Smaller organizations are achieving cost savings, productivity gains and competitive advantages by fully leveraging the latest technologies.
New research from TechAisle finds that 51 percent of small to midsize businesses (SMBs) are accelerating their digital transformation initiatives despite the operational and economic impacts of the COVID-19 pandemic. In fact, 22 percent of the 3,600 SMBs surveyed said that the crisis has intensified their commitment to implement digital transformation across their organizations.
The term “digital transformation” refers to modifying organizational strategies, models and processes to take full advantage of the latest technologies. It’s not merely the adoption of technology to automate workflows but a foundational change in the way the organization does business. Done right, digital transformation makes it possible to become more efficient, agile, innovative and responsive, and to better leverage data to improve decision-making and create competitive advantages.
According to TechAisle’s research, organizations that go all-in with digital transformation see the greatest success. SMBs with organization-wide digital transformation initiatives have been able to reduce costs by 2.1x, enhance customer relationships by 1.9x and increase productivity by 1.4x compared to organizations that have adopted digital transformation selectively.
Why Digital Transformation?
Not surprisingly, given the current economic challenges, “achieving cost efficiencies” is the No. 1 reason why SMBs are moving forward with digital transformation. According to 46 percent of SMBs surveyed by TechAisle, digital transformation can help ensure that their businesses remain viable amid market uncertainties, unpredictable revenue streams and restricted access to capital.
SMBs are also leveraging digital transformation to help them do more with less. Almost one-third (32 percent) of those surveyed said that digital transformation can help improve operational efficiency, while 28 percent said it can enable greater productivity.
However, 38 percent of SMBs also see digital transformation as a means of gaining competitive advantages through the delivery of innovative products and services. Additionally, 31 percent are adopting digital transformation to drive business growth. According to TechAisle, this is creating a “digital divide” that’s becoming even more pronounced due to the pandemic.
“SMB firms that are embracing an agile IT / business infrastructure and capitalizing on the advantages of digital transformation are developing sustainable competitive advantages that will define a path towards success in both the near and longer term,” the TechAisle report notes.
How to Get Started
If digital transformation is more than just technology adoption, how do SMBs go about implementing a digital transformation initiative? The first step is to take a hard look at longstanding business practices and activities with an eye toward improving agility and responsiveness. Of course, retooling processes that have worked well for years creates risk and cultural challenges. That’s why digital transformation also emphasizes data collection and analysis to assess long-held business assumptions.
When analyzing business processes, organizations should consider technologies that could help to optimize operations. Digital transformation is associated with disruptive technologies such as artificial intelligence and virtual reality, but there’s an array of mature technologies that can facilitate the transformative process. Collaboration and messaging are prime examples — improving communication among employees, business partners and customers can play a key role in business process optimization.
Internet of Things (IoT) applications can help organizations gather real-time data, monitor infrastructure and assets, and improve efficiency through automation. Big data analytics can improve decision-making accuracy.
Planning is Key
Once technologies have been identified, organizations should develop a roadmap for implementation. Ideally, the plan will include small-scale proofs of concept and an iterative approach that allows for testing of the underlying hypotheses. The overall implementation should be completed in phases, with achievable goals and measurement of key performance indicators.
It’s important to recognize that digital transformation puts organizations at higher risk of data breaches. Organizations need to take a fresh look at how they implement a data security strategy as they adopt transformational technologies and ensure that robust security controls are “baked” into every solution.
According to IDC, spending on digital transformation technologies will continue at a solid pace despite the challenges presented by the COVID-19 pandemic. The research firm predicts that digital transformation investments will grow 10.4 percent in 2020 to reach $1.3 trillion.
“COVID-19 has upended the global economy, with direct negative implications on the way businesses invest in IT,” said Craig Simpson, senior research manager with IDC’s Customer Insights and Analysis Group. “DX technology investment has not gone unscathed, but so far it has been affected to a lesser extent since many large-scale DX projects underway or planned are instrumental to broader strategic business initiatives.”