The role of digital transformation for SMBs
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Meeting customer demands is the utmost priority for a business today. It doesn’t matter whether your business is small, medium, or large. To fulfil these needs and stay competitive, companies must use robust technologies such as cloud computing, data analytics, automation, and cybersecurity. These will streamline their businesses and support digital transformation.
By harnessing the power of modern technologies, small and medium businesses can take control of their workflows, implement result-driven strategies, improve productivity, and save costs. This is the empowerment that digital transformation brings, and it’s what we’ll be exploring in this article.
3 major elements of digital transformation
Digital transformation is essential for companies to adopt new technologies and refine their workflows. There are three core elements of digital transformation. These are – physical, cognitive, and cultural elements.
Physical
Digital transformation and innovation integrate sophisticated technologies instead of manual, error-prone workflows. Here, the physical element refers to ‘digitalisation’. It improves the productivity and efficiency of the employees. For instance, you can talk about implementing automation for customer support, creating online training programs for employees, using AI-driven insights to increase sales rates, and more.
Cognitive
With digital transformation, businesses can take advantage of the cognitive capabilities of technology. Yes, we are talking about AI and machine learning. They have the ability to mimic the human mind and learning abilities. AI and ML technologies can build smart cognitive systems that organisations use to pull out better financial and market trend insights. Moreover, businesses not only include cognitive elements but also implement cloud-based applications with built-in AI functionalities.
Cultural
A successful digital transformation occurs when employees inherit organisational changes and quickly adopt new strategies such as automation, smart machines, and the cloud. That means they should embrace a cultural shift that requires them to adapt to new technologies and tools. Thus, the companies must have goals aligned with the digital transformation and value the latest technologies-related processes.
Why is digital transformation necessary for SMBs?
Automate processes
Integrating digital transformation tools into their systems allows the SMBs to streamline and optimise the whole business process. These tools help automate workflows, reduce errors, save time, and manage resources. The project management tools (e.g. Jira, Trello), customer relationship management tools (e.g. Hubspot, Zoho), finance management tools (e.g. QuickBooks), and data analytics tools (e.g. Google Analytics) aid the business in reducing mundane tasks and focus them on other vital things. In this way, these tools boost productivity and employee efficiency.
Enhance profits
Another benefit of digital transformation is that it assists SMBs in increasing their profits. With the help of technologies, tools, and strategies, businesses can engage with more audiences and grow their user base. For instance, e-commerce platforms increase their reach within local areas, markets, and user segments of a specific domain.
Digital tools like automation and data analytics save the business from costly errors. Thus, these tools reduce costs and resource utilisation. As a result, the business maximises profitability and improves ROI.
Data-driven decisions
SMBs must consistently fight with digitally indigenous and traditional companies to stay competitive. So, by embracing the new technologies and tools, they can gain data-driven insights about their product performance, service performance, and customer engagement. They can fetch insights into their website performance and digital campaigns through data analytics tools. These insights help them develop a powerful data-driven strategy which optimises the organisation’s overall performance.
These insights help to understand their customers’ behaviour and interests. Ultimately, they know which business strategy works well and which needs a change or complete replacement. In this way, they can strategically update their platforms, sites, campaigns or other digital assets to fulfil their customers’ requirements.
Improve customer experience
In this rapidly evolving digital world, customer expectation also changes. Now, users get all the services within their hands through the rise of mobile apps, chatbots, social media platforms, and self-service portals. These platforms help them to access the services instantly and seamlessly, around 24*7. According to McKinsey research, improvement in user experience increases 2%-7% sales revenues and 1%-2% profitability.
So, by prioritising these strategies, SMBs provide personalised and convenient customer services. Additionally, they can gain valuable insights about the users. According to these insights, the company can tailor its products and services to the users’ needs. By developing a personalised customer servicing approach, they drive more users and gain their loyalty and respect. This way, they can improve user interaction and build long-lasting relationships.
Drive sales and marketing
In this era of digital revolution, SMBs can improve their sales rate and marketing efforts with the help of SEO, CTAs, email campaigns, online advertising tools and social media platforms. Also, they can sell their products and services through e-commerce platforms. Using these strategies and channels, SMBs can access a wider audience. As a result, they can convert more customers to their permanent audience and convince them to purchase products.
Furthermore, digital tools and advertising allow them to track better analyse campaign performances and map buyers’ journeys. By adopting these strategies, the SMBs improve their marketing effort and ROI.
Enhance collaboration
One of digital transformation’s most significant benefits is enabling collaborative work approaches. After the COVID-19 pandemic, many organisations have shifted towards remote and hybrid work cultures. Digital tools and strategies revolutionise these remote and hybrid environments. For instance, employees can communicate and collaborate through video conferences, email and chats, project management tools, and cloud-based project-sharing apps. Hence, team members can collaborate anytime and anywhere during remote work.
How can SMBs integrate digital transformation?
Creating a road map for digital transformation
First and foremost, SMBs need to embark on a journey of strategic planning. Creating a specific digital transformation roadmap is a crucial step. With strategic plans, they can outline their goals and timelines for completing particular processes and projects, ensuring they are organised and prepared for the digital transformation journey.
Furthermore, the plan must include the current status of the business, areas to improve, and a clear strategy to implement technology-driven solutions and identify resources and digital tools to improve the business. By doing these, the SMBs allocate more resources and develop new methods to achieve success through digital transformation.
Investing in technology
Investing in advanced technologies such as cloud computing, data analytics, automation, cybersecurity, and cryptocurrency is not just an option, it’s a necessity for SMBs. This proactive approach helps them streamline their workflows, reduce manual efforts, and improve customer satisfaction.
