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We know from working with clients across industries that many small and medium-sized companies all too often shy away from digital transformation because these companies (incorrectly) believe that only large corporations have the financial means to tackle a digital transformation. We have found that these companies are worried not just about the cost involved, but about other issues – big and small – such as current IT gaps, HR and talent needs, the reliability of their company’s data, data security issues, lack of time, and sometimes even the intricacies of privacy laws to name a few.
For SMEs, the idea of a digital transformation can surely be daunting. Often, they are uncertain about when the timing is right to start the process of a digital transformation. SMEs may also be unsure exactly how a digital transformation can propel them forward. We understand this. Time and again we reassure these same companies about the power of digital transformation and its advantages. We are firm believers in digital transformation and how it can elevate small and medium-sized enterprises. It’s important that SMEs understand that digital transformation is not just a necessary cost, it is a driver of competitive advantage.
As a recognized expert in the field aptly explained it, digital transformation is “the key for [SMEs] to become more competitive in the marketplace and better positioned for long-term growth.” We have seen first-hand the positive impact that SMEs have enjoyed once they embraced a digital future.
Yet, for SMEs and large corporations alike knowing that they need to adapt their business in order to succeed in the digital age is not the same as knowing how to undertake the process of a digital transformation. Given their size and specific budget and resource constraints, SMEs must plan carefully for the future and invest in the areas that will make the biggest impact on their businesses. In other words, we’ve found that what is most effective – and what SMEs need the most – is to understand the scalable strategies that are right for them and which position them effectively for a successful transformation so they can thrive in the ever-changing digital environment.
Growth vs. Scalability
Before we dive into the strategies, however, let’s take a moment to look at the difference between growth and scale because this distinction is an important one. A recent Harvard Business Review article defines growth as adding revenue at the same rate you are adding resources and further defines scaling as adding revenue at a much greater rate than cost. In terms of digital strategies, this means that your investment in digital should not focus solely on the aspects of your business that you can automate – the things you can do faster. You want your company instead to focus on issues that will grow the company at an exponential rate. So, yes, by all means, automate time-consuming, low-impact or repetitive tasks. Free up your employees’ time so they can focus on the bigger picture. Their time will undoubtedly be better spent if they can concentrate on more important issues and responsibilities such as increasing revenue or reducing operating costs.
Take, for instance, your sales process. This is most likely an area in which you can achieve exponential growth. How can you streamline the process or reduce costs with digital technologies? If your next sale takes as much time and money as the one before it and the one before that, you don’t have a scalable model. Following this example, when undergoing a digital transformation, your goal is to find the steps of the sales process that you can automate so that your next sale is not just faster, but also easier and less expensive that the one you just made. To achieve scale, you’ll want to assess the entire process overall and pinpoint the steps that can be replicated quickly and cost effectively. Evaluating and overhauling current processes is an opportunity for you to improve decision-making, maximize efficiencies and revenues, and create an overall stronger customer journey.
In our experience, with digital transformation it will be far more effective for the future of your business if you prioritize your company’s most pressing issues first. Invest your time and effort in the most critical areas. Is this customer retention? Turning leads into customers? Reducing manufacturing costs or time to delivery? Whatever the answer may be, frame the issue thoughtfully and determine what needs your attention the most.
Strategies for SMEs
With a digital transformation, finding scalable strategies will propel you forward in new and exciting ways. These strategies will help you find the best path forward.
Like we said, start by asking yourselves some of the big questions. What’s the key to our businesses survival? What are the most pressing business issues we face? What do we want to achieve? These questions give you a framework as you craft a list of priorities.
Working with experienced consultants and tech vendors will make the entire process more efficient. Time is money, right? These partners can make your transformation less complicated and more effective. Plus, you’ll benefit from their experience, so you’ll learn what works and what doesn’t for companies in your same situation.
Cost is always an issue for SMEs. The good news is that there are some cost-effective ways to get expert advice. Be upfront with your consultants about your budget. Often there are low-cost solutions that you can implement.
Early buy-in from your staff across departments is key. Work with the members of your staff who will be affected by a digital transformation to get their input early and often. You’ll want them to be champions of the transformation!
Look to invest in capabilities that can grow with your company. Is the technology you will be adopting now be right for the company in 5 years? Make certain that new technologies integrate seamlessly with existing technology. Successful transformations depend on smart technology investments, both to streamline your operations today and grow your company in the future.
Finally, don’t miss out on the big opportunities that digital transformation offers just because you are a small or medium-sized business. A digital transformation will position your company to compete in the marketplace with larger competitors and allow you to thrive in the digital economy. A forward thinking, but pragmatic approach will serve you well as you evaluate the technologies that can grow your company.