What is Digital Transformation (Really)? A Guide for SMBs
- Michelle Johnson
- May 1, 2024
- 10 min read
Updated: Sep 18, 2024
Have you ever sat in a meeting or attended a company town hall session and played "Business Buzzword Bingo?" For the uninitiated, this is where you and your colleagues each have a sheet of paper listing different business buzzwords, which you mark off as the meeting progresses. The first person with a completely checked off list wins. Cynical? Yes.
Less cynically, Business Buzzword Bingo encourages listening, and it also highlights those overused management phrases. "Synergy'',. "Leverage". (Extra points for "Leveraging Synergies''!). "Out of the box", "Blue Sky thinking", "Move the Needle", "Circle Back." We've heard them many, many times (and we've used them too). They're cliches and some of them are so overused and so generic they're becoming meaningless.
“Digital Transformation” is rapidly approaching buzzword status. It’s one of those phrases that sounds absolutely fantastic. It’s digital so it’s future facing. It’s transformation. What sort of growth-oriented company wouldn’t want to transform? And it’s so incredibly broad that it’s applied everywhere. By everyone. And every time it’s used, its meaning and application will be slightly different.
This is hugely helpful to industry experts and consultants who want to add a Digital Transformation service to their list of competencies. Squirrel9 offers it here. It’s less helpful for a harried Operations Executive who’s trying to find the right solutions and skillset to solve persistent issues.
Let’s move beyond the hype and offer a clear definition of what Digital Transformation means for small and medium-sized businesses. And, since this post started with a mention of Business Buzzword Bingo, let’s see how many buzzwords we use along the way!
The Core Idea
Digital transformation is the adoption of digital (computing) technologies to improve business processes, enhance customer experiences, and gain competitive advantage. In a nutshell, digital transformation prepares businesses to thrive in the digital age. It does this in several key ways.
Increased Efficiency and Agility
By adopting digital tools that fit your business requirements, repetitive tasks can be automated. This frees your team members to do higher-value activities. These toolsets could be as simple as a meeting scheduling application that shares your sales team member’s availability with their customers, or as complex as a software robot that uses machine learning algorithms to identify potentially fraudulent credit card transactions.
Adopting any digital tools will necessitate a level of process improvement; this in turn leads to faster turnaround times and reduced costs. Done correctly, streamlining processes also introduces elements of measurability, driving data-driven decision making, and providing the basis for continuous improvement.
Enhanced Customer Experience
SMBs need to consistently and continuously please their customers if they are to grow and thrive. And customers are becoming more demanding. Many of them (I’m looking at Generation-Z) are inherently digital-first, eschewing bricks-and-mortar for the online space. This holds true whether they’re consuming for their own needs (as B2C), or acting on behalf of the businesses they represent, in the B2B space.
Most businesses these days will have some sort of web presence. It’s the cost of doing business - hygiene, not differentiator. In order to differentiate, businesses need to digitally transform their online presence, significantly enhancing their customer experience (CX) in a variety of ways. Ultimately, this creates a smoother, more personalised, and ultimately more satisfying journey for your customers. This is true regardless of whether you’re selling to the consumer market or to another business.
Online transformation can be accomplished in a variety of ways. Self-service portals provide customers with up-to-the-minute account information so they can track orders and troubleshoot issues independently, at any time of the day. Supplemented by well-trained chatbots and virtual assistants, customers can have their basic questions and support needs met, saving them time and freeing human agents to work on more complex inquiries. Buying is also made simpler, with online purchasing, a variety of payment options, and automated order fulfilment.
All of these improvements provide valuable data. Harnessed correctly, this allows SMBs to understand their customers better, and the time saved through process automation is available to develop innovative solutions to address their wants and needs. Digital transformation enables tailored marketing messages, promotions, and product recommendations, and provides customers with a consistent, personalised experience however they may choose to interact with your business. Data is available to sales teams and in-store associates, providing opportunities to follow-up on past purchases, understand customer spend, and upsell items that will genuinely help solve customer pain-points.
There is incredible value to be had from enhancing customer engagement and communication, and through digital transformation this can be enabled at scale. Social media provides a channel for interactive contact, and that enables real-time feedback mechanism via online reviews, surveys, and in-app feedback.
Is Your Business Ready for the Digital Age? Take our free assessment and find out:
Competitive Advantage
Digital transformation for SMBs and larger businesses establishes a powerful feedback loop for sustainable competitive advantage. Automating routine tasks frees teams to innovate, fueled by precise customer data and feedback. This fosters deeper customer relationships, satisfaction, and products customers love. Digital transformation increases efficiency and equips teams with data-driven insights for informed decision-making and even more innovative solutions – a cycle that ultimately reduces waste and generates increased revenue.
Innovation differentiates businesses from their competition.
Innovation supported by the increased agility derived from digital transformation allows businesses to seize new opportunities and respond to disruptive events faster. This may involve slight pivots to the business model, or the creation of entirely new revenue streams and business models.
Innovation builds resilience. Technologies are always evolving and customers are becoming more demanding. Digital transformation provides the data and the operational support required to embrace continuous improvement and adaptive agility, meaning that businesses are better able to stay relevant and competitive in a rapidly changing landscape.
Challenges and Considerations for Small & Medium-Sized Businesses
While digital transformation offers a wealth of opportunities, small and medium-sized businesses embarking on this journey face a number of challenges. Let’s explore these considerations and see how they can be addressed.
Resource constraints are a major hurdle. Limited budgets and a smaller talent pool (compared to larger enterprises) can make it difficult to invest in cutting-edge technologies and hire personnel with the necessary skills. Legacy infrastructure can also be a roadblock. Outdated systems might not be compatible with new technologies, requiring significant upgrades or replacement.
Another hurdle is resistance to change from colleagues and team members accustomed to the existing workflows. A successful digital transformation requires a culture that embraces innovation. Gaining team member buy-in (and better still, ownership and active participation) is possibly the most important success factor in an organisation’s entire digital transformation journey.
The rapid pace of technological change is itself daunting. Keeping up with the latest advancements can feel like an uphill battle. Small and mid-sized businesses can overcome these challenges by focusing on core business needs and strategic objectives, supported by a structured plan of prioritised, incremental change.
Is Your Business Ready for the Digital Age? Take our free assessment and find out:
A Practical Guide to Digital Transformation for SMBs
Operations Executives are the masterminds who keep business running smoothly. Digital Transformation isn’t just a business buzzword; it’s a toolbox designed to empower you across your entire domain - and its positive effects will be felt organisation-wide. Here’s how to unlock its potential.
Align Your Goals with Organisational Strategy
First, it’s important to ensure that digital transformation aligns with the organisation’s strategy and long-term vision. Digital-first organisations should have this encoded in their DNA. Organisations that haven’t started with this advantage need to build executable strategic plans that cater for this evolution - and which position the organisation to exploit the advantages they will bring.
The strategic alignment doesn’t stop there. Focusing on core operational areas is key. Supply chain, production, inventory management, and customer service are prime candidates for digital transformation.
Automated systems can streamline these processes, freeing up teams to focus on higher-value tasks. Data insights can be leveraged to optimise production schedules or predict potential shortages. This targeted approach leads to efficiency gains and cost reductions and also ensures products are delivered faster, keeping customers happy.
The impact of digital transformation extends beyond internal operations. Setting clear goals to improve customer interactions using digital tools across all touchpoints, including marketing, sales, and customer relationship management, can create a soother and more satisfying customer experience.
Assess Your Current State
Before diving headlong into transformation, a clear understanding of the current state must be established. This involves a three-pronged approach:
Technology & Knowledge Infrastructure:
Evaluate existing IT and Business Information Systems, software applications, and security measures. Are there areas for modernisation? Do your applications share information between one another? If not, are they capable of doing so? How much duplicate capability is there?
Also take stock of where your vital business knowledge is kept. Is it in a well-organised, easily accessible repository? Or is it strewn throughout the organisation, hiding in notebooks, individual laptops, misplaced digital folders, or (worse) trapped in a few heads?
Process Efficiency:
Analyse operational processes across the organisation to identify bottlenecks, redundancies, and opportunities for improvement. Keep an eye out for the potential to automate processes, even if the budget for doing so isn’t immediately available.
Data Management:
Review current data collection, storage, and analysis capabilities. Are you capturing the right data for informed decision making? Can it be accessed in one place? How easy is it to query the data or to generate useful insights and reports?
Is Your Business Ready for the Digital Age?
Take our free assessment and find out:
Prioritise the Transformation Journey
Once a clear picture of the current state has been established, it’s time to identify key priorities. Focus on operational areas where digital transformation can have a significant impact.
This will vary depending on the industry the organisation is in. For retailers, look into inventory management systems to optimise stock levels, using data-driven insights to forecast customer demand (allowing for better promotions and localised marketing campaigns), or enhancing the customer journey by providing an omnichannel, online/offline shopping experience.
Distributors could investigate warehouse automation including robotic systems for picking and packing, or the use of real-time tracking systems throughout the supply chain to monitor delivery progress and identify potential delays.This allows for proactive communication with suppliers and clients, and improved customer service.
Service providers should explore automated scheduling and booking systems that allow customers to schedule appointments at their convenience. They should also look into automating other routine customer interactions with chatbots or virtual assistants.
Collaboration is Key
Any organisation’s digital transformation efforts should take a customer-centric approach. This will usually include implementing or updating a Customer Relationship Management (CRM) system to manage customer interactions, track service and purchase history, and to personalise service and product offerings. Typically, this will be a cross-organisational effort, involving stakeholders from sales, marketing, and finance, as well as the operations team.
