Digitalization (Digital Transformation) is the process of using digital technologies to reduce costs, save time, and improve flexibility for different business processes, leading to faster decision-making, better growth, and increased revenue.
In this article, we will discuss 6 challenges of digitalization in Germany. If you’re interested, stay with us!
The 6 main challenges for digitalization in Germany are infrastructure issues, a lack of digital education, data privacy concerns, a process-oriented work culture, an aging population, and a shortage of IT specialists.
infrastructure issues
One of the reasons why Germany is not digitized is the issues related to its infrastructure, which include:
- slow 5G rollout
The rollout of the 5G network in Germany has been slow, which has affected the digitization process, as faster download speeds and better connections provided by 5G networks are very useful for accelerating the digitization process.
5G delivers significantly higher internet speeds, improved connection stability, reduced latency, and increased bandwidth capacity. These features make the 5G mobile network a great tool for enhancing the digitization process by saving time, making online communication easier, and enabling businesses to transfer larger amounts of data faster.
- weak coverage of fiber-to-the-home (FTTH) penetration
FTTH, which stands for Fiber to the Home, involves connecting a fiber-optic cable directly to the customer’s premises, whether it be their home, office, or other locations.
FTTH technology offers the ability to transfer data at very high speeds, making work processes easier and less time-consuming.
The digitalization process will be negatively affected by the weak coverage of Fiber-to-the-Home (FTTH) penetration in Germany, as it makes it harder to perform any type of digital work.
- poor internet connection in rural areas
While rural areas may not be centers for business or commercial activities, and of course, they are not home to central government offices, having a decent internet connection in these regions remains essential when considering a country's digitalization.
The reality is that rural areas in Germany generally suffer from poor internet connectivity, which negatively impacts the country's digitalization efforts.
When it comes to digitalization, internet speed is critical because it is a key tool for digital transformation.
Any issues related to connectivity will affect all subsequent steps. For this reason, infrastructure is by far one of the most important factors influencing digitalization in Germany.
Digital education and qualification of the labour force.
Digital transformation requires digital education and the qualification of the labor force because it doesn’t affect just a single sector. Rather, it changes how we work in almost all industries—from healthcare to IT—and extends even to manufacturing.
In Germany, the education system fails to keep up with the latest technologies, making it harder for graduates to stay familiar with the newest developments in the digital world.
For these reasons, the German market suffers from a shortage of qualified labor, which hinders the digitization process and slows its progress.
Process Orientation in Work
Process orientation in work is an approach that focuses on the process and the procedures needed to achieve the desired outcome, rather than just the final result.
In Germany, process-oriented work has a negative effect on digitalization because adopting new technologies requires many approvals, signatures, and extensive paperwork.
For these reasons, many companies in Germany may view digitalization as a time-consuming idea rather than a tool to reduce costs, save time, and improve overall work flexibility.
The Older Generation of the German Population
The older generation currently makes up a significant portion of the German population, and they are more likely to resist new digital technologies, often avoiding them entirely. Therefore, when a company adopts a new technology, it must ensure that it is accessible and acceptable to a large portion of its clients or users.
The same principle applies to government operations. If the government aims to digitize some of its services, it must ensure that this change is favorable and user-friendly for its citizens.
Data Privacy Concerns
Data privacy laws in Germany are very strict, which creates a stumbling block for the digitalization process. This is because digitalization leads to increased collection of users' data by companies that offer digital services. As a result, how we use or access data becomes complicated due to legal issues, slowing down the digitalization process.
IT Specialist Shortage
The shortage of IT specialists affects the digitalization process directly for the following reasons:
- It slows down the implementation of the latest technologies.
- It prevents digital transformation from reaching a large portion of various industries.
- It increases the cost of the digitalization process due to the lack of skilled information technology experts.
The lack of information technology specialists can be attributed to many reasons, such as:
- The low salaries in IT compared to those in North America (e.g., the USA).
- Students can earn almost the same salary as an IT specialist by pursuing an easier field, such as accounting.
FAQs
What are the factors affecting digitalization in Germany?
Digitalization in Germany is affected by the following factors:
- Infrastructure issues
- Weak digital education among the workforce.
- Process-oriented work culture
- The aging generation of the German population
- Data privacy concerns
- IT specialist shortage
Are there negative impacts of digitalization in Germany?
Yes, negative impacts of digitalization in Germany include:
- Potential job losses
- Challenges for small businesses
- Data privacy concerns
Is digitalization good or bad?
Digitalization has both a good side and a bad side. On the one hand, it makes life easier by saving time and enables non-verbal communication. On the other hand, it raises concerns related to data privacy.
What is the difference between digitalization and digitization?
Digitization involves converting materials like paper documents or analog media into a digital form that computers can process.
On the other hand, digitalization refers to the use of digital technologies to optimize business processes, reducing costs, saving time, and improving flexibility. This leads to smooth decision-making, higher growth, and increased profits.
What is the difference between digitalization and automation?
Automation refers to the use of digital technology to execute tasks with little or no human intervention. Digitalization, on the other hand, also involves using digital technology, but its purpose is to improve business workflows and create new growth opportunities in the digital world.
This is the end of our article, where we have taken you through six of the challenges facing the digitization process in Germany. We have also discussed some of the most frequently asked questions related to digital transformation, such as the difference between digitization and digitalization, among others.
Now, it’s your turn to tell us: What do you think is the biggest challenge preventing Germany from becoming fully digitized?