How small businesses can leverage digital solutions to their advantage
Small and medium-sized enterprises (SMEs) did not pay much attention to digitization until the COVID-19 pandemic struck. While many SMEs have failed to survive amid the pandemic, many have been able to minimize business disruptions due to the technology’s early adoption.
Lethargy and lack of awareness, budget constraints, cost of ownership, talent shortage, adoption and utilization issues are some of the reasons SMEs have stayed away from take advantage of technology to streamline business operations.
Now that digital transformation has become essential for the survival and growth of small businesses, SMEs must find ways to overcome these challenges. Here are a few ways.
The power of digital transformation for SMEs
In the last quarter of 2020, Dun & Bradstreet surveyed 250 small business owners to understand the impact of COVID-19 on their operations. While about 54% said they had succeeded in reducing operating costs through digitization of day-to-day activities, 51% revealed that the adoption of new technologies / digitization has improved their competitive positioning.
Digitization allows companies to extend their reach in the market and acquire new customers, better customer engagement using social media and other customer relationship tools, improve productivity and operational efficiency and better manage cash flow.
How to proceed with the digital transformation?
For large companies, digital transformation brings better efficiency, productivity and profitability, while small enterprises take advantage of it for their survival.
Most large companies have already integrated technology into their core business and back office functions, and they are pursuing technological improvements to compete in the market to evolve and grow.
SMEs, on the other hand, cannot adopt all forms of technologies in various fields at once due to their inherent weaknesses. Management or owners should assess their weaknesses and prioritize them before starting digitization.
In most cases, SMEs start with business functions that present more problems and are essential to their survival and growth.
Generally speaking, sales and marketing operations are essential for any business. Once this is resolved, small business owners can target digitize the supply chain network (for a manufacturing or commercial company) and back office functions like finance, HR, etc.
In addition, business solutions like ERP and CRM take care of most of the Commercial functions and back office functions In one time.
For most SMEs, the entry point depends on their industry. For example, for a retailer going live might be the starting point, or for a business that involves after-sales service, introducing service automation or CRM into a sales-driven business is a starting point.
Small business owners shouldn’t create silos of multiple disparate digital systems through this kind of model, which will be suicidal in the long run. The best way to solve this dilemma is to have solutions for the most painful areas first and have everything else together in an integrated way.
Cloud and SaaS environment
The emergence of cloud computing has opened up various avenues for companies to benefit from technological solutions without having to invest large amounts of funds up front.
The cloud ecosystem has brought two benefits to businesses, especially SMBs. The first is the subscription payment model that turned Capex’s technology investment into Opex. Second, the possibility of interrupting services (platform, infrastructure or software) if they do not meet the needs.
Initially, for on-premise models, small business owners have to invest large sums in server hardware and software, operating systems, networking, application licensing, team, etc.
In addition to providing non-physical infrastructure and platforms, the cloud computing ecosystem provides software applications and tools, from web applications to CRMs and ERPs, on an on-demand subscription model.
Until recently, emerging technologies were beyond the reach of SMEs due to the huge costs involved, lack of skilled labor, etc.
New era technologies, including artificial intelligence (AI), internet of things (IoT), machine learning (ML), robotic process automation (RPA), Data Analytics, Blockchain, etc., can be used to solve various problems in business processes, provide after-sales customer service, collect strategic data on trends, changes in customer and market behavior, and automate processes.
The biggest advantage for SMBs is that all of these technologies are available on demand through the cloud.
Application development platforms
Developing an application was a difficult task for businesses, especially small and medium-sized businesses, which did not have the technical resources or the funds to purchase or hire other companies to develop applications and tools.
With the advent of low-code or no-code development platforms, SMBs can now use any non-technical employee in the business or back office to build applications. They can also benefit from these subscription tools via the cloud in the SaaS model.
Opportunities for tech SMEs as providers of technology solutions
The digital acceleration among businesses of all sizes, thanks to the inevitability created by the COVID-19 pandemic, has opened up many opportunities for technology companies large and small.
Technology SMEs, which have proven their technical capabilities and credentials, have the potential to meet the technological needs of not only SMEs, but also large enterprises, thanks to cost and time advantages.
In fact, these SMBs can compete with large tech companies because of the low cost, flexibility, agility, and responsive support they offer.
Areas of Opportunity
The segments that are expected to register considerable growth in the coming years and, therefore, may offer many opportunities to SME technology companies are:
- Edtech and fintech areas, where India has already produced unicorns and decacorns, including BYJU’s, Paytm, Unacademy, PhonePe, etc., to name a few
- Provision of applications and tools via the SaaS model
- Develop and deliver low-code or no-code software development platforms
- Argitech and e-commerce
- E-commerce and online platforms that can help SMEs.
The success of small tech companies in leveraging the demand for tech solutions depends on their credentials through success stories and customer testimonials, availability of top talent with the right skills and expertise, feedback on customer service, agility and reliability.