As we are in the age of digital transformation, you’ll be forgiven for thinking that an infrastructure migration to the cloud is all it takes to digitalise - but there’s far more to it now - and SMEs are leading the way.
We are seeing that SMEs are not only proving to be the most tech-savvy and open to greater digital adoption, their openness will be what sets them apart from the competition as digitisation creates more opportunities - financially, operationally and reputationally.
Digitisation has come a long way and today encompasses a mix of streamlined backend processes, automation, de-risking and a slicker, one-stop shop to create a more enjoyable end-user experience. As technology advances, expectations for greater efficiency and productivity are being heightened - as they should be.
As this tech evolves, SMEs who aren’t held down by legacy infrastructure or processes are often able to go straight into the adoption stage of these new technologies. They’re able to ensure that all key components line up and work towards more profit and greater business output sooner than their corporate counterparts, as and when they need - and the proof is in the pudding.
ZDNet found that 55% of SMEs surveyed in Brazil saw improvements in customer relationships, process agility and customer acquisition from their digitisation evolution during the first year of the COVID-19 pandemic. In addition, a Xero report showed that smaller businesses across the UK, Australia and New Zealand utilising technology were £32,000 better off than those who were tech-averse.
The work of digitisation allows for entirely new processes to be created and implemented. As is often the case, fresh eyes are able to see what is missing, what would add value and how things can be improved. This is one of the advantages that SMEs hold as by their nature, their way of working and thinking isn’t limited to only one method or by red tape inhibiting change.
A recent study found that SME leaders plan to continue to digitise the way they work with the top IT investment areas being workplace modernisation, business intelligence and data management. As more tools are being developed and more easily integrated into existing workflows, SMEs are finding that they’re able to take advantage of omni-channel capabilities to reach a wider audience and to also develop contingencies.
The pandemic showed just how agile even some of the smallest businesses have been to ensure their connection to their customers and suppliers weren’t disrupted. Much evidence from worldwide surveys shows that up to 70% of SMEs intensified their use of digital technologies due to COVID-19, and around a third invested in new digital capabilities during this time. (Source: Riom and Valero, 2020)
In some cases, their willingness to adopt new technologies demonstrated how, for many smaller businesses, it wasn’t a choice but a necessity in order to survive. However while this may be a stressful situation to be put in, their innate ability and readiness to pivot when looking at the macro-environment is how SMEs differentiate themselves and are ultimately able to offer more.
Technological Readiness: Originally made up of four key components: optimism, innovativeness, insecurity and discomfort. SMEs embody technological readiness shown by their confidence and collective ability to implement organisational change.
In the last two years, entrepreneurs have been getting younger with a significant number of new business leaders falling into either the Gen-Z or Millenial category. These generations are not tech-averse but are instead tech native, very comfortable applying tech solutions to several elements of their business, even those not core to commercial success.
A 2021 ERC study found that the more digitalised SMEs (arguably those with Millenial or Gen-Z leaders) were able to maintain or grow their turnover, if the technology introduced within operations resulted in increased innovative activity. By using apps to automate admin, mitigate risk and utilise data for business intelligence, SMEs are able to get ahead of the curve and focus on growth in more ways than one. So as SME leaders are getting younger, their technological readiness is making a distinct impact already.
However, the ERC study also discusses that while SMEs have more technological readiness, 38% question whether their adoption of technology was strategic enough. This can pull into consideration if there is too much choice in the digital space, however, where new technology is increasingly getting embedded with long-standing institutions’ processes or applications, this can help to resolve this issue. A trusted partner that aligns with your strategy will often only partner with those with the same vision, so it is important to choose wisely from the start or reassess your core provider later down the line.
Not only is digital innovation key to success, it’s the type of digital moves that are made that will make the difference. While business, no matter the size, comes down to figures and the bottom line, the key takeaway from some of the most agile and successful SMEs over the past two years is their use of finance as data.
Financial data is an indicator of overall success - not only from a revenue perspective but also operationally, reputationally and a productivity standpoint. By assessing this data, SME leaders are able to create a map of the strengths and weaknesses of their organisation with the use of innovative digital tools that bring in a holistic view.
In addition to this, automation is key and is equally important in developing a smart digital strategy. Automating financial elements is becoming a natural extension of business IT investment for the tech native SME leaders, particularly as automation in itself has evolved. It is no longer about enabling a function that can’t be changed, but today, we see more customisable elements, the ability to turn the tool on or off as frequently as needed, and crucially, it spits out data in return. It all works in tandem towards the end goal.
Digitalisation isn’t going anywhere as the realms of possibility and what makes good business sense keeps expanding. Remaining acutely aware and open to this will help drive differentiation and success - something that SMEs have always embraced.