What is digital transformation and why should small and medium businesses care about it?
Whilst the term can have slightly different definitions according to who you’re talking to, one way of understanding it is to think of the incorporation of digital tools, technologies and processes into existing business operations. At the simplest end of the spectrum, this might involve giving staff members business smartphones (or allowing them to connect their own to the business network as part of a BYOD programme). A rather more complex example might be the introduction of a new software application to manage, say, the customer journey, or how your organisation deals with its accounts.
Why should small and medium sized businesses care?
Exciting though many aspects of digital transformation can sound, many small businesses still bury their heads in the sand when it comes to engaging with the concept. After all, it always involves change, and almost always involves investment, in terms of both time and money. Both of those concepts can be understandably frightening to smaller organisations.
However, the fact is that all businesses operate in a digital world – indeed, one that is becoming ever more dominated by technology. The number of organisations that can genuinely manage to operate outside of any kind of digital tool or process is rapidly dwindling.
But this shouldn’t be a narrative of fear. The real impetus for small and medium organisations to engage with digital transformation shouldn’t be to avoid being left behind – it should be because digital transformation can genuinely unlock new opportunity.
Research has indicated that nearly half of decision makers believe that technology levels the playing field for small businesses compared to their larger competitors. So, while an upfront investment may be involved, that investment should rapidly be repaid in terms of greater competitiveness with even large organisations.
Even more excitingly, 37% of those decision makers think that small and medium organisations actually have an advantage when it comes to digital transformation, because they are more agile and able to implement change more rapidly and smoothly than large enterprises. That’s a pretty exciting prospect, surely?
How does it work in practice?
Ok, so what about some practical examples of how SMEs can engage with digital transformation in a cost-effective way?
Let’s start with one of the most obvious applications of digital technology – automation. Almost every business has some aspect of day-to-day operations which is boring or repetitive for staff to carry out – and yet which digital technology can undertake very easily. Whether searching through documents for specific information, moving data from one format to another or even populating an existing system with information, there is typically a huge array of low-value, high-tedium business tasks that simple software applications can take care of. In turn, staff are freed up to focus on higher-value, more strategic work, which ultimately boosts both their morale and the business bottom line.
Then there are areas in which digital technology can save on existing costs – such as the reams of paper swallowed up in many small and medium businesses. It may be impractical for you to go entirely paperless but digitising even a few key processes can seriously cut down on the money and energy expended not just on continuously printing out documents, but then on actually managing and storing those documents. Similar principles can be applied to a range of other business resources, from electricity to water.
And what about the Internet of Things (IoT)? By embedding connected sensors in existing hardware throughout the organisation, SMEs can capture previously untapped data and transform it into actionable business insights, whether that’s deploying a fleet of vehicles in a more organised manner, or proactively servicing machinery on a production line just before it fails and causes significant business disruption.
None of these digital interventions need to involve a huge upfront investment or significant business disruption. They can even be introduced by degrees, scaling smoothly as the business itself grows. ‘Digital transformation’ might sound like a huge undertaking, but for many SMEs, it’s about small investments that deliver enormous results.
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