In the enterprise, digital transformation is no longer synonymous with striving toward a structural or radical change by replacing and rebuilding systems and processes. Rather, it now resembles any other business function – with the goal of enabling continuous innovation across departments.
If you’re at a small or medium-sized business (SMB), however, the stakes are different. You’re probably already pressed for technology resources and capital. Why then, would you care about turning your operations inside out and changing your fundamental ways of working?
While SMBs and startups often have the same functional concerns as enterprises – such as patchy cash flow, unmet revenue targets, customer service complaints, and poor employee productivity – all of these challenges have a significantly bigger impact on the continuity of a small business than that of a large organization.
As a result, SMBs are seeing value in stepping up investments in digital transformation with specific primary and secondary objectives à la the enterprise. A fifth of over 3,600 SMBs surveyed by Techaisle reported that the disruptions caused by the pandemic had amplified their belief in organization-wide digital transformation, leading them to look at it more holistically and strategically.
Let’s explore how SMBs can chart their digital transformation journey and make sure technology delivers business value in every operational area and process.
Know the types of transformation
Digital transformation can often be broken down into four categories of change, based on the extent and areas of their impact.
Business process transformation
Business processes are the most basic units of operations that benefit from improved or evolving technologies such as AI and machine learning, AR/ VR, and hybrid clouds, as well as the analytics, services, and APIs associated with these technologies. Ultimately, these mini-transformations result in specific KPIs such as better product quality, less cost per unit produced, or faster delivery.
Business model transformation
You can find dozens of examples today of how technology is enabling startups to turn traditional business models on their heads while delivering more value to consumers. Netflix (video distribution), iTunes (music distribution), Uber (taxis), and Airbnb (hotels) are some that race to the top of the mind.
Using the building blocks of processes transformation – like AI and analytics – these companies are continuing to accelerate change in the already transformed business models.
The biggest survival ability of a startup or a small business is its propensity to pivot – or venture out into a new domain of business. Twitter launched as a podcasting platform, YouTube started out as a video dating site, and Starbucks began life selling coffee beans.
You don’t always need to change your core domain; you can add another product or service range to your core offering using technology that you understand or use. For example, Shopify successfully added hosting services to its ecommerce framework and is now a one-stop solution for online retailers.
“As you’re thinking about transforming a company, try to realize those cores, those gems that you have that you can pivot off of to create that next chapter,” said Pitney Bowes CEO Mark Lautenbach as they developed a new, customer-facing commerce cloud to allow smoother payments.
New technology can unlock untapped opportunities and new markets for your business, especially if you have a lean operational structure. Domain transformation perhaps creates more value than any other category of business transformation.
Technology drives change, but people drive technology. True digital transformation happens when you have agile workflows, decentralized decision-making, and an engaging company culture that promotes learning, testing, risk-tolerance and openness to change.
Most SMBs stop in their tracks when they hear “digital transformation” because of the perception that it is something complex beyond the grasp of their limited resources.
This changes with the basic term “digital adoption,” which is simply the deployment of multiple technologies for various processes. These could be as simple as using SaaS productivity tools, providing mobile access to business-critical apps, or tracking sales and marketing analytics. Present-day platforms do away with the need for specialized tech skills by providing unified platforms with simple, intuitive UIs to manage any business function under the sun.
With the increasing availability and simplicity of automation tools, SMBs are embracing evolving technology wholeheartedly. The IDG Digital Business Survey found that AI, multi-cloud environments, software-defined storage and networking, and IoT figure among the most commonly adopted technologies.
By increasing the speed and breadth of technology adoption, you can scale up your digital workflows, resulting in increased employee productivity, faster lead conversions, and better insights from customer or product usage data. This in turn helps in accurate and timely decision-making – the difference between win or lose for SMBs.
Strong leadership and an internal support system are key to speeding up and scaling your digital transformation, especially if you have multiple or wide-ranging objectives. Digital adoption might require a huge cultural shift, getting buy-in from staff in all departments, overcoming compliance issues, rapid prototyping and shipping of product changes, making the business case for technology implementation, as well as eliminating well-established processes.
Be transparent in your goals with your workforce – make sure they know how their roles will change during and after the transformation. Promote leaders who can drive this change from the bottom up. Set clear, strategic targets for product owners and managers, and give them the flexibility and budgets to be agile and think (and act) on their toes.
Ultimately, this is what will increase the chances of the success of your initiative and deliver more value to the customer.
Understand how change affects your customers
Digital adoption can change companies for the better (by making them more efficient and organized through automation) without transforming them. But of course, business process transformation can occur in bursts and small increments. AI- and ML-enabled applications level the playing field for SMBs and give them far-reaching insights on consumers and the overall market that were previously available only to enterprises with deep pockets.
Digital transformation is not an isolated activity that you go about with your head down without looking up until it’s done. Change permeates and affects every area and component of a small business, including processes, employees, and customers.
However, customers hold sway over pretty much every market today. They have access to information on any product, solution, and company at their fingertips. Therefore, the smaller the business, the more focused it’d better be on providing a great customer experience (CX).
No surprise then that respondents to the TEKsystems survey chose “improving customer experience and engagement” as the top goal of their digital transformation efforts. These findings are bolstered by research from BCG – it found that nearly 9 in 10 companies had customer-facing goals as their top business objectives for digital transformation.
While examples abound of how the top brands recognized the shift towards digitization in their industry and transformed their business structure accordingly (Dominos for food delivery, for one), small businesses can achieve nearly the same results with simple chatbots.
The DIY ones that piggyback on popular IM apps like Facebook Messenger let you proactively engage with visitors on your site, make well-timed offers, nurture leads, speed up service issue resolution, and offer exclusive, personalized content.
As lifestyles are increasingly being influenced by smartphones, websites, and other digital channels, SMBs need to leverage the “experience economy” by making digital customer experience (DCX) the vehicle by which they deliver experiential and economic value to their customers.
Eat that elephant – one bite at a time
The urgency of digital transformation has increased in the wake of the pandemic and its after effects. More so for small businesses that stand a lot to lose or gain from the omnipresent economic impact of COVID-19. That said, small businesses have the advantage of being able to experiment with new technologies, incorporate new methods and models, tweak their strategies, and change course quickly when needed.
SMBs can realize the benefits of digital transformation by identifying their most pressing problem – the biggest threat to their survival, if you will – and dealing with it first. “Take your business and break it down into smaller chunks and start building things. And don’t solve problems that don’t exist yet, that you haven’t yet faced,” advised Pieter Jordaan, CTO of TUI Group, as quoted in a recent article on CIO.
That isn’t so hard as it sounds, as explained in the article. With the depth and range of today’s software ecosystem, more often than not, the solution is staring you right in the face.
If you work at a small or medium-sized business, you can’t ignore the fact that technology is rapidly changing consumer behavior – and vice versa – regardless of the industry you operate in. The digital transformation party is on and the big brands are already dancing to the beat. So get crunked up!
Dipti Parmar is an experienced marketing and technology consultant, helping startups, ecommerce brands, and B2B SaaS companies establish thought leadership in their industry with innovative strategies through her agency 99stairs. She is a columnist for leading business and tech publications such as Entrepreneur Mag, Adobe's CMO.com, and Inc. Dipti has also been listed as a top startup marketer by TechCrunch.
When she's not drinking her team's blood (figuratively), she is busy telling vampire stories to little girls who like Disney princesses. Follow @dipTparmar on Twitter for her best insights.