A digital readiness assessment is a systematic analysis and comparative evaluation of a company’s digital maturity. The digital readiness score determined from this assessment provides a quick snapshot of the overall level of digital maturity.
As can be seen in Figure 1, the digital readiness assessment covers the five areas of strategy, customer, competition, organisation and technology. In each area, a systematic analysis and evaluation is carried out in accordance with specific criteria for the degree of digitalisation.
Figure 1: Areas of analysis for the e-commerce readiness score
- 1) Strategy: An examination of the extent to which a systematic digitalisation strategy and a consistent understanding of this strategy exist. Our experience from projects across a wide range of industries has shown that companies are often lacking a clear definition of “digitalisation”, let alone a common understanding of what it means in practice. It is precisely when this disagreement occurs among management circles that a great deal of hasty, poorly thought-out digitalisation measures are rolled out. At best, these end up serving as “digital insulation solutions”; however, they in no way promote the efficient digital development of the company as a whole. Meanwhile, the risk of imminent disruption by existing and new competitors is increasing massively all the time.
- 2) Customers: An evaluation of the digital maturity of customer (groups) – in other words, determining which (digital) customer requirements must be met. Especially in regard to sales and customer relationship management, successful digitalisation is driven by the market and thus by customers. Within the context of digitalisation, in particular, rapidly changing customer behaviour also requires corresponding flexibility on the company side. The assessment of the extent to which (digital) customer requirements are met is therefore an important indicator for assessing the degree of digital maturity.
- 3) Competition: An analysis of the digital maturity of main competitors – especially with regard to sales – is important due to several factors. Digitalisation has massively reduced the number of market entry barriers across all sectors. New, digitally-oriented market participants, in particular, are seeking to promote themselves to customers as “new gatekeepers” with additional digital services and thus to break open existing sales structures. At the same time, existing competitors are equipping themselves to meet the new demands of the increasingly digital customer journey. Accordingly, it is important to investigate the environment of new and established competitors within a systematic comparison.
- 4) Organisation: Assessment of the digital maturity of organisational structure and existing know-how. For a digitalisation strategy to be successful, the issue of digitalisation must be anchored firmly in a company’s organisational approach. On the one hand, this requires the introduction of appropriate roles and responsibilities, e.g. a Chief Digitalisation Officer (CDO). On the other, it’s of foremost importance to establish appropriate know-how on various digitalisation topics in a cross-functional, cross-country fashion. In this regard, the analysis of the company’s digital maturity level plays an important role.
- 5) Technology: Assessment of the degree of digital maturity with regard to technologies used in the various core functions. In this context, technologies are considered as enabler for digitalisation. Adopting a cross-functional approach (that is, looking at everything from accounting to sales to internal communication), we determine which digital technologies are already being used and where deficiencies or a need for action exists.
All five areas of analysis are ranked on a dedicated score ranging from 1 (worst) to 10 (best). Once all areas have been evaluated individually according to this scale, the individual scores are combined to obtain the overall digital readiness score.
Independent of the overall score, relevant digitalisation action fields are derived for each analysis area in accordance with the individual score achieved. These action fields are then analysed further in regard to their digital transformation potential, typically within the framework of a holistic strategy, and may also be evaluated as part of a business case pertaining to opportunities and risks. Based on this, the fields of action are then prioritised, converted into concrete measures and integrated into day-to-day business by means of systematic implementation.
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Markus Fost, MBA, is an expert in e-commerce, online business models and digital transformation, with broad experience in the fields of strategy, organisation, corporate finance and operational restructuring.Learn more