Digitalization in the end game: opportunities or risks for companies?

Digitalization in the end game: opportunities or risks for companies?

In digital transformation, companies face challenges that affect not only the technology, but also their entire structure. This is shown by a study by EY, which shows how digital change is progressing in the Austrian economy. At the same time, it highlights that 62% of companies neither use artificial intelligence (AI) nor plan to integrate it. In recent years, however, digitalization has established itself as an opportunity that 75% of the companies surveyed see.

Hendrik Leder, who earned his doctorate in the Cotutelle process at the Universities of Antwerp and Leuphana, reflects on the challenges that advancing digitalization brings with it. His studies focus on “declining industries” that are facing existential questions in light of digitalization and the increasing spread of email. With the loss of relevance for document optimization software, which once secured postage discounts for major customers, he speaks of a so-called endgame.

The status quo of digitalization

A recent study shows that 26% of companies are already using AI applications and 12% are planning to introduce them. The leading industries are the financial and service sectors with usage of 35%, followed by industry with 31%. Surprisingly, the real estate and construction sector shows strong catch-up potential at just 13%. Despite these positive approaches, 88% of companies using AI see a lack of intensive discussion of regulatory requirements.

The pressure to adapt is enormous. Companies that find themselves at an endgame point are often faced with the challenge of responding with cost reductions or business model changes. While Leder wrote three technical articles in his cumulative doctorate, it remains unclear how exactly company management and employees evaluate the status of their industry.

The challenges for CIOs

In addition to digitalization, the shortage of skilled workers is one of the central challenges for companies. A study by Lünendonk shows that 75% of companies suffer from a shortage of skilled workers, with experts in software development and cloud architecture being particularly in demand. Many companies rely on external service providers to cover their IT needs. Another important aspect is cloud migration. Nearly half of companies plan to migrate the majority of their applications to the cloud, but security concerns are slowing the process.

In a high-pressure innovation project, Microsoft Austria opened its AI Innovation Factory in Vienna. The initiative, in which EY is also an active partner, aims to accelerate AI transformation in the economy by connecting start-ups and large companies. The studies show that the development of digital skills is important. 41% of companies rely on further training to increase these skills.

Advancing digitalization could represent an endgame for many industries. Interests like those in the software industry, which once thrived, may be able to survive in niche markets as the challenges for companies to adapt their business models intensify. Optimism about digitalization has increased since the beginning of the year, but uncertainties remain. The aspect of cybersecurity, which is becoming increasingly important due to increasing digital transformations, is another critical point that is not sufficiently prioritized by many CIOs.