How does digital transformation work? A guide for companies

Many companies have introduced various digital tools over the past few years to organize day-to-day work. These include customer relationship management (CRM) systems, project management tools, accounting software, knowledge bases, and document management systems (DMS). Despite these investments, gaps often remain. Teams frequently rely on workarounds such as Excel spreadsheets that are error-prone and require manual data transfers between systems. This makes comprehensive automation harder and puts pressure on efficiency.

True digital transformation requires more than individual tools. It depends on a clean data architecture, systematic processes, and an integrated system that supports every area of the business. Only then can workflows be optimized sustainably and competitive advantages secured.

In 2023, around 42 percent of small and medium-sized enterprises (SMEs) in Germany used enterprise resource planning (ERP) software to plan and control their business processes. That matches the EU average of roughly 45 percent. ERP adoption among SMEs has risen compared with 2021, but has stagnated since. Large companies use ERP systems far more often, at around 89 percent — also in line with the EU average (ifm Bonn).

This article explains how digital transformation works and which steps companies should take to achieve sustainable digitalization.

Fundamentals

Understanding digital transformation as a holistic process

Digital transformation goes well beyond rolling out individual software solutions. It describes a comprehensive shift in business processes, organizational structures, and company culture through the use of digital technology. In practice, this means analyzing existing workflows, redesigning them, and supporting them with the right digital systems.

Many companies have already adopted various digital tools, but this often creates isolated solutions. Excel spreadsheets, for example, are used as makeshift bridges for functions that existing tools do not cover. That leads to high manual effort, greater error rates, and makes automation harder.

Sustainable digital transformation requires a unified data architecture that provides all relevant information centrally and consistently. Equally important are clearly defined, systematic processes that digital systems can support and automate. Only then can efficiency gains and transparency be achieved in the long term.

Status quo

Digitalization in mid-sized companies: opportunities and challenges

Digitalization has gained importance among mid-sized businesses in recent years. According to a study by the Institut für Mittelstandsforschung (ifm Bonn), around 42 percent of SMEs in Germany used ERP software in 2023 to plan and control business processes. That is close to the EU average of 45 percent. While ERP usage among SMEs increased compared with 2021 (36 percent), it has stagnated since. Large companies use ERP systems far more frequently, at around 89 percent.

Despite the growing spread of digital tools, many SMEs have not yet reached the desired level of digital maturity. More than one third of SMEs achieve high to very high digital intensity, measured by the Digital Intensity Index, which covers at least seven of twelve digital measures. Use of artificial intelligence (AI) among SMEs has increased from 11 percent in 2023 to around 25 percent in 2025. In addition, more than half of SMEs use paid cloud services.

These figures show that digital technologies are gaining ground, while significant potential remains for deeper and more sustainable digitalization. The challenge is to embed digital tools in a holistic digitalization strategy rather than deploying them in isolation.

Analysis

Mapping as-is processes and data flows as a foundation

The first step in successful digital transformation is to make current workflows visible across all areas of the business. This includes a detailed analysis of as-is processes — the workflows that actually happen in practice. This analysis reveals weaknesses, redundant tasks, and media breaks that can be automated or optimized.

In parallel, existing data assets and their flows need to be captured. This data metabolism describes how information is exchanged between departments and systems. Data is often spread across different formats and systems, which complicates access and creates sources of error.

A transparent overview of processes and data flows forms the basis for further planning. It makes it possible to define targeted improvements and select the right technical solution. It also serves as a shared reference point for everyone involved and supports change management.

Strategy

Defining to-be processes and integrating change management

Based on the analysis of the as-is situation, to-be processes are developed together with senior staff in each department. These target workflows take efficiency, automation potential, and employee requirements into account. Involving leadership is essential to build acceptance and develop practical solutions.

Change management plays a central role at this stage. Digital transformation changes how people work and the roles they hold. A systematic approach to supporting change helps employees understand and adopt new processes and systems. This includes training, regular communication, and feedback loops.

Defining to-be processes and accompanying change management lay the groundwork for a successful digitalization strategy.

Implementation

Developing a digitalization strategy and selecting the right systems

Implementing digital transformation requires a clear digitalization strategy. This strategy defines which technologies and systems will be used to support the defined to-be processes. There is no one-size-fits-all approach, because every company has individual requirements and constraints.

Possible options include ERP systems such as Odoo, industry-specific solutions, or AI-assisted custom development. The choice depends on factors such as company size, process complexity, existing IT infrastructure, and budget. The system should be flexible enough to allow future adjustments.

The digitalization strategy also covers timelines, resource planning, and responsibilities. It connects technology decisions with organizational measures and forms the basis for project management.

Project management

Project delivery: from planning to go-live

The digitalization strategy is implemented in a defined project. Depending on company size and complexity, projects typically run between two and nine months. During this phase, selected systems are implemented, interfaces set up, and employees trained.

Structured project management helps keep timelines on track, minimize risks, and ensure quality. Regular alignment with everyone involved improves transparency and enables quick responses to challenges.

Involving business units during implementation is essential to deliver practical solutions and build acceptance.

Rollout

Go-live and hypercare: support during the early phase

After implementation comes go-live, when the company starts working with the new system. The first weeks are especially critical, as employees need to adapt to new workflows and tools. A hypercare phase with intensive support and regular exchange is therefore essential.

During this phase, issues are resolved quickly, adjustments are made, and open questions are clarified. Continuous dialogue between users and IT stakeholders supports successful integration of the system into everyday work.

A well-supported rollout increases acceptance and helps ensure that digital transformation delivers lasting results.

Frequently asked questions

Why are individual digital tools not enough to achieve digital transformation?

Individual digital tools can make specific tasks easier, but they often lead to isolated solutions and media breaks. Without a unified data architecture and systematic processes, automation remains limited and manual effort stays high. A holistic view is necessary to achieve sustainable efficiency gains.

What role does change management play in digital transformation?

Change management supports employees as they transition to new processes and systems. It builds acceptance, reduces resistance, and enables training and communication. Without targeted support, new technologies cannot be used effectively, which puts the success of the transformation at risk.

How long does implementing digital transformation typically take?

Project duration varies depending on company size and process complexity. In practice, timelines often range between two and nine months. Careful planning and structured project management are essential for efficient delivery.

Which systems are suitable for digitalizing business processes?

The choice depends on a company’s individual requirements. ERP systems such as Odoo offer integrated solutions for many business areas. Industry-specific software or AI-assisted custom development are alternatives when special requirements exist. Flexibility and scalability are important criteria.

How important is data architecture for digital transformation?

A clean, unified data architecture is the foundation for automated and transparent business processes. It enables consistent exchange of information between departments and systems and reduces sources of error. Without a well-designed data structure, digitalization remains inefficient.