January 2025 Update

1) Many Companies Lack Clear Goals and Metrics for AI Integration
A recent Boston Consulting Group (BCG) study highlights a significant gap in companies’ ability to leverage AI effectively. Despite widespread interest in using AI models to boost revenue, many organizations lack clear objectives and tools to measure AI’s impact. For example, Fielmann, a German optics chain, uses AI to predict wait times and enhance customer satisfaction, but the financial benefits remain unquantified.
The BCG survey, conducted with 1,800 managers globally, revealed that 60% of companies lack strategic monitoring or financial metrics (KPIs) for AI. Yet, these firms still plan to increase AI investments. This trend is mirrored in Germany, where both large and small enterprises are experimenting with AI but struggle to integrate these projects into measurable frameworks.
Leaders like Siemens and Bosch demonstrate AI’s potential with tools like Siemens’ “Industrial Copilot,” which accelerates machine programming. However, even these frontrunners hesitate to share financial results, highlighting the industry’s broader challenge of moving beyond experimental phases and establishing robust AI strategies.
Source: https://www.handelsblatt.com/technik/ki/rendite-durch-ki-firmen-fehlen-konkrete-ziele-und-messinstrumente/100100387.html

2) Germany’s Economic Dependence on the U.S. for Digital Technologies Sparks Concern
The victory of Donald Trump in the U.S. presidential election has heightened concerns within the German economy regarding its dependence on American digital technologies and services. A recent Bitkom survey revealed that 90% of German companies rely on imports of digital products, with 41% reporting “strong dependence” and 40% indicating “moderate dependence.”
Call for Strategic Adjustments
Over half (56%) of the surveyed firms anticipate revising their business strategies in response to the political shift. Additionally, 50% expect to modify their supply chains. A strong consensus (95%) emerged among German companies advocating for reduced reliance on U.S. imports.
Digital Sovereignty in Focus
Bitkom President Ralf Wintergerst emphasized the need for “digital sovereignty,” highlighting the importance of self-determined technology use without full autarky. He warned that Germany’s heavy dependence on the U.S. could worsen without decisive action, as the technological gap continues to grow due to America’s substantial investments and deregulation efforts.
Limited Resilience Without Imports
The study underscored the fragility of Germany’s digital economy, with 36% of companies estimating they could sustain operations for 7-12 months without digital imports, while only 3% believe they could last over two years.
Broader Dependence on Imports
In addition to the U.S., 79% of companies reported dependence on Chinese digital products, with 44% indicating “strong dependence.” Key imports include hardware (90%), software (75%), cybersecurity solutions (71%), and components such as chips and semiconductors (69%).
These findings highlight the critical need for Germany to strengthen its technological independence and develop resilient supply chains.
Source: https://www.ad-hoc-news.de/wissenschaft/90-prozent-der-deutschen-unternehmen-sind-vom-import-digitaler/66475541

3) Eastern German States Lag Behind in Digitalization
After two years of stagnation, the German economy became more digital in 2024, particularly in the southern and western states, according to a study commissioned by the Federal Ministry for Economic Affairs. The “Digitalization Index,” created by the Cologne Institute for Economic Research, highlights regional disparities in Germany’s digital transformation.
Regional Disparities Persist
Eastern German states, including Berlin, Brandenburg, Mecklenburg-Vorpommern, Saxony, Saxony-Anhalt, and Thuringia, remain at the bottom of the digitalization rankings. In contrast, Bavaria and Baden-Württemberg lead the way as the most digitally advanced regions, followed by significant improvements in the northern and western states.
Measuring Digital Progress
The Digitalization Index evaluates the digital transformation of the economy based on ten categories, ranging from products and business models to external factors like bureaucratic and legal frameworks. The study underscores the need for targeted efforts to bridge the digital divide between regions in Germany.
Source: https://www.handelsblatt.com/politik/deutschland/digitalisierungsindex-2024-ostdeutsche-bundeslaender-sind-bei-der-digitalisierung-abgeschlagen/100100847.htm