Does your SMB need a digital transformation?

Learn what digital transformation means for an SME, why it is so important and if you need a strategy for it. And what would that strategy look like?

Does your SMB need a digital transformation?

Does your SMB need a digital transformation? 837 1024 Visible Pathway

Author: Chris Rodowicz  |  Reading Time: 8-9 minutes

 

In this article we cover:

  1. What is digital transformation and does every SMB need a strategy for it?
  2. Should your digital transformation journey be a stand-alone initiative or an enabler that underpins your overall business strategy?
  3. And what would it look like?

What is digital transformation?

Digital Transformation (DX) means different things to different companies and to the people within them. In simple terms it is the replacement of old manual processes or older technology based solutions with newer digital technology ones. DX is a catch all term for a journey consisting of a series of projects that you undertake en route to becoming a digital business.

As simple as that may sound DX can truly transform your back office operations or your customer facing business or both. It can consist of

  • a transaction enabled website, or adding a chat feature or smart assistant
  • online student enrolments and visa applications
  • an employee onboarding portal
  • triaging emails coming in so they are routed to the right people the first time
  • introducing online collaboration tools
  • an online banking application / approval for home loans
  • e-signature capability for contracts and documentation
  • registering and insuring your vehicle or making a claim
  • and of course everything mobile

mobile apps lead the digital transformation revolution

Covid and DX

Covid has been a compelling driver of some of these initiatives, effectively forcing companies of all shapes and sizes in survival mode, to ram through change that otherwise might have taken years to get executive support and approval. Some examples include restaurants moving to online ordering of a dinner menu for 10, prestige brands like Louis Vuitton moving to online sales or our customers having to do group workshops virtually during lockdown.

Some governments but not all have made huge leaps forward in what their constituents can now perform remotely and online compared with 12 months ago. The Australian govt agency that handles unemployment benefits, Centrelink, was able to move tis registration process online in just a few weeks. Then we have disasters like the UK government losing track of Covid cases by using a spreadsheet version over 5 years out of date and limited in row numbers.

Covid has dramatically changed how business gets done

Stand-alone initiative or strategy enabler?

Your DX initiative should be an enabler underpinning the strategic vision you have for the business and facilitating you to deliver specific outcomes that let you realise that vision. Done right, the benefits can run deep and wide in your business including:

  • agility to take advantage of emerging trends and changing market conditions that can fuel growth (who wants to be the next Nokia)
  • operational cost savings
  • staff productivity gains
  • reduced cost of sales

Digital Information does not equal Digital Transformation

DX is not only about the digitisation of information, it is about the digitisation of the entire business. A subtle difference perhaps but one with significant implications. We have all been digitising information for decades but we still rely on manual processes when handling information. We still don’t make that information available across the business, it is typically siloed in one department or function.

But not every business needs a DX strategy. Start-ups and businesses born in the digital era will be ‘digital by design’ and will have built their business and quite possibly some of their competitive advantage using digital only platforms. They will not carry the burden of how things were done before.

Skills required for DX

You are unlikely to have all the skills, particularly technical ones needed, on staff to execute a DX initiative. Larger enterprises engage consulting firms to provide guidance and strategy, technical expertise, project management and engineering skills required to execute such a project.

This is quite a paradox because the majority of consulting firms involved in these DX initiatives generating billions of dollars in fees each year don’t actually have any enterprise wide DX strategies for themselves.

I can understand that because the older your business and the more entrenched in its traditional business model, the more difficult it is to embrace DX and the change it imposes on you. Legacy systems and business processes can be a real drag on any DX initiative and can really complicate the project.

Consultants also can’t offer the intimate understanding of and connection to your business. Your team will need to contribute this element. Plus you need clearly stated business objectives that you can then measure success against (remember this was the #1 reason for failure).

