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Well Done – With Room for Improvement

Experts conduct research into digitalization levels of companies in the Black Forest district of Baar-Heuberg (SBH)

Are businesses in the Black Forest district of Baar-Heuberg (SBH) prepared for future challenges, and in which areas do they still need to take action? These were the topics examined in a study carried out by the Steinbeis Transfer Center for Applied Methods of Project Management, the SBH Innovation Network, and the Baden-Wuerttemberg Cooperative State University, Villingen-Schwenningen campus. They were supported by several interest groups: Südwestmetall, the metalworkers’ union IG Metall, and economic development agencies of the SBH and Villingen-Schwenningen. Their finding: Companies in the area are doing well when it comes to digital transformation. Despite this, SMEs with fewer than 50 employees are particularly at risk of being left behind in important areas for the future.

The project alliance looked at the topics of IT security, software, Industry 4.0 (connected manufacturing), big data, artificial intelligence, and emerging technologies. They also examined concerns regarding new technologies and employer attractiveness. To carry out the study, the experts analyzed 143 questionnaires using structural equation modeling. This method makes it possible to ensure that technologies can be broken down into individual disciplines of technology and that they can be correctly weighted.

The top-line result first: The study showed that implementation levels are high when it comes to IT security, enterprise software, and the implementation or planned implementation of classic Industry 4.0 and big data topics. This is across the board, independent of company size or sector of industry. With artificial intelligence and initiatives relating to future technology (such as autonomous driving), implementation levels are low, however.

Looking at the topic of software across different areas shows that overall, implementation levels are very high. When asked whether they have developed or are developing a software concept and a digital technology strategy, most companies replied positively. It can therefore safely be assumed that any existing gaps will soon be plugged. Where software has not been introduced yet, this is probably because not all companies need all types of solutions. If there are any topics that have still not been addressed, these can be considered less complex and if needed, firms can bring support in from outside.

One area that scored somewhat lower than software is the degree to which classic Industry 4.0 topics have been addressed. As with software, it can be assumed that not every company has to have every kind of technology. One possible issue could lie in implementation levels in combination with company size: As companies get bigger, implementation levels rise. This may become a problem for smaller firms, especially if medium-sized companies penetrate their “home territory.” Another problem is that 21% of all companies reported difficulties due to a lack of business concepts, and for 12% of firms this has even become a “show-stopper” – independent of sector of industry. This clearly points to a need to take action. More support services are needed for smaller companies to find out about different technologies and their implementation options for Industry 4.0.

Image left: Overview of implementation levels with respect to digitalization. Only pertinent sectors of industry were looked at for each topic – IT security and software were looked at for all sectors; emerging technology, Industry 4.0, big data, and artificial intelligence were only looked at for mechanical engineering, the automotive industry, and medical technology. Image right: Implementation levels of projects revolving around electric vehicles, autonomous driving, and blockchain technology. The first two topics are only shown for mechanical engineering and the automotive sector – such fields are not pertinent to areas such as medical technology. None of the companies questioned until now have implemented a blockchain project. At 50%, the number of firms planning to introduce the technology is extremely high, however.

The study also looked at big data, asking specifically about data mining and how data is used to control processes. The topics looked at in the area of artificial intelligence included condition monitoring (automatically checking machine parameters), forecasting models, the use of artificial intelligence to estimate future orders, intelligent pattern recognition software in production, operations research into production improvements, and forecasting models/artificial intelligence for anticipating machine downtimes. The results show that implementation levels are not as high as they are in classic Industry 4.0 areas, probably because these are more recent topics. One can assume, however, that implementation levels will improve in these areas in the midterm. This will require support, however, as many of these topics are highly complex. In addition, more university graduates will be needed in these areas to cater to the long-term demand for skilled workers.

The researchers also looked at how many companies have already worked on e-vehicle projects, autonomous driving, and blockchain technology. A large number of projects have already been carried out in the areas of electric vehicles and autonomous driving, and more are due to follow in the years to come. However, this depends strongly on the sector of industry, which otherwise had little impact on answers. High levels of implementation can be found in mechanical engineering and the automotive industry, whereas these topics are of little interest in medical technology.

The picture is completely different when it comes to blockchain technology. The companies surveyed for this study have not started any projects in this area, but at 50%, the number of firms planning projects is extremely high, and this does not depend on the sector of industry.

One aspect that can be considered positive is that companies have understood how important this issue is. Despite this, a great deal of explanation and research will be needed to identify which companies this technology will be relevant to in the first place. This is a complex area of technology, and it calls for the right skills. So it will be important to foster these skills in the region. This know-how needs to be made available for free so that smaller firms with limited financial means do not miss the boat.

The study also looked at concerns regarding digital technology (such as cyberattacks, the theft of company know-how, investment risks, or losses resulting from system failures). Companies are not too concerned by these issues. They prefer to tread cautiously in some areas, but they would not let this subsequently prevent them from introducing new technologies.

One other thing the study made clear was that being based in a rural area or running a business in an urban area has no influence on the extent to which digital solutions have been introduced. Finally, the study also successfully highlighted a link between high levels of digitalization at a company and high levels of employer appeal, independent of the sector of industry or size of business. Firms that have achieved high levels of digital implementation are also winning the war when it comes to attracting brains.

The team that worked on the project feels positive about the future. The study confirms that companies in the Black Forest district of Baar- Heuberg are doing well when it comes to digital transformation. They are making continual optimizations and updating systems, and any gaps that do exist are being filled in the medium term. There are, nonetheless, some specific areas where action is required. Smaller companies run the risk of falling behind with digitalization, and the topics that need tackling relate to complex fields of technology, such as artificial intelligence. To address this deficit, the SBH Innovation Network and the Steinbeis Transfer Center for Applied Methods of Project Management are planning to set up a business know-how cluster. Not only should companies be shown different ways to introduce emerging technology, they could also be offered practical support. A suitable foundation of knowledge also needs to be established by research and development initiatives in this area. Both project partners are planning to enter into cooperations with economic development bodies in order to drive more business startups in specific areas in the region. Companies and universities are also being advised to train more graduates with a background or know-how in corresponding areas.