Last year, there was a significant acceleration of digitization in Polish manufacturing companies. However, the current challenging economic environment is hampering firms’ plans and ambitions in this area. The “Digi Index 2023” report prepared by Siemens Poland indicates that the digital maturity index of medium-sized enterprises has decreased this year to 1.8, compared to 2.4 last year. Insufficient budgets were identified as the main obstacle to digital transformation in this year’s edition of the report. Large entities, having greater resources for this purpose, digitize slightly faster than medium-sized companies.
The authors of the study indicate that this year’s decrease in the Digi Index for medium-sized companies should not be interpreted as a failure or a signal of a slowdown in the transformation in the Polish manufacturing industry. Lower results simply mean that some projects that were being implemented in previous years have either naturally come to an end this year or have been postponed to a more favorable period in the economy. Digital transformation is a process spread over several years.
“The level of digitization of Polish manufacturing enterprises is improving. Companies’ awareness is growing, and digital transformation is becoming an increasingly discussed topic, although there is still a lot to be done. The potential for these companies’ development and the development of their operational flexibility is always at our fingertips, and we just need to reach for it”, says Łukasz Otta, Director for Digital Transformation and Business Development at Siemens Poland.
For the past four years, Siemens Poland has been examining the level of digitization of medium-sized manufacturing companies operating in Poland from selected industries: food & beverage, automotive, machinery production, and chemistry & pharmacy. The Digi Index calculated based on these studies (on a scale from 1 to 4) is a barometer of the technological awareness of domestic companies and their managers, reflecting their level of digital maturity. The current edition of the study, conducted among a group of 150 manufacturing companies employing 50-249 employees, shows that the challenging economic environment has verified their digital transformation plans. The Digi Index for medium-sized enterprises is 1.8 and is significantly lower than in 2022. Digitization continues, but a large group of manufacturers still struggles with challenges in the area of digital transformation, and current challenges do not make it easier.
“The drop in the average Digi Index value can result from several reasons. Primarily, challenging times in the local and global economy, energy cost jumps, inflation, unstable situation beyond our border – all this affects a certain restraint when it comes to any investments in organizations”, says Łukasz Otta.
The positive fact in this year’s edition of the Digi Index is that already 4% of the surveyed companies declared a level of production digitization exceeding 81% – which is 3.3 percentage points more than last year. However, most companies (on average every third one) evaluated their level of production digitization as being in the range of 41-60 %. There is still a significant group of companies (22% of respondents) that declared that their level of production digitization does not exceed 20%.
“According to the Digi Index, the automotive industry is the first in terms of the level of digitization this year. This is due to the fact that this industry builds its value around car manufacturing technologies but also technologies they are equipped with. Secondly, if we talk about automotive conglomerates operating in the global market, their level of digitization must be as good as the extensive field of action of these enterprises. Operating in so many markets would simply be impossible without the use of digitization.”, says the director at Siemens Poland. He continues, “Digital transformation is the perfect remedy for the need to monitor production costs, increase its flexibility, obtain market information about what is happening with it. In Poland, there is great potential in this area because we have many entities belonging to the food market.”
This year’s Digi Index survey also covered large manufacturing companies employing more than 250 employees for the first time. In their case, the value of the index was much higher and amounted to 2.7, meaning that most of them use digital tools in daily operational activities. This good result of the large companies is largely due to much higher budgets compared to medium-sized entities.
“Large companies digitize faster, mainly because they are often global organizations, and there is a transfer of knowledge between different locations”, explains Siemens Poland expert.
Medium and large companies perceive barriers in the path of digital transformation differently. The largest entities often indicated a lack of possibilities for integrating information systems from various vendors (almost 37%), and financial issues and inability to use the collected data were tied second place (33% each). Almost every fourth surveyed company indicated that the problem is also a lack of systematic planning at an early stage of production, resulting in the need for modifications at later stages.
“The main obstacles mentioned by medium-sized enterprises in our study are predominantly financing, data management difficulties, and strategic planning. However, in my perspective, it’s the lack of strategic planning that is the biggest obstacle, since proper planning of digital transformation in a manufacturing company should give us a clear answer to the question of how my business will benefit from this,” says Łukasz Otta.
The Digi Index examines six areas of digitization in companies – strategic planning, organization and administration, system integration, production and operational activity, data management, and the application of digital processes for which a separate indicator is calculated. In this year’s edition of the study, data management turned out to be the most digitized sector (with a result of 3.0), despite the difficulties pointed out by companies in this area.
“Companies are strongly moving towards collecting production data, and this is a strong point of Polish companies. On the other hand, they still have an appetite to use this data better and more online. The next step, therefore, is better utilization of these data for business purposes, to be able to predict costs, plan resources, or organize production”, explains the expert.
The area that companies are having the biggest problem with is organization and administration, which is on the opposite pole of the Digi Index and received just a 1.0 score. The challenge here especially was to establish the roles of leaders and teams working for the development of digitization, as well as launching programs to support employees in developing digital skills.
“Successful digital transformation will be as good as the implementation of this technology and the skillful use of this technology throughout the entire production plant. Just buying even the best IT technology is not equivalent to the digital transformation of a given company. Only teaching and getting people used to this technology allows for development”- says Łukasz Otta. – It is also important that a well-conducted digital transformation is simply a continuous process.”
Link to the Digi Index 2023 report: https://www.siemens.com/pl/pl/o-firmie/raporty-siemens/digi-index-2023.html
