A Guide to Digital Transformation for SMEs
Today, meetings and operations that were traditionally conducted face-to-face or in physical stores are shifting to digital platforms such as Zoom, WhatsApp meetings, e-commerce, and online banking. This digital transformation not only impacts customer expectations but also penetrates other aspects of business, such as remote work, communication, and collaboration.
Small and medium-sized enterprises (SMEs) are aware that customer demands are changing, and there is an increasing demand for always accessible information, services, and products. However, those embracing digital transformation are not just customers; there are also tangible financial benefits, such as maximizing the value of existing assets, reducing operational costs, optimizing service delivery, and creating growth. This cumulative potential offers SMEs a “level playing field.” SMEs acknowledge that digital transformation provides them the opportunity to compete with larger, well-established rivals.
Focusing on the demands and advantages of connection and communication, SMEs are ensuring their businesses are ready for digital growth. By adopting digital strategies, SMEs can not only reduce operational costs and increase competitiveness but also expand their market share.
For a small or medium-sized business, digitally transforming with a limited budget may seem daunting. This guide aims to address some concerns and highlight how SMEs can implement and benefit from digital transformation.
The Importance of Digital Transformation: SMEs’ Journey to Future Readiness
Digital transformation leverages digital technologies to streamline business activities and functions, adding value and increasing productivity. Ultimately, for SMEs to succeed in digital transformation, they will need to address all aspects of their business. A comprehensive review of their company might involve the creation or expansion of existing business processes, applications, workflows, and procedures.
Organizations are undertaking digital transformation to better position themselves for long-term growth. This might be driven by several factors, such as reducing overhead, increasing revenue, or improving productivity to stay competitive.
Improvements Digital Transformation Brings to SMEs
Digital transformation involves looking at and reviewing various aspects of your organization to identify improvement opportunities. Such an initiative might include examining IT operations to leverage cloud technologies or assessing sales, marketing, and financial processes to achieve integration across multiple systems.
By transforming and enhancing processes with digital technologies, SMEs will be able to automate unnecessary, repetitive, and error-prone tasks. This generally allows for better decision-making with improved efficiency. As a result, SMEs can provide better customer experiences, increase loyalty, and even attract new business.
Given this opportunity, it is not surprising that small businesses are more likely to adopt digital technologies compared to large companies. About 75% of small firms (with fewer than 10 employees) claim to use at least one digital technology for business purposes, while this share decreases among larger companies.
Key Factors for Improved Business Performance through Digital Transformation
The indispensable component of digital transformation is technology. However, this often involves eliminating outdated processes and legacy systems. The most important factors for digital transformation for small and medium-sized businesses are:
Small businesses: Attracting new customers
Medium-sized businesses: Staying competitive
Upper middle-market businesses: Increasing employee productivity
Benefits of Digital Transformation for SMEs
The advantages of leveraging emerging technologies for SMEs are compelling. By going digital, SMEs can compete with more established organizations. Some of the key benefits digital transformation brings to small and medium-sized businesses include:
Increased Savings and Efficiency
Digital transformation simplifies and consolidates routine processes and operations related to customer and technical support, product design, logistics, and more, speeding up tasks and increasing productivity, leading to significant time and cost savings.
Organizations leveraging technologies such as Artificial Intelligence (AI), Automation, and Machine Learning can understand customers and predict their behaviors. These technologies allow SMEs to capture, manage, and measure customer interactions with their businesses, enabling more accurate lead scoring and sales forecasting.
Enhanced Customer Experience
SMEs can address pain points customers experience when interacting with their businesses. Through digital transformation, SMEs can improve customer experience by collecting and analyzing critical customer data via tools like data analytics, feedback collection, and marketing automation.
Small and medium-sized organizations can use this data to develop multichannel offerings, provide personalized services, and offer new interaction channels through chatbots, self-service, and customer relationship management.
Increased Competitiveness, Agility, and Innovation
Thanks to cloud-based solutions, SMEs can now compete with larger businesses. The cloud makes it easier for small and medium-sized businesses to scale. SMEs can maintain the flexibility and efficiency of a startup while competing and growing at scale by offering quality services.
Traditionally, small and medium-sized organizations faced significant barriers to entry, such as insufficient funding, inability to scale quickly, and generally falling behind in technology. The emergence of cloud solutions enables SMEs to remain competitive, agile, and innovative at a much lower cost than in the past.
Data-Driven Insights
SME owners are aware that decisions should be based on analytical data. In the fast-changing digital environment, data has become one of the most valuable assets for SMEs. Using accumulated data wisely allows SMEs to enhance their strategic and business decision-making processes, positioning them for growth.
Many analytics tools allow businesses to track and analyze website performance, assess marketing campaigns, and measure the success of their content in real-time. This enables businesses to make informed decisions to offer user-centered customized products and services.
Big data and business analytics enable the collection of accurate market and customer intelligence. By using data-driven insights to make informed decisions, SMEs can evaluate existing customer insights and adjust their offerings and services accordingly.
How Does Digital Transformation Look for SMEs?
Every business is unique, so each will need to develop a digital transformation roadmap tailored to its operations and specific needs. However, digital transformation can take many forms, from adding real-time messaging or chatbot functionality to your website to enhancing your digital content management strategy. As a result, it’s likely that SMEs are already engaged in some form of business transformation.
Based on the EU’s 2018 Digital Transformation Scoreboard, digital technologies most widely adopted include social media, mobile services, big data and analytics, and cloud technologies (SaaS, PaaS, and IaaS). In the coming years, technologies such as IoT and 5G are expected to increase this adoption. The broad range of technologies shows that businesses must work with technology to enhance efficiency if they want to evolve with the rapidly changing digital landscape. Although every business has its own transformation roadmap, there are critical points to consider that can serve as helpful guides when selecting the technologies to drive business transformation.
Getting the Basics Right
There are many considerations when it comes to digital transformation. Improved broadband speed and bandwidth should be high on your list. Telecommunications should also be a top priority in terms of preparedness. Especially if you have large files to download or back up, business-grade broadband’s higher speeds and reliability will be critical. Additionally, if you plan to use cloud technology for video conferencing, apps, or phones as part of your business transformation, business broadband is a must.
Integrating Systems and Technology
Many SMEs make the common mistake of implementing multiple different systems when addressing their digital transformation needs. This approach often leads to complex systems that use multiple formats, inputs, and outputs. As a result, collaboration, upgrades, and maintenance can become challenging, and this may prove more costly in terms of both expenses and efficiency in the long term.
SMEs should consider adopting a seamless digital strategy. To achieve a more digital approach, SMEs need to identify technology solutions that integrate well with their existing IT systems. Look for comprehensive solutions that offer scalability, are easily customizable, and provide robust capabilities to accommodate future changes and align with growth plans.
Another consideration is consistency. Identifying common platforms and applications for your users will allow you to standardize processes and formats, facilitating a seamless flow of information. Therefore, SMEs will see their communications evolve and workflows enriched with digital capabilities.
Leveraging Cloud Technologies
Using the cloud for your digital transformation is a great way to familiarize your users with new technology while also reducing your costs.
Some common digital transformations leveraging cloud technologies include:
Cloud telephony
Backup and storage
Basic and productivity business applications like email and Microsoft’s Mi365
Web analytics improvement
The Power of the Internet for SMEs
The internet offers immense benefits for SMEs. As the internet matures, consumer behaviors have changed, and shopping has become more multichannel than ever before. As a result, a wide range of software and platforms have been made available. Google Analytics, social media, newsletters, and online business extensions can provide accurate and dynamic performance data.
For example, SMEs can use website analytics to track a customer’s journey, identifying where they came from, which website categories they tried to visit, and how long they spent on your site. Website analytics allow SMEs to fine-tune their online presence to encourage users to sign up for their products or services.
The Importance of Data
When used correctly, data can be one of the most powerful tools for small and medium-sized businesses. When you are data-savvy, data can lead to more accurate business decisions and targeted campaigns. To leverage this benefit from your digital transformation efforts, SMEs should aim to centralize, analyze, and transform data into actionable insights.
Centralizing data into a single system allows SMEs to create consistent, enhanced, and customized experiences to improve the customer experience.
Therefore, SMEs should focus on the following:
Digitally improving data workflows to enhance data management
Using APIs to ensure communication across systems and consolidate various data flows
Identifying and using behavioral, transactional, and operational data from multiple channels and devices to drive decisions and tailor communications
Digital transformation provides robust data and enhances accessibility, creativity, efficiency, profitability, and competitiveness.
