Scientists from the Faculty of Economics and Business at Kaunas University of Technology (KTU) have developed a free platform that allows evaluating the digital technologies applied within a company and, consequently, determining its level of digitalization. The digitalization processes within a company can be compared to those of other manufacturing companies, and recommendations can be obtained for the development of digitalization capabilities and the implementation of digital technologies.
As digital technologies continuously evolve, and competitors consistently adopt digital innovations, it becomes challenging to accurately assess whether a company’s digitalization budget and ongoing processes are sufficient. “If you lead or work in an industrial company, it’s highly likely that you’ve encountered a situation where you doubt the speed of your company’s digitalization,” said Dr. Mantas Vilkas, a professor at the Faculty of Economics and Business, as quoted in the KTU statement.
Valid questions arise about whether a company is falling behind in implementing digital technologies compared to competitors, which areas are sufficiently developed by digital technologies, and which are not. It’s also difficult to evaluate whether the full potential of the implemented digital technologies is being realized. This is precisely the purpose of this platform.
Answers to such questions are crucial for many industrial companies, and some even purchase digitalization audit services. During such audits, experts evaluate the processes and digital technologies used within a company and provide recommendations.
However, expert-led digitalization audits have their advantages and disadvantages. “High expert qualifications result in high audit costs, and these audits are time-consuming. Experts assess a company’s digitalization progress based on their experience and the ideal vision of a fully digitalized company they have formed. Recommendations also reflect the specific knowledge and preferences of individual experts,” says Dr. Andrius Grybauskas, a scientist from the Faculty of Economics and Business, as quoted in the statement, discussing the shortcomings of audits.
Taking these shortcomings into account, a team of KTU scientists, consisting of business analysts, industrial engineers, and data analysts, has created a free tool that allows companies to assess their level of digitalization by comparing their experiences with other industrial companies’ digitalization experiences.
By filling out an anonymous questionnaire about the digital technologies and management practices applied within a company, a personalized digitalization level report is generated, along with recommendations for addressing digitalization deficiencies. The company’s situational report is generated from a continuously expanding database of digitalization data from 506 companies at present.
The assessment of the level of digitalization is based on scientifically proven research that emphasizes the notion that successful digital transformation depends on management’s digitalization capabilities, which are used to reveal the potential of digital technologies.
“Management’s digitalization capabilities encompass competencies beyond technological expertise, including transformation management abilities that are crucial for evaluating digitalization needs, developing competencies, and managing changes. The culture supporting change within companies is also essential,” says Professor Dr. Mantas Vilkas.
According to the scientist, digitalization resources are equally important for these processes: “The availability of financial resources, knowledge of information and digital technologies, and the use of external assistance are just as important as management competencies.”
On the other hand, the application areas and scopes of digital technologies used within companies are also significant. Advanced companies apply digital technologies to digitize sales processes, production systems, and supply chain management processes. “One company may only apply a few digital technologies to its production system, while another company may employ the entire arsenal of digital technologies for managing production processes,” says the professor.
“Digitizing the sales process, smart products, services that support customer processes, software for production, industrial robots, machine learning solutions in manufacturing, augmented or virtual reality solutions, and digital supply chain integration are just a few of the possible digitalization capabilities found in both digital services and production and supply processes,” Professor Dr. M. Vilkas enumerates the ways digital technologies are applied.
By completing a questionnaire, companies can make use of statistically programmed machine learning algorithms created by scientists to evaluate both management and technology application processes, compare the company’s achievements with those of average and top companies in digitalization, and generate a digitalization level report.
Researchers faced the challenge of determining the timing of implementing specific digital technologies within a company. It is evident that companies cannot implement all digital technologies simultaneously. Therefore, how to prioritize and what is the optimal sequence for the deployment of digital technologies becomes a crucial question. This is where the determination of skill levels provides answers.
Through their research, it was established that management and technological skills are directly interrelated. The more digital technologies are implemented, the more management’s digitalization capabilities develop. However, not all companies start from the same position in digital transformation. Some companies begin digital transformation with significantly higher transformation management skills developed while implementing other changes.
The situation is somewhat different concerning companies’ technological skills and the deployment of digital technologies that support them. “It’s hard to imagine that a company with little advancement in digitalization would start predicting demand using artificial intelligence algorithms. However, if a company’s sales process is supported by a CRM system, products are sold in an online store, and the company has accumulated enough historical sales data, such predictive systems become a real possibility,” says Dr. Andrius Grybauskas, a scientist at KTU.
The tool developed by the scientists not only recommends which digital technologies should be deployed but also suggests the sequence in which it should be done. To achieve this, several decisions are made, and a digitalization scenario recommended for the company is generated.
First, companies are provided with information about which years companies contributing to the database have developed specific technological skills. “In this way, a company can determine whether it is lagging behind or leading in the development of digital skills,” says Dr. A. Grybauskas.
Second, using machine learning algorithms, scientists have determined which sequences of digital technology deployment allow for the fastest acquisition of digitalization skills. These sequences become best practices and form the basis for recommending the order of development of weaker skills.
Third, companies can use an interactive tool that, after selecting a technology skill they wish to develop, selects companies in which this skill is more developed and shows other skills these companies possess.
The digitalization level assessment platform is available online. After completing a questionnaire (about 20 minutes), a personalized comparative digitalization level report and digitalization scenarios are generated. Companies can also make use of interactive tools for modeling digitalization scenarios. Given the constantly changing market landscape, scientists advise comparing your digitalization state with a growing database of company data at least once a year.
The research was conducted and is funded in collaboration with the European Regional Development Fund (Project No. 01.2.2-LMT-K-718-05-0090) under a grant agreement with the Research Council of Lithuania (LMTLT). It is supported as part of the European Union’s response to the COVID-19 pandemic.