The Digital Transformation of Business: New Business Models
The world is changing. Urgent developments such as climate change or technological progress are just as important as demographic and political changes. This transition affects not only the way we live, but also the way we do business.
More efficient, more sustainable and, above all, more digital: The economy also has to deal with changing conditions and develop further. The digital transformation therefore means breaking new ground – and seeing the shift to digital business as an opportunity.
MAMAA lead the way
The economic change is essentially driven by four factors:
1. the demand for decarbonization
2. the demographic change
3. the slowdown of globalization
4. the digitalisation
For years, US tech companies in particular have been giving an impression of where the path of the digital economy can lead. According to Forbes, the "Big Five" of the tech industry came to a combined value of almost 9 trillion US Dollars in September 2023.
The small group of corporations behind the abbreviation MAMAA is thus one of the most valuable companies in the world. Led by Apple, with a market capitalization of over 2.7 trillion US Dollars, Microsoft, Alphabet, Meta and Amazon have established themselves at the forefront of the digital economy.
The pinnacle of the digital economy
New business models through digital transformation
Digital business models and their importance
In the digital economy, one thing matters above all: data. Personal data, in particular, is invaluable because it can be used in many contexts for personalized advertising and offers. But new business models can also be developed with such data, which is generated during the use of technical products.
Platform Models
We have already presented one of the most important platform models: Amazon. Unlike traditional pipeline business models, platforms are based on a two-sided market.
Uber, Airbnb or YouTube form a digital ecosystem in which platform operators, providers and users work together to create value.
The comparison between YouTube and HBO shows how great the potential is: The streaming provider HBO has 140 million unique users and revenues of around 4.7 billion US Dollars. YouTube generates over 8 billion US Dollars in revenue – and thanks to more than a billion unique users, it can be sure that market value and revenue will continue to rise.
Digital Supply Chain
For Industry 4.0, IT technology not only means numerous opportunities to optimize processes along the value chain. It is also the first step on the way to a digital supply chain – and thus to new business models.
As a result, the market for digital twins is growing continuously. By 2031, annual sales of virtual images of physical objects could rise to 183 billion US Dollars.
With the help of sensors and advanced analytics, manufacturers of machines or devices can increase their profit margins by offering digital services related to the product: from monitoring to remote maintenance to predictive maintenance, many things are conceivable here.
Cloud-based services
"X-as-a-Service" stands for the concept of simply being able to provide anything as a service. This is made possible by the cloud.
Today, cloud-based products and services range from software-as-a-service and infrastructure-as-a-service to platform-as-a-service and much more.
Digital technologies, far-reaching networking in the IoT and the growing importance of IT in almost all industries make the cloud model lucrative.
According to the market research company Gartner, services in the public cloud generated approximately 491 billion US Dollars worldwide in 2022. Sales of around 725 billion US Dollars are forecast for 2024 – a growth of almost 48 percent.
Use instead of buying, sharing instead of owning
The digital transformation of the economy is increasingly causing a paradigm shift regarding our consumption. After all, digital technologies not only connect machines on the Internet of Things – but above all people.
Platform models and digital networks are a key driver for more sustainable consumer behavior, in which using a product is more important than owning it. The sharing economy and pay-per-use approaches benefit from the fact that platforms make almost everything available without being able to buy it. The offer ranges from clothing to cars.
Almost 70 percent of people worldwide are willing to participate in sharing communities. Forbes estimates that this market will grow to 335 billion US Dollars by 2025 – an increase of more than 2,000 percent since 2014.
Digital automotive industry: Mobility-as-a-Service
A new era of digital business models
The combination of data and technology is the basis for the development of new business models that will change our economy in the long term. Digitalisation makes it possible to personalise products and services and put customers at the centre. Production, marketing and distribution processes can be organised more efficiently.
This is changing the usual structures of value creation and competition, and global networking is being expedited. Not only industrial groups and multinational companies, but also SMEs have to deal with the digital transformation. For them, this also offers numerous opportunities to position themselves advantageously with new digital business models.