Failure can come from anywhere but success comes from people

Ingredients for DX success

The key ingredients for success are (in priority order):

  1. your people
  2. the data that you have in your organisation
  3. your decision making ability
  4. the technology you select

A lot of people get too focused on #4, the technology, but that is the least important ingredient.

Your people

Businesses consist of pretty much just their people, products and processes. Products and processes are relatively simple to deal with. However, your people, your key asset above all, well …nothing can make or break the success of your business transformation like your people can. And people naturally fear change.

So you need to get them on board with the change as it could be quite radical for some. Engaging your staff gives your initiatives their best chance to be successful. Lose them in the first communication, ignore their concerns and their input and your project will fail.  This is not new, just ask any decent IT project manager.

Let’s talk about data

IBM estimate that 80% of the world’s data is proprietary, meaning it is within business walls and not publicly available. Data by itself is not very valuable or sexy but put to good use it can have a transformational impact on your business.

image courtesy unsplash

Your data can help you better understand customers and their needs, to optimise processes that serve them better and to make doing business with them easier. Your B2B DX strategy should still have customer outcomes at its core. Without this your initiatives will founder. Remember your customer can be inside the business walls as well as outside.

So how can DX help me to interpret my data to better serve my customer?

The more data you have the better but the task of putting it to use can get a little overwhelming. This is a key part of a DX initiative, using computers to crunch your data in a smart way by using and training ‘learning algorithms’.

Incorporate your staff’s intimate knowledge of your processes, customers and their behaviour to understand how best to use this data. Use it to refine your customer’s experience in engaging with you at whatever stage they are. And you also have the tools for digitising mundane, repetitive but very important tasks that humans don’t like doing or even do well.

Using learning algorithms can be the key to differentiating yourself in the market too. And differentiation is very important to business success. Read this article to find out why.

Where to start?

Like all complex projects you should break it down into small chunks and prioritise each one. Motivating and getting all your people on board will have a very positive effect on your overall success. Select one business process to be the visible and tangible ‘easy win’. This initial success with its tangible ROI can make your vision much easier for people to buy into and that’s what you need to succeed.

Starting with your customer’s buying journey you can use algorithms to help define what you should be doing to best serve their needs at any moment and to encourage them to move forward in their buying process.

As an example – pick a business process involving a single document to digitise, preferably a customer-facing form that is used frequently in your business touching more than one department. Then calculate the cost and time involved in processing this form 100’s maybe 1000’s of times each year. You might be surprised when you see the results.

Many businesses don’t understand and so don’t capture the true Total Cost of Ownership of their products and services. People tend to just capture the direct costs but not costs that are shared and need to be allocated as such.  This is a great place to get an early win with a simple to digitise process and document but with a compelling ROI and an improved customer experience. A win win!

The customer buying journey

All B2B customers go through 6 stages in their process to buy everything from copy paper, laptops to consulting expertise. These 6 stages can be framed using the acronym IMPACT.

The IMPACT framework represents all the elements a business needs to take into consideration when becoming truly customer centric and not just seeing their customers in the context of their own processes and operations.

When you align your business to the IMPACT stages you will see a dramatic improvement in sales with more of them, less friction in winning them and better profit margins.

Understanding how your customers buy first using the IMPACT framework is a foundation to then being able to execute DX initiatives successfully

Chances are you will need some outside support in your DX journey but the first part is all yours to do. Before you start talking to suppliers about AI, IoT, mobile apps, machine learning and all the cool technology out there make sure you have a solid, cogent business strategy that can be enabled better by digital.

To win in today’s business world you need to be able to

  • transform your business fast and continually adapt to ever changing market conditions and customer expectations
  • employ smart people with diverse skills and encourage them to contribute to your vision
  • trust everyone and accept small failures along the way as learning moments that benefit overall
  • leverage technology where it makes sense but don’t let it drive the agenda
Regardless of what industry you are in, focus on the transformation part not the digital or technology part of the phrase, start with little steps, and you will go a long way to achieving success where others have failed.