Cf. Capgemini Consulting 2011, p.47.

⁹³ Cf. Bosse et al. 2019, p.21.

⁹⁴ Cf. Berghaus & Back 2016b, p.3.

⁹⁵ Cf. Becker et al. 2009, p.213.

⁹⁶ Collins Cobuild 2020.

⁹⁷ Cf. Hölzle et al. 2019, p.11.

⁹⁸ Cf. Berghaus & Back 2016a, p.110.

⁹⁹ Cf. Becker et al. 2010, p.2.

¹⁰⁰ Cf. Hölzle et al. 2019, p.32.

¹⁰¹ Cf. Teichert 2019, p.1684.

¹⁰² Cf. Berghaus & Back 2016a, p.100.

¹⁰³ Cf. Hölzle et al. 2019, p.6.

¹⁰⁴ Cf. ibid., p.14.

¹⁰⁵ Cf. ibid., p.13.

¹⁰⁶ Cf. Alter 2008, p.461; Alter 2013, p.78.

¹⁰⁷ Cf. Berghaus et al. 2017, p.8.

¹⁰⁸ Cf. Hölzle et al. 2019, p.19f.

¹⁰⁹ Cf. ibid., p.13f.

¹¹⁰ Cf. Hölzle et al. 2019, p.25.

¹¹¹ Cf. Jording 2018, p.44.

¹¹² Cf. Hölzle et al. 2019, p.6.

¹¹³ Cf. Hölzle et al. 2019, p.18.

¹¹⁴ Cf. Berghaus & Back 2016a, p.103.

¹¹⁵ Cf. Goldmann 1996, p.3.

¹¹⁶ Cf. Bharadwaj et al. 2013, p.472.

¹¹⁷ Cf. Matt; Hess; Benlian 2015, p.2f.

¹¹⁸ Cf. Hölzle et al. 2020, p.22.

¹¹⁹ Cf. Hölzle et al. 2019, p.29f.

¹²⁰ Cf. Cronenberg 2020, p.13.

¹²¹ Cf. Hölzle et al. 2019, p.30f.

¹²² Cf. ibid.

¹²³ Cf. Hölzle et al. 2019, p.31.

¹²⁴ Cf. Haffke 2016, p.3.

¹²⁵ Cf. Haffke 2017, p.5460f.

¹²⁶ Cf. Haffke 2017, p.5462.

¹²⁷ Cf. Hölzle et al. 2019, p.31.

¹²⁸ Cf. ibid., p.32.

¹²⁹ Cf. Berghaus & Back 2016a, p.99.

¹³⁰ Cf. ibid.

• College: University of Applied Sciences Hanover
• Grade: 1,0
• Author: Maxi Osterhaus (Author)
• Publication Year: 2021
• Pages: 92
• Catalog Number: V1008393
• ISBN (eBook): 9783346402271
• ISBN (Book): 9783346402288
• Language: English
• Tags: Digital Transformation