Digital Transformation in medium-sized and family businesses

55% of German family-owned companies feel prepared for the challenges of the digital transformation. But only a minority of them already uses technologies such as cloud computing (38%), Big Data (19%) or applications for artificial intelligence (5%). These are the findings of a study conducted by the WHU - Otto Beisheim School of Management, that examined which digital and IT technologies German family-owned companies are already using.

The study, sponsored by Andersch, divides the technologies into four different categories: Basic IT, advanced IT, modern IT and future technology. "It is frightening that even in the use of basic IT, only a small majority of people are actually using these applications," says Professor Nadine Kammerlander, Head of the Chair of Family Businesses at WHU, who accompanied the content of the study. For example, 66% of companies use an ERP system to control business processes and suppliers, 55% send invoices electronically, 52% use social networks and 50% have introduced a digital system for managing customer relationships.

Companies know about the potential, but have problems with investment, expertise and actual implementation

"50% of the companies have told us that they already know about the application possibilities and performance potential of modern information technology," says Nadine Kammerlander. "However, a major hurdle mentioned was that the lack of technological interfaces between existing applications and new technologies in particular would limit the possible applications in practice. Further difficulties included acquisition and implementation costs as well as lack of know-how.

Strategic partnerships and collaborations can help to develop a culture of innovation

Nadine Kammerlander says: "In summary, it can be said that all that appears almost omnipresent in public discourse today, German family-owned companies only operate in a - sometimes single-digit percentage - minority. Pioneering technologies such as Blockchain or AI are even isolated cases. Many family-owned companies act according to their DNA: only when they are completely convinced of the use of a technology and believe that it pays off do they invest. This is a perfectly legitimate strategy. However, at the same time it also means that they cannot gain experience with the new trends and technologies outside of lectures and press coverage. The minority that is already using and trying out new technologies today will in future be more likely to be able to bring about necessary changes more quickly, in a more targeted and efficient manner. In the worst case, the majority of family businesses could, in the worst case, give up the possible competitive advantages of the future today".

Mike Zöller, partner at Andersch, is very sympathetic to the problems of family businesses. "Companies with which we work often lack the necessary expertise and openness to innovation to deal with new technologies - sometimes in a playful and exploratory way," says Zöller. "Not every new technology will directly increase sales or profits. It is much more a question of investing today in order to remain competitive. Those who cannot or do not want to build up their expertise completely on their own should look for strategic partners and collaborations. These make it possible, even with limited resources, to try out new digital applications, analyze them and test them for their usability. At the same time, such an opening can be the first step towards a new culture of innovation".

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About

The study 'Digital Transformation in Medium-Sized and Family Enterprises' was conducted at the Chair of Family Enterprises at WHU - Otto Beisheim School of Management lead by Prof. Dr. Nadine Kammerlander and with the support of Andersch. The study examines the question of how the current status of digital transformation in this business segment is to be assessed today. To this end, 1,727 top decision-makers from 1,444 companies were surveyed, 689 of which are majority-owned by families and 755 of which are non-family owned. 94% of the respondents are executives, 53% of whom are members of the management/board of directors and 34% are the respective chairmen of this body.