Additionally, these technologies support them to evolve their businesses with the current market trends and user demands. They should know the need to choose technologies and digital tools that match their business needs and strategies.
For instance, if a business adapts a cybersecurity strategy, it must employ antivirus software, intrusion detection systems and firewalls to protect its network infrastructure. Also, regularly updating software and checking potential threats and vulnerabilities is necessary for those organisations.
Updating infrastructure
Outdated hardware and software results in backlogs and causes a business to waste resources. Thus, updating infrastructure is necessary for every small and medium business. By updating its infrastructure, the company ensures progress in the workflows. Also, they can ensure that the systems have the capabilities to handle the demands of digital workflows and technologies.
Digital skill programs and training
In this evolving digital pace, SMBs need to train their employees with advanced digital skills to harness the power of modern technologies. The skills include data analysis, digital marketing, social media management, website development, and more. By skilling up their employees, the SMBs can harness the full potential of the technologies, tools, and strategies.
Adapting cloud-based systems
The cloud-based systems help small and medium-sized businesses that want to develop their business through digital transformation. These cloud-based systems come with numerous benefits like –
Cost savings: For the traditional systems, you need to buy software, hardware, and other services from different vendors and pay them. It will end up with a considerable cost. Instead, you will get all these essential materials from one vendor and need to spend less.
No need for maintenance: You can integrate modern technology with the assistance of cloud computing without any hassle of infrastructure maintenance.
Easy access: With this cutting-edge technology, employers can access data anytime from anywhere. Thus, they don’t need to worry about data loss.
Flexibility: Cloud-based systems are flexible enough to use. You can easily add more users to your system by using this technology. If you have a seasonal business, you can remove the users during the off-season and add them again in the pick-season. As a result, you don’t need to pay extra costs when the users are not using the system.
Some real-life examples of digital transformation and innovation
Finance
Digital transformation has changed the way we work in the financial sector. The digital platforms offer the hassle-free and convenient experience of online banking for the users. From onboarding to transactional operations, everything they can handle within their home. As a result, they don’t need to wait in a long queue in front of the bank counter for any financial services. Also, customers can even find plenty of options for learning about personal finance management online.
Another significant example is embedded finance. It’s all about integrating banking and other financial services into non-financial apps/services. Non-financial firms embed banking, certain finance management apps, programs, or products that enhance the remote options for customised loans, instalment payments, and insurance. For instance, Uber drivers can activate cards, get cash back by refilling fuel, and collect earning deposits from the Uber Pro program.
Moreover, there are other examples of digital transformation in finance, such as mobile banking, elevating personalised analytics through Big data, and leveraging secure payment with blockchain technology.
Retail
Retailers deploy digital devices, platforms, and channels to provide seamless shopping experiences for customers. A common digitalisation strategy in the retail sector is the AI-based chatbot. These chatbots automate customer services and deliver personalised recommendations for the users. Also, the chatbots can deliver rich data analytics that further improve product allocation decisions. For example, a sports goods retailer analyses current weather reports and predicts to determine whether a two-degree difference in temperature impacts the sale of thermal undershirts.
Other significant implementations are augmented reality (AR) and virtual reality (VR). These technologies help in product demonstrations in an immersive environment and make the users feel about the real products. So, you can take the example from Apple. They have used AR during the pandemic to bring their physical stores to your doorstep. This strategy of Apple allows users to check the ‘AR Quick Look’ for the iPhones and iMac models, letting them decide how the products look in their space and hand.
Healthcare
In the healthcare sector, there are two significant forms of digitalisation – networked electronic health records (EHRs) and virtual doctors. Many healthcare organisations, such as hospitals, medical offices, laboratories, and clinics, use these cost-effective solutions to deliver proper treatment and care. Moreover, cloud applications assist healthcare providers in analysing the bills at a granular level so that the patients understand the cost of treatments.
Again, the analysts utilise scenario planning applications that help predict the patient’s demand. By analysing the patients’ demands, they can understand the number of beds and the staff required for the treatment.
Then, the profitability management software guides healthcare organisations in evaluating the profitability of individual businesses. Say, they can understand where to allocate the resources for cardiology. For instance, King’s College London in Dubai decreases the time to access patient data by 50% using the EHR. As a result, they experienced a 25% reduction in time spent on EHR due to faster transaction and screen load times.
Future of digital transformation
Digital transformation and innovation have changed almost every aspect of business. From manufacturing to supply chain logistics, product searching to purchasing, digitalisation revolutionaries every working procedure. Thus, the new innovations reveal more opportunities for businesses, help to analyse customer sentiments and offer a more personalised shopping experience. Therefore, the companies can extend their profit margin to the next level.
Over the last few years, we have seen a contemporary technology called generative AI that has spurred transformation objectives. ChatGPT is the most outstanding example of GenAI, which opens new doors to the possibility of reducing mundane tasks. For instance, enterprises use ChtGPT to write business reports, conduct market research, initiate employee onboarding and training, and more.
So, from the above analysis, it’s clear that businesses employ the potential of digital transformation to solve their business challenges and implement strategic objectives. But it’s an ongoing process which involves choosing the right technology, investment, strategy, and partners to get a positive result.
Conclusion
The importance of digital transformation becomes indubitable for small and medium businesses. In today’s fast-paced world, businesses must adopt modern technology for long-term sustainable growth. Small companies get outstanding opportunities for innovation and showcase their niche to the market. Thus, every business should embrace digital transformation to compete in this dynamic market.