Changes made in one core area, such as operations, will have a ripple effect on the other functions in the organisation. Implemented badly, that ripple effect turns into a tsunami, resulting in destructive disruption and ill-will throughout. Digital transformation isn’t an isolated effort. Work with other departments at all levels to identify digital solutions that enhance customer experience across all touchpoints
Your Journey Needs a Roadmap!
Transformation without a roadmap can work, though in very limited ways. Changes that are unplanned and uncommunicated are usually left unembraced, and their benefits unrealised and their value unappreciated. Here’s how to avoid that fate.
Most digital transformation initiatives will unveil a laundry list of improvements that might be made. Each of these initiatives will have their own champion. Without prioritisation, it’s possible that the most passionate champion will force through the least effective initiative, and its lack of impact will have a negative effect on any other digital transformation initiatives that follow. This can be avoided with a clear prioritisation methodology. Each initiative should have a clear return on investment associated with it (along with other benefits), and a transparent prioritisation process should be implemented. This includes clear timelines for completion, resource requirements, and measurable outcomes that track progress and success.
Resourcing needs to be carefully considered as well. This includes budget allocation, personnel needs, and required training programs. Options such as outsourcing specific tasks or partnering with technology vendors to fill any skill gaps within your organisation should be considered and priced.
Digital transformation will almost always involve a shift in processes and workflows. Most people resist change, especially when it's not well communicated or understood. To ensure smooth adoption, a change management and communication strategy must be developed. This will address potential resistance and gain buy-in by focusing on clear communication about the benefits of digital transformation to both the organisation and its team members. Change management done correctly is a powerful force that enhances company culture, drives innovation and agility, and ensures team members thrive in their transformed environment.
Evolution, Not Transformation
Technology is a dynamic force, constantly adapting and changing. Yet digital transformation is often framed as a singular, monumental achievement. A more accurate view positions it as an ongoing evolution instead, with progress made incrementally and piece-by-piece rather than all at once. To truly harness the power of digital transformation, organisations must embrace this continuous journey at a strategic and business-as-usual level.
An organisational culture that embraces innovation provides an excellent foundation for digital transformation as well as continuous improvement. Here’s how it can be cultivated:
Empowering Experimentation
An environment where employees feel comfortable exploring emerging technologies and suggesting innovative solutions for operational challenges is a boon. It fosters creativity and keeps the organisation at the forefront of progress. It requires psychological safety and a dedication to learning by doing - which in turn requires the ability and encouragement to make mistakes (and learn from them). Imagine a workforce that’s afraid to try something new for fear of being disciplined. Then imagine one that’s constantly seeking ways to improve processes and optimise efficiency through experimentation. Which would you rather work in? Which would you rather have working for you?
Data-Driven Decisions
Data should be the guiding light for business decisions. Prioritise data analytics across all departments, and strategic choices will be made on intuition and backed up by powerful, real-world insights. Great, well-structured, shared data informs these decisions which drive the innovation that delights customers and ultimately results in business growth.
Continuous Learning
Partnering with consulting firms specialising in digital evolution, like Squirrel9 Consulting, offers valuable expertise. Our tailored advice on digital transformation, from analysing the current state to visualising potential transformations, as well as successful technology implementation and execution significantly aids the process.
Networking with other COOs and operations leaders who have successfully navigated their own digital evolution journeys provides valuable insights and best practices. At a team level, targeted training, conference attendance, and participation in industry events encourages knowledge acquisition and sharing that benefits the broader organisation.
An organisation that nurtures a culture of experimentation, data-driven decision making, and continuous learning is adaptable, flexible, and well-prepared to thrive. This adaptability is key to prospering in a constantly evolving digital landscape. Digital evolution doesn’t become a one-time project; it becomes part of the company’s DNA, driving growth and propelling it towards long-term success.
Embracing Digital Evolution
Beyond the business buzzwords, in reality most companies benefit from a more nuanced journey: digital evolution. Technology is a living entity, constantly changing and developing at a rapid pace. To leverage its full potential, organisations must embrace this continuous adaptation.
In today's competitive landscape, digital evolution isn't optional for mid-sized businesses. It's the key to unlocking new opportunities, optimising processes, and staying ahead of the curve. But remember, this isn't a sprint; it's a marathon. A strategic and well-planned approach is crucial for success.
Ready to assess your organisation's digital evolution journey?
Squirrel9 Consulting offers a comprehensive digital evolution assessment tool. This free tool helps you identify your current state of digital maturity, highlighting areas of strength and opportunities for improvement. By taking the first step towards self-evaluation, you're setting your organisation on the path to a thriving digital future.
Is Your Business Ready for the Digital Age?
Take our free assessment and find out:
Looking for even more insights?
Subscribe to our blog for ongoing guidance and best practices on navigating the ever-changing digital landscape. Together, we can help your organisation unlock its full potential and achieve long-term success.
Comentários