Digital transformation has taken over almost all industries and it helps businesses deliver value to their customers. For businesses, a digital transformation strategy is all about modifying their business processes with the use of advanced technologies that streamline workflow, enable better interaction with employees and assures outstanding customer experience. It also focuses on enabling data to flow in real time across several functions and processes in the ecosystem to ensure a level of transparency and efficiency, and help the business gain a competitive edge. According to an article by Forbes,
- 60 percent of companies have already undergone a digital transformation and have two new business models.
- 89 percent of companies have already taken up a digital first business strategy.
- 70 percent of companies have a strategy on digital transformation and they are working on it
- 21 percent of companies have already finished their digital transformation project.
All these figures show the importance of digital transformation in industries, and this spike is due to the advanced technology available, the widespread use of which opens the doors to stronger opportunities. This is a chance for small businesses also to embrace digital transformation to be more competitive, take informed business decisions, optimize operations and deliver value throughout the organization. The advanced digital tools enable small businesses to enter new markets and target new customers at affordable rates.
Major Drivers of Digital Transformation in Small Businesses
As per a Deloitte survey on small businesses, commissioned by Google, 38 percent of small businesses found that digital transformation offers increased sales and revenue. The other organizational benefits of digital transformation are improved communication between employees and better flexibility. As compared to large businesses, small business employees are likely to collaborate twice more than employees in large-sized businesses. The more the collaborations between the employees the better the value delivered, better innovations, efficient productivity and above all happier employees. According to the study by Deloitte, 69 percent of digitally advanced enterprises said that digital tools increase employee satisfaction. Another factor that accelerates digital transformation in the small business sector is the ever-rising expectations of consumers. Today, customers are encouraged to shop from businesses that offer favorable and easy shopping experience with easy digital payment, improved interaction between business and customers etc. The report says that 77 percent of US small businesses regularly use advanced technology for better online shopping experience or for consuming digital media.
Challenges of Digital Transformation for Small Businesses
Though small businesses are investing in digital transformation, there are some businesses that are still skeptical about it. As per the study by Deloitte, 80 percent of US small businesses are not using the digital tools to the fullest and this can lead to inadequate broadband, financial loss, etc. 40 percent of organizations believe that digital tools are not relevant for their business and 38 percent believe that digital tools are not effective for their business. These figures show that some small businesses are not at all digitally engaged and they don’t realize what they are missing out on. However, it is also important to understand the challenges of digital transformation.
- Examine the scope and degree: Digital transformation is an ongoing process and not a one-time task. Digital transformation can be implemented in a limited manner with a few technological solutions and not going deep into business process. Another option is completely overhauling operations. The challenge here is to bring a balance between these two approaches. Starting off with a fewer technologies is an easier option and a complete overhaul can provide significant results. However, the second approach needs effective strategy, investment and can disrupt short-term operations.
- Filling up the employee skill gap: Digital transformation comes with heavy business operations due to the introduction of new technologies and change in the core business process. To fulfill these activities, employees are expected to have strong skill sets which they may lack. So digital transformation demands employee training and re-skilling program. This can be stressful for internal resources and work culture.
- Constrained budget: Businesses often consider digital transformation as an expensive affair as it requires huge investment for technology, infrastructure and training. But careful planning and working together with experts can bring down the cost without compromising quality and efficiency.
- Risks in operational security: Digital transformation means use of technologies like automation, machine learning, artificial intelligence, cloud technology, Internet of Things and many more. So as the use of technology advances, the chances of risking data is also higher. This can be a threat to the business which could make them skeptical about adopting digital transformation. With more technology and connected network of endpoints, there will be several entry points. However, entrepreneurs must understand that customers and employees can also contribute to security threat. So, making sure that all networks are secure along with educating the users and employees about the security practices is vital.
- Employees’ acceptance: Digital transformation can be intimidating for employees as it disrupts that conventional mode of business operations. Similarly, the change affects the customers too and the chances of them leaving and going for another business are higher. Therefore, it is important for business to make sure that the transition is smooth and also helps meet customer expectations.
Tips to Undergo Digital Transformation
- Find out the problem: Businesses adopt new technology into their system to solve their problems. There are various areas and all of these may not run quite well and digital transformation helps the business to analyze and fix the problem areas. For example, sometimes the finance department may spend too much time collecting various finance data and validating it. With digital transformation, businesses can implement big data analytics to extract insights and act accordingly. Areas where the company is lacking efficiency can be identified and the issues addressed.
- Choosing the right transformative technology: If you have identified the problem, the next step is to research digital transformation technologies that can solve the business problems. When you are looking for a new platform, make sure to research thoroughly, speak to the top-level executives of other companies and find out the functionality possibilities. It is best to consider at least one platform that is below your budget and study its functionalities. You can also review a few other platforms that are within your budget. Compare all these and come to a prudent decision.
- Data is the key: Businesses must be able to extract value from data, but as the data gets larger managing it becomes a challenge. Focusing on and understanding the data from your customers, business partners and employees is vital to develop the products and services and deliver value. With digital transformation these data can be easily analyzed to make better business decisions.
- Each team should adopt the new technology: The success of digital transformation depends on how the employees understand the goals and objectives of your business, the advantages of the new technology and knowing about various ways to use the data. It may take some weeks for the employees to learn about the latest technology, but once everyone understands how to use the technology and how it impacts the businesses, it is easier to bring out the best in the organization.
- Measure the metrics: A review plan to measure the effectiveness of digital transformation is important. The effectiveness of digital transformation can be measured by picking the right key performance indicators (KPI). Choosing the right number that measures the effectiveness of digital transformation is vital. Also, make sure to keep the scale simple. Picking out too many KPIs may not give you the right results but remember that KPIs might change with the transformation.
Advantages of Digital Transformation
Reduced cost, improved productivity, time savings etc are some of the obvious advantages of digital transformation. Apart from these, the following are some of the other key benefits of digital transformation:
- Better decisions with data-driven insights: In this digital world, businesses are striving to be competitive and data helps to drive valuable insights. Digital transformation provides access to accurate data that helps businesses understand what customers want. Paper-based data and those in other hard-copy assets can be digitized with the help of data entry services. Getting real-time analytics data helps businesses to use their budget wisely. With AI, businesses can develop digital tools that can be used to collect data from consumers, understand market trends and patterns and thereby develop customized products and services.
- Better communication: Adopting digital transformation ensures better communication with employees as well as customers. Advanced communication tools can be used to get feedback from customers; and businesses can develop personalized products and services and thus boost customer satisfaction.
- Be more compliant: Digital transformation helps businesses make confident business decisions, adopt advanced business strategies and achieve regulatory compliance. It also helps to design and manage operational risk programs.
- Operate everything digitally: Many small businesses are turning digital with the objective of reducing paper wastage and automating various tasks and business processes. Digital transformation also offers employee management tools that let you track employee attendance, their performance, work hours etc. Tools like these can simplify employment management processes. Similarly, spend management systems like PurchaseControl help to streamline procure to pay process.
Future of Digital Transformations
According to the Global Digital Transformation Market Research report 2020 to 2025, the market is expected to grow at a CAGR of 12. 4 percent and reach USD 543. 7 million by 2025 from USD 340.2 in 2019.
IDC (International Data Corporation) predicts that digital transformation spending is expected to rise to more than 53 percent by 2023 from 36 percent in 2019. IDC analysts Bob Parker and Shawn Fitzgerald says that direct digital transformation investment is rising at a CAGR of 17.5 percent and it is expected to reach $7. 4 trillion during the period 2020 to 2023.
As a professional data entry company, we know digital transformation is a continuous process and businesses need to be nimbler and more adaptive to ensure a successful transition.
