Digital Transformation is the process of the adoption of digital technology for redefining business strategies through process automation techniques and strategic plans for enhancing organizational efficiency. Small to Medium-sized Enterprises play an important role in most economies. SMEs account for the majority of businesses worldwide as they are important job creators and the development of the global economy. They consist of 90% of total business and 50% of the employments across the globe. Expanding Internet access and increased usage of technologies have become the new feature of the future market. And Digital Transformation is helping businesses to achieve great success by optimizing the ways of manufacturing, handling, storing, and transporting things.
Digital Transformation for Small-to-Medium-sized Enterprises (SME)
Today every sector is witnessing transformation due to Digitalization. In the SME sector, the following reasons are triggering this era of digital transformation:
- Advancement of technology and innovation: Innovations are essential for economic growth, and achievements in technology are allowing SMEs to improve knowledge networks, market intelligence, and access to global markets at relatively much lower costs.
- Changes in business practices with e-commerce and social media: The digital transformation is facilitating the emergence of altogether new business opportunities through the internet. It is providing a new platform for millions of daily transactions and communications that is enhancing their competitiveness in local and global markets.
- Globalization and Industry 4.0: In the fourth industrial revolution, the manufacturing process is getting digitalized, machines getting directly connected, assembly-line production is taking place with a lesser impact on the environment. Also, increased and better mobility of goods and services are facilitating Digitalization in the global markets.
- Generation Z, an era of digital consumers: These people’s birth year ranges between mid-to-late 1990s and early 2010s (nearly 74 million in the US). This generation is surrounded by digital devices that prefer online mode of communication over verbal communication.
Therefore, today it is quite evident and justified to say that the next generation will be the Age of Digitalization.
Businesses have mainly three priorities, namely the creation of new costumers, reduction in operational costs, and consistent generation of revenues. However, today SMEs are facing some grave challenges such as low technology and information exposure, inefficient access to the global markets, improper tax compliant processes, and infrastructure planning. But more importantly, they lack innovation and new business ideas. Small Business ERP (Enterprise resource planning) solutions are capable of a significant reduction of these costs, consecutively resulting in the decrement in operational, administration costs, order processing time, etc. and better inventory returns. Efficient digital transformation creates a positive impact on an ERP system. It can bring great results through vibrant and customized process automation.
The assimilation of digital techniques in the business can take place in the following ways:
- Cloud Computation: It is a general term for an internet-based platform capable of providing services like accessing and sharing of data across different users and devices upon requests. This feature allows employees and clients to access data and extract information from anywhere and anytime, enabling them to work remotely as well as efficiently.
- Internet of Things (IoT): It is a technology-based data transfer between devices over the internet. Through this, businesses can gather information and analyze data to create new business strategies.
- Artificial Intelligence (AI): Artificial Intelligence (or AI) algorithms investigate how a human brain thinks, how people learn and solve problems and further replicate the results with smart software. Their actions do not depend on the programmer’s mind. Rather they learn, understand, and judge themselves. Today, machines are manufacturing goods without human intervention, and intelligent software is performing tasks with great efficiency using AI techniques.
- Digital Supply Chain (DSC): DSC consists of software, hardware, and communication networks that support business interactions between globally distributed organizations and amplifies activities (that include buying, selling, transportation, and storing) to achieve speed, flexibility, and transparency.
- Chatbots: Chatbots are designed with the intent of providing backup to the users in the service sectors through information delivery and feedback. They are capable of imitating written or verbal human speaking. Some well-known chatbot examples are Google Assistant, Siri, Alexa, etc.
Digital Transformation for SME can be a great opportunity to leverage technological advancements and innovation and achieve great breakthroughs of success over time. Digital Transformation can help in the reshaping of business to improve process efficiency and enhancing customer experiences. Hence, Digitalization is very advantageous for SMEs. Some of these advantages are as follows:
- Development of Better Business Strategies using Data-Driven Analysis: In this era of competition, big data is like a blessing. Using data analytics tools on these big data, small businesses can track and analyze the performance of their marketing campaigns and advertising platforms. And the analyzed data can be used to make profound decisions based on what works well in the market and what does not.
- Fewer Errors and Better Accuracy: Digital Techniques can eliminate errors at every stage. From data collection to task management, from the assignment to completion of tasks within deadlines can be done effectively using these digital techniques. This helps in boosting overall accuracy and reduces rework.
- Increasing Operational Efficiency: The inclusion of digital techniques reduces the wastage of paper as well as save time and money. There exist many tools that can help in the automation of various tasks and processes such as tracking attendance, calculating salaries, thereby figuring out ways to cut non-essential costs.
- New Opportunities for Small Businesses: Adoption of digital technologies, tools, and strategies can greatly accelerate the growth rate of the business by creating immense expansion of opportunities for small businesses. Tools like AI enables them to think of new ideas and strategies to enhance their customer experiences.
Stoll Group, a company that offers design solutions in the areas of panel building, building technology, etc. and has about 180 employees. To bring better stability and process dynamics in the various customer projects, the company launched an internal digitization project which implements an internal reference work in the form of a wiki. Initially, it was difficult to convince the employees to use the digital reference work, but rather than stopping, the company continued to follow the project. The project process greatly improved with the help of the wiki, as all employees now had access to the same information. This allowed everyone to get everything they need for their project at any time. As a result, both customer satisfaction and project quality increased enormously.
In another example, McCormick & Company, an American food company that manufactures spices and seasonal mixes launched FlavorPrint. FlavorPrint is an online flavor recommendation tool that asks users to take quizzes, collect data, and delivers personalized custom recipes based on their tastes. Inspired to distribute spices based on customers’ tastes, the idea of FlavorPrint took off, and today it is known as “Next Netflix for Food”.
The techniques of Small business Digital Transformation are methods that extend human creativity rather than replacing it. These technologies are capable of creating outstanding opportunities for Small-to-Medium-sized Enterprises (SME). SmallDay has well defined process for Small Business and StartUp to scale with right digital intervention. At SmallDAY IT services, we leverage modern management skills and IT tools to optimize and manage software delivery and life cycle, and together we can explore and convert such opportunities into success.
