SMB: The Transformation Nation

Digital Transformation may not be an intrinsically new idea, but it is an increasingly popular and important one… And happily it isn’t limited to big business either.

Digital Transformation. Is it: a) binning your analogue watch in favour of a retro Casio number, b) a brand new way of reinventing the enterprise with digital tools, or c) a nice new pair of leather gloves all ready for winter?

b) you say? Nope. Actually it’s none of the above.

Because, while Digital Transformation (DT) does indeed refer to the idea of using digital tools to transform the workplace and how we do business, it’s hardly a new one. After all, what is IT itself if not an expression of exactly that notion?

What IS new however, is the speed and extent at which such transformations are now taking place, how quickly and fundamentally that is impacting the businesses concerned, and how broad and deep the chasm between those that are embracing DT and those that aren’t is already becoming.

The good news is that it’s never too late and better yet DT is no way limited to big business. Quite the opposite in fact. In many cases DT is lending smaller outfits a new level of agility and therefore a way to turn the tables on larger competitors.

One recent study of businesses of 1,000 employees or fewer sought to examine how small and midsize businesses are engaging and approaching DT and how they are using it as a catalyst to drive competitive advantage over larger rivals.

Among the many interesting statistics it threw up was that almost half the 3,000 or so decision makers polled believed that technology is levelling the playing field for small businesses versus larger corporations, while more than two in five actively saw their size as an advantage where capitalizing on digital innovation is concerned.

Indeed, the study found a direct connection between DT and revenue growth, with fast-growing SMBs (specifically those experiencing 10% growth in annual revenues or more) significantly more likely to be making significant progress towards DT than their slower burning counterparts.

One of the companies cited, hair-care firm Living Proof, which had been managing its operations via simple spreadsheets, has now digitised everything from finance to HR, and its supply chain to its production. This has, it says, made the business far easier to run, and helped maximise growth, expand its product portfolio by 230%, and boost revenues by 330% — all with the addition of only 30 people.

Those are some pretty clear and compelling numbers and not a typical. Uber, Skype, Spotify, WhatsApp, Netflix, Airbnb. All rapidly disrupted entire industries. All did so as a direct
result of digital centric strategies. And all are now leaders in their chosen marketplaces.

There’s a problem here though. All the businesses name-checked latterly have something in common. None of them were forced to modernise by deploying digital techniques and technologies. Why? Because, from their very beginnings, they were already Digital Natives, as such entities have become known. In other words, they didn’t need to ‘transform’; they were born digital.

So what about businesses that don’t have the benefit of having been gestated in such a manner? What about so-called Digital Newcomers and Immigrants? This is where agility and flexibility really begin to tell — and therefore where the SMB’s advantage can really start coming to the fore.

Larger organisations now have the option, as do SMBs, to scale their IT resources according to demand. Where SMBs have the edge however, is that their existing capital IT investments tend to be much smaller and therefore less constraining.

Whereas larger concerns are typically encumbered by legacy systems, the smaller firm is often able to grow its technology estate — be that physical, virtual, in cloud, or hybrid — directly in line with business strategy. In light of these factors, small businesses that want to gain an early edge should be thinking about some or all of the following DT touchstones as they move forward.

First, mind-set. As demonstrated by Uber et al, Digital Transformation is not (just) about deploying technology. It’s about finding and addressing an external need (or equally an internal need) and utilising a digitally centric strategy to do so.

Then clarity. Specific, precise services that address and meet your particular needs and those of your customers. Thirdly simplicity. Solutions that mean less time spent on IT management, not more.

Then security. Services that keep your business and your data safe and that do the same for your customer base.

Next reliability. Choosing external services (and service providers) that guarantee specific levels and standards of service.

Finally, sustainability. Is there contingency for you to safely port data and services in the event of a problem?

Small business owners able to cover these bases will put themselves in a strong position from which to begin transforming towards a truly digital operation; first shoring up their futures, and then enhancing them.

What will happen to those that don’t? To the smaller organisation that doesn’t at least think about Digital Transformation?

Well you really shouldn’t need multiple choices to answer that one.

“In many cases DT is lending smaller outfits a new level of agility and therefore a way to turn the tables on larger competitors.”

As a small or medium business looking to transform, please take a look at our SMB Cloud Hub at: uk.insight.com/solve/cloud