You’ve probably heard the expression, “The customer is king.”
Most successful businesses in the world hold customer-centricity as a core value.
When the pandemic hit, in early 2020, customers began to move towards digital channels with unprecedented fervor. It was only logical for companies to go where their customers are. So how do you foster the digital transformation of SMEs?
More than a year into the COVID-19 pandemic, it has become the “new normal” for both employees and customers to accept the hybrid model of doing business.
To gain a perspective on digitization trends in 2021 and beyond, let’s look at some numbers:
- A survey by McKinsey in 2020 revealed that companies that are more agile, experiment with new technologies, and make heavier investments in digital technologies are twice as likely to report outsize revenue growth than their competitors. . .
- A Boston Consulting Group (BCG) study showed companies at the forefront of big data trends generate 12% more income than those who don’t use big data.
- Spending on digital transformation technologies and services worldwide from 2017 to 2024 is estimated to rise from 0.6 to 2.39 trillion USD.[Statista.com]
Needless to say, digital transformation of SMEs acts as a central pillar of success.
So, why then are only one-in-four SMEs (small and medium-sized enterprises) invested in modern technologies? After all, by the end of 2020, the need to embrace digitization was clear to businesses across all industries.
To survive the mass migration towards digitization, small and medium-sized businesses must be proactive in developing their digitization strategies.
Of course, there is no one-size-fits-all strategic approach to modernization. A BCG study revealed that 30% of digital transformations succeed in achieving their business objectives. Why do the balance 70% of transformations fail? Some of the reasons include: of digital transformations succeed in achieving their business objectives. Why do the balance 70% of transformations fail? Some of the reasons include: of digital transformations succeed in achieving their business objectives. Why do the balance 70% of transformations fail? Some of the reasons for failure include:
1. Poorly defined company goals
2. Implementation of a new digital model left in the hands of non-specialists
3. Organizational inertia
4. Employees’ resistance to change
5. Transforming everything at once
6. Implementing disjointed systems to address multiple issues
7. The wrong technology partner
8. Lack of support and training post-implementation
Why should your company be left behind? Companies of all sizes from numerous industries are modernizing as well. Here are some of the benefits and opportunities of digitization for SMEs:
1. Development of better business strategies using data-driven analytics
2. Better data accuracy
3. Increasing operational efficiency
4. Enhanced customer experiences
5. Connect with customers in a more engaging way
6. Reach a much larger audience
7. Increased revenue growth and stability
8. Efficiency increases through automation
9. Development of new marketing channels
10. Development of digital sales channels
SME leaders are under pressure to digitize. So how should you approach the digital transformation of SMEs?
While there are obvious opportunities and benefits, the risks are different across industries.
Before you get to that, here are four questions to ask, involving the key stakeholders in a digital transformation initiative:
1. What is your company’s value proposition? Is it aligned with your digital transformation strategy?
2. Does the technology provide you ease for running the business operations to achieve your business objectives?
3. Will this project contribute to make new money or sustain existing revenue? Both are important.
4. Will it simplify operations or increase your team’s productivity?
Once you have clarity on the above, you can then decide on such an investment and its business value to your company.
Whether you are a business leader or a catalyst to direct conversations around digital transformation within your organization, find out what you need to do to succeed?
5 need-to-know insights for a successful digital transformation
Here are five things SME leaders need to know for a successful implementation of digital transformation:
1.Define your business objective. Pro tip: Start with your customer
This is the most important part. Yes, digital transformation has numerous benefits. But what’s right for your peers may not be right for you. Therefore, you must start by defining your business objective. As discussed above, technology without customer consideration will inevitably lead to failure. So start with your customer. Ask yourself, how can you add value to their digital experience? What tools and insights your employees will need to execute effectively to contribute to meet your business objectives?
2. Identify the right leaders within your organization
These are the people who have a brilliant understanding of your business, are progressive in their thinking, and embrace technology. Find these individuals and team them up. They will be the ones to set the road map and provide direction to execute a successful digital transformation initiative.
3. Bring in the data
Pool in all the structured and unstructured data necessary to carry out the daily business operations. Understand the process of data accumulation, process, timeline, and the purpose of gathering this data. How does this data contribute to departmental objectives? How do these objectives align with your overall company strategy? As you analyze the information you have received, you can then decipher digitization priorities, including which processes require automation to improve workflows.
4. Budget and value on investment
You must then find out the budget that can be allocated to implement digital transformation in your organization. While some SMBs have larger-than-average budgets, some may start with a pilot project with limited funds and resources. It will be easier for you to make a decision based on your business objectives defined at the start. Identify the quantifiable metrics that will reveal the value and success of the digital transformation project.
5.Build a winning culture
According to the McKinsey study, mentioned above, behavioral and cultural challenges pose threats to successful digital initiatives. Even with the best intentions, it can be challenging for your workforce to adopt new digital models. It is wise to invest time in training, not only understanding how to use the tool, but why your company is using it. How is it going to make their daily life easier? With the extra time at hand, show them how they can more effectively execute their daily tasks. How can they contribute valuable insights from the new digital models in place? Encourage a culture of learning and innovation. And make sure your ‘A’ team, the team spearheading the whole digital transformation, are setting the right examples for a smooth transition.
Remember, success in digital transformation is closely tied to the success of a cultural change within your organization and a new perception of your customer needs, and how you can leverage technology to fulfil them.
So, there you are!
We have laid it all out for you here on all you need to know when considering digital transformation of SMEs. With 15+ years in IT consulting and having implement ed digital transformation projects across SMBs in North America, we can help you. Reach out to us to find out how we can facilitate your digital transformation and help you drive business performance